Cathay Pacific plunges to huge loss

Cathay's loss was worse than forecast. Vivek Prakash / Bloomberg

Hong Kong flag carrier Cathay Pacific on Wednesday reported a massive loss of HK$2.05 billion (Dh962.3 million) for the first half of the year as the airline struggled with intense competition from rival airlines.

In a filing to the Hong Kong stock exchange on Wednesday, the carrier also revealed its revenue rose by 0.4 per cent ,to HK$45.85bn for the six months to June 30.

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The results were far worse than analysts' predictions of a loss of up to HK$1.2bn. In the same period last year, the carrier made a profit of HK$353m. The latest results came after Cathay saw its first annual loss in eight years in 2016, as lower cost Chinese carriers eat into its market share.

It is the company’s first interim loss since 2012.

After making a full-year loss of HK$575m in 2016, the airline recently cut 600 jobs as part of a major shake-up.

In a statement, the airline said the industry was experiencing “fundamental structural changes”. The chairman John Slosar added: "Other major adverse factors were higher fuel prices (including the effect of our hedging), the adverse effect of the strength of the Hong Kong dollar on revenues denominated in other currencies, and higher aircraft maintenance costs."

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It has increasingly struggled against competitors, from mainland China and Middle East-based carriers on long-haul routes, to budget airlines muscling in on regional flights.

Passenger yield, a key measure of profitability which tracks money earned from flying a passenger one kilometre, was down 5.2 per cent to 51.5 cents, from 54.3 cents in the first half of 2016.

The result adds to the pressure on the Cathay Pacific chief executive Rupert Hogg to turn around Asia’s ninth-biggest carrier by market value. Mr Hogg, appointed in April to take over from Ivan Chu Kwok-leung, is responsible for the airline’s three-year restructuring plan. Wednesday’s earnings report was the first  release under his leadership.

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