Post by on 2018-03-15
HONG Kong's Cathay Pacific Airways has reported a net loss of HKD1.26 billion (US$161 million) for 2017, its biggest annual loss in nine years, wider than the prior year's loss of HKD575 million but smaller than an average loss estimate of HKD2.15 billion drawn from 11 analysts polled by Thomson Reuters.
The annual loss was slimmer than expected due to the rebound in the cargo market which helped offset fuel hedging losses and stiff competition for passengers.
Cathay reported an attributable profit of HKD792 million in the second half, helped by an improving cargo market and profits from subsidiaries and associates such as Air China, which offset its first half loss of HKD2.05 billion.
This was Cathay Pacific's second consecutive year of losses and its fourth since the airline was founded in 1946. Revenue grew 4.9 per cent to HKD97.28 billion, while cargo revenue surged 19.1 per cent to HKD23.9 billion.
Cathay last year launched a three-year turnaround programme that aims to make HKD4 billion in savings. It has announced job cuts and plans to boost productivity including increasing the number of economy-class seats on Boeing 777 planes.
Cathay's chairman John Slosar said in a statement: "We are confident of a successful outcome from these efforts," referring to the turnaround programme.
"We also look to benefit from a slowing of the decline in passenger yields as global economic conditions improve. The outlook for our cargo business is positive and we will take best advantage of opportunities in the growing global cargo market."
He warned, however, that fuel costs were increasing and impacting operating costs, although the firm's losses from expensive fuel hedging contracts shrank 24.6 percent over the year.
Cathay Pacific reported a 3.3 per cent decline in yields, a proxy for ticket prices, in 2017, although it said they had improved by 3.1 per cent in the second half of the year compared with the first half. Its full-year cargo and mail yield grew 11.3 per cent, helped by the growth of e-commerce and as buoyant consumer confidence spurred companies to restock inventories.