Hong Kong's Cathay Pacific posts HK$1.26 bn loss for 2017

Cornelia Mascio
Marzo 14, 2018

Cathay Pacific Airways is finally seeing some respite from its earnings woes. Hong Kong's Cathay Pacific Airways posted its biggest annual loss in nine years, which was slimmer than expected as a rebound in the cargo market helped offset fuel hedging losses and stiff competition for passengers.

Cathay Pacific Airways said Wednesday its net loss for 2017 more than doubled from the previous year as it continued to face competition from low-priced rivals.

Net loss for the year ended December 31 was HK$1.26 billion ($160.6 million), compared with a HK$575 million loss a year earlier, it said in an exchange filing.

Chief executive Rupert Hogg took over in May 2017, replacing Ivan Chu, who had been in the job for three years. "Our priorities for 2018 are our transformation program, changing the way that we work so as to better contain costs which will strengthen our passenger business further".

Several one-off factors impacted its results, including a HK$244 million gain on the deemed partial disposal following Air China's issue of A shares resulting in the dilution of Cathay's stake.

Cargo yield - a key indicator of profitability reflected by earnings from carrying one ton per kilometer - jumped 11 per cent. A slower rate of decline in passenger yields also supported the improved result. "Passenger yield is still in pain".

Loss per share was 32 HK cents, compared to loss of 14.6 HK cents previous year. "There's concern whether this is sustainable" given uncertainties due to a possible trade war after the US increased tariffs on aluminum and steel, he said.

Still, it was Cathay's second consecutive year of losses and its fourth since the airline was founded in 1946.

Fuel is the largest component of an airline's costs in Asia. Cathay has been booking losses on its hedges after crude oil unexpectedly tumbled from more than $100 a barrel in 2015.

The carrier has since shortened the contracts' lock-in period to two years from four.

The company is in its second year of a three-year turnaround programme that aims to make HK$4 billion in savings.

The company has been in talks with its pilots over compensation, frozen pay for senior staff, and increased the number of economy seats on some planes as part of its efforts.

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