Economy

Cathay Pacific posts biggest loss in nine years, but beats expectations

Cathay Pacific posts biggest loss in nine years, but beats expectations

HONG Kong flag carrier Cathay Pacific today announced a HK$1.26 billion (RM630 million) net loss for 2017, marking the first back-to-back annual loss in its 71-year history.

It logged a net loss of HK$1.26 billion (US$160.69 million) for 2017, wider than last year's loss of HK$575 million but smaller than an average estimate of HK$2.15 billion drawn from 11 analysts polled by Thomson Reuters.

The group had an attributed profit of HK$792 million in the second half of 2017, improving from the HK$2.05 billion loss in the first half.

Cathay said losses from wrong-way fuel bets amounted to HK$6.4 billion for the whole of past year, narrowing from HK$8.46 billion in 2016.

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

However, a number of one-off factors affected the airline's earnings including a HK$498 million fine from the European Commission and HK$224 million associated with redundancy charges. Cathay also disposed of its interest in TravelSky Technology for a profit of HK$586 million.

"Overcapacity in passenger markets led to intense competition with other airlines", Cathay said in a press release.

In order to ease the operating costs, the airline has instituted a three-year restructuring exercise which will supposedly bring the airline nearly $4 billion HKD ($510.2 million USD) in savings.

Vancouver 'still game' for World Cup bid despite cost concerns
But Horgan said the responsibility was on higher bodies to ensure that B.C. wouldn't be on the hook if the budget expanded. Canada, the US and Mexico are up against Morocco to host the world's most widely viewed sporting event.

There was no mention of further cuts in Wednesday's announcement but Slosar said the company's "transformation programme" was still a priority for 2018, promising to "better contain costs" to boost passenger business.

Cathay says it saw positive results from its three-year transformation programme as the year progressed, and that also benefited from a strong cargo business, a weaker United States dollar and improved premium class demand. "Evidence of progress became apparent in the second half of the year", Slosar said in a letter accompanying the financial results.

Another closely monitored metric, cost per available tonne kilometre (excluding fuel), reflecting its cost structure, rose slightly to HK$2.14, indicating the airline still had more work to do to rein in costs.

Cathay's share price recovered from losses in the morning trading session and climbed as much as 3.2% to HK$14.22 in Hong Kong, the highest intraday price since November 2015.

Additionally, rising fuel costs, which rose 11.3%, caused a significant jump in the airline's operating expenses.

Cathay Pacific, Hong Kong's biggest airline, also operates regional carrier Cathay Dragon. Qatar Airways owns a 9.94 per cent stake in Cathay.

The news was greeted by a surge more than three percent surge in the firm's share price in afternoon Hong Kong trade, although the gains were later pared.


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