The Cathay Pacific Group has recorded a second year of losses, more than doubling the loss posted in 2016.
While revenue for the group was up 4.9 per cent on 2016, the total attributable loss came in at 1.26 billion Hong Kong dollars (around £115 million) – down another 119% on the HK575 million (£52.5 million) lost in 2016, which was the company’s first loss in eight years.
The airline began a three-year restructuring programme in 2017 to cut costs, which it says started to show promise in the second half of the year, as evidenced by the HK792 million (£72.3 million) profit in the second half compared to a HK2.05 billion (£228.4 million) loss in the first half.
Cathay Pacific says two factors affected its performance in both 2016 and 2017 – “intense competition” with other airlines and “continued pressure on yields” on key routes during a time of “overcapacity” in their markets.
However, the airline says it benefited from a strong cargo business, a weak US dollar and higher demand for premium class seats from passengers.
Passenger revenue was down 0.8 per cent on 2016, while capacity grew 2.8 per cent owing to new routes and increased frequency on others. Load factor dropped 0.1 percentage point to 84.4 per cent and yield fell 3.3 per cent to HK52.3 cents despite a 3.1 per cent improvement in the second half of the year.
Meanwhile, cargo revenue grew 19.1 per cent year-on-year, with tonnage up 10.9 per cent and yield up 11.3 per cent.
A rise in fuel prices and the cost of increasing operations led the airline’s costs to increase by 27 per cent. Fuel accounted for 30.7 per cent of operating costs, but the carrier said fuel hedging losses were reduced, meaning fuel costs grew 11.3 per cent compared to 2016.
Cathay Pacific was one of the subjects of a £50.6 million fine from the European Commission following the decision that the airline was one of several to agree to cargo surcharge levels prior to 2007 that infringed on competition laws. The carrier says it has applied to annul the decision.
The airline also entered into an agreement with DHL International to acquire the 40 per cent of shares in Air Hong Kong that it does not already own, with the transaction expected to be completed by the end of 2018.
John Slosar, chairman of Cathay Pacific, commented: “Our priorities for 2018 are our transformation programme, changing the way that we work so as to better contain costs which will strengthen our passenger business further. We are confident of a successful outcome from these efforts.
“We are improving our competitive position by expanding our route network, increasing frequencies on our most popular routes and buying more fuel-efficient aircraft.
“We are acting decisively to make Cathay Pacific and Cathay Dragon better airlines and stronger businesses. We believe we are on track to achieve strong and sustainable long-term performance.”