News
Cathay Pacific’s profits slump
August 19th 2016
Hong Kong’s Cathay Pacific Airways on Wednesday reported an attributable profit of HK$353 million ($45.5 million) for the first six months of 2016, down 82% year-on-year. Read More »
“The operating environment in the first half was affected by economic fragility and intense competition. There was sustained pressure on revenues, reflecting suspension of fuel surcharges, weak currencies in some markets, weak premium class demand, particularly on long-haul routes [despite a 4.7% increase in long-haul capacity], and a higher proportion of passengers transiting through Hong Kong,” said John Slosar, chairman of Cathay Pacific Airways. The carrier’s yield fell by 10.1%, while its load factor slipped 1.4% to 84.5%.
In particular, Cathay said corporate demand originating in Hong Kong was “well below expectations, particularly to New York and London”, while it noted that added trans-Pacific capacity by competitors “has been significant”, putting further pressure on loads and yields in its bread and butter business.
Slosar said Cathay had initially forecast growth of 4.8% for the full year, but this has been revised down to 3.1%, also due to the late delivery of new A350s, which turns out to be a blessing in disguise, given the weaker market conditions. The Swire carrier still expects to take delivery of nine A350s this year, a more than optimistic target as Airbus continues suffering from a delivery backlog caused by late cabin suppliers.
Slosar said the outlook for the rest of the year “remains challenging”, but emphasized that no service related costs would be cut. “In fact, we are investing in new products and better service,” he said.
