Cathay Pacific posts worst first-half loss in at least 20 years (updated)

Kingboard Holdings

16/08/2017 10:12

* Continues to lose customers to mainland Chinese 
competitors 
    * Does not expect conditions to improve for rest of the year 
    * Cathay on track for first ever back-to-back annual loss 
 
 (Adds measure of traffic, share movement, background) 
    SHANGHAI, Aug 16 (Reuters) - Cathay Pacific Airways Ltd 
 0293.HK  on Wednesday posted its worst first-half loss in at 
least 20 years and said did not expect conditions to improve for 
the rest of the year, as it continues to lose customers to 
mainland Chinese competitors.  
    The loss of HK$2.05 billion ($262.07 million) for the six 
months ended June, versus a profit of HK$353 million a year ago, 
puts the Hong Kong airline on track for its first ever 
back-to-back annual loss since it was founded in 1946.  
    Group revenue edged up 0.4 percent to HK$45.9 billion, while 
passenger yields - the average fare paid per mile per customer - 
fell 5.2 percent, Cathay said in a filing to the Hong Kong 
bourse. Yield on cargo services rose 4.4 percent. 
    "We do not expect the operating environment in the second 
half of 2017 to improve materially," Cathay Chairman John Slosar 
said in a statement.  
    "In particular, the passenger business will continue to be 
affected by strong competition from other airlines and our 
results are expected to be adversely affected by higher fuel 
prices and our fuel hedging positions," he said.   
    Shares in Cathay closed up 0.86 percent before results were 
announced, in line with the Hang Seng index  .HSI  which rose 
0.9 percent. The airline had been initially expected to publish 
results around midday Hong Kong time (0400 GMT).  
    The airline posted an annual loss last year for the first 
time since the global financial crisis as state-supported 
Chinese airlines chipped away at its market share, particularly 
on international routes to and from China. 
    Revenue passenger kilometres (RPK), a measure of traffic, 
grew by 1.4 percent over the first half, its lowest growth rate 
since the turn of the decade save for the first half of 2013, 
according to BOCOM International analyst Geoffrey Cheng.  
    In comparison, China Southern Airlines' RPK rose 12.49 
percent year-on-year over the same period, according to company 
data. Air China  601111.SS   0753.HK , which has a 
cross-shareholding with Cathay, reported RPK growth of 6.5 
percent.  
    Cathay is in the midst of a three-year reorganisation that 
includes its biggest headcount reductions in almost two decades. 
It reshuffled its top leadership in April and is considering 
shifting some flights to its short-haul arm.  urn:newsml:reuters.com:*:nL4N1KM189 
    Last month, third-largest shareholder Kingboard Chemical 
Holdings Ltd  0148.HK  called on the airline's founding Swire 
family to intervene to lead it out of "hard times".  urn:newsml:reuters.com:*:nL4N1KM189 
 ($1 = 7.8223 Hong Kong dollars) 
 
 (Reporting by Brenda Goh; Editing by Stephen Coates and Himani 
Sarkar) 
 ((brenda.goh@thomsonreuters.com; +86)(0)(21 6104 1763; Reuters 
Messaging: brenda.goh.thomsonreuters.com@reuters.net)) 
 
Keywords: CATHAY PACIFIC RESULTS/