Cathay's operating loss almost triples in 2017

Cathay's operating loss almost triples in 2017

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

Hong Kong's Cathay Pacific Airways Ltd posted on Wednesday its biggest annual loss in nine years as fierce competition from mainland Chinese and Middle Eastern rivals exacerbated problems with overcapacity.

Mr Hogg also has cut 600 jobs as part of a three-year revamp, and taken delivery of newer aircraft to help Cathay become more competitive against low-priced and Chinese mainland carriers.

"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", says chairman John Slosar.

Cathay reported today a net loss of HK$1.26 billion (RM627.4 million) for 2017, wider than the prior year's loss of HK$575 million but smaller than an average loss estimate of HK$2.15 billion drawn from 11 analysts polled by Thomson Reuters.

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.

However, fuel was still the most significant outlay, accounting for 30% of operating costs at HK$31.11 billion, compared with HK$27.95 billion in the year before.

Cathay's operating loss almost triples in 2017

It reported an attributable profit of HK$792 million in the second half, helped by an improving cargo market, which helped offset its first half loss of HK$2.05 billion.

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 U.S. dollar and improved premium class demand. Cathay has been booking losses on its hedges after crude oil unexpectedly tumbled from more than $100 a barrel in 2015.

Hong Kong conglomerate Swire Pacific is the largest shareholder in Cathay with a 45% stake, while Air China owns 29.99%.

It pledged to cut 600 staff including a quarter of its management as part of its biggest overhaul in two decades.

Chief executive Rupert Hogg took over in May 2017, replacing Ivan Chu, who had been in the job for three years.

The carrier has also been in long-running talks with pilots over compensation, housing benefits and pay freezes, with a strike targeting the year-end holidays averted in 2017.

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