Cathay Pacific flies back into profit after two years of losses

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The Cathay Pacific Group has reported a vastly improved financial performance in 2018 as a restructuring plan initiated pays off.

Last year, the group, which includes Cathay Pacific and low-cost arm Cathay Dragon, posted an attributable profit of HK$2.34 billion (US$299 million) for 2018, compared to a loss of HK$1.2 billion for 2017.

In 2018, the two airlines combined carried 35.4 million passengers, 1.9 per cent more than the 34.8 million in 2017. The load factor fell by 0.3 percentage points to 84.1 per cent.

Total fuel costs for Cathay Pacific and Cathay Dragon (before the effect of fuel hedging) increased by HK$7.54 billion (or 31.1 per cent) compared with 2017.

Passenger revenue in 2018 was HK$73.1 billion, an increase of 10.1 per cent compared to 2017. Capacity increased by 3.5 per cent, reflecting the introduction of new routes and increased frequencies on existing routes.

Last year, Cathay added 10 destinations – Nanning, Jinan, Brussels, Copenhagen (seasonal), Dublin, Washington D.C., Davao City, Medan, Cape Town (seasonal) and Tokushima (seasonal).

It also introduced a passenger service to Seattle in March 2019 and will introduce a service to Komatsu in April 2019. Frequencies were increased to other destinations in response to demand and it stopped flying to Kota Kinabalu and Dusseldorf.

Cathay Pacific Group chairman, John Slosar said broadly benign economic conditions, the environment in which its airlines operated was “as ever difficult” in 2018 and “competition was intense, fuel prices increased and the US dollar strengthened”.

He added: “However, our transformation programme remains on track and had a positive impact. We focused on finding new sources of revenue, building our network and strengthening the Hong Kong hub, delivering more value to our customers and improving productivity and efficiency.”

Cathay said overcapacity in passenger markets resulted in intense competition with other airlines, particularly those from Mainland China which put pressure on market yields on key routes particularly in the second half of the year.

But the passenger business benefited from capacity growth, a focus on customer service and improved revenue management. Load factors were sustained and yield improved despite competitive pressures.  The cargo business was strong.  Capacity, yield and load factors increased.

Cathay plans to take delivery of 21 Boeing 777-9 aircraft, along with 49 other Boeing and Airbus aircraft by 2024. The airline’s now operates the A350-900 and -1000, the B777-200 and -300, and the A330-300, while Cathay Dragon operates the A330-300, A321-200 and A320-200.