Cathay Pacific has scrapped its profit forecast for the second half of the fiscal year, and is conducting a "critical review" of its business as overcapacity and poor yields have put pressure on revenues.
In a statement on the Hong Kong stock exchange, the carrier says that, contrary to guidance issued in its financial results report for the six months to 30 June, "it is no longer expected that results for the second half of 2016 will be better than those of the first half."
"Since the interim report was issued, the outlook for our airlines’ business has deteriorated. Overcapacity and strong competition is putting particular pressure on our passenger business, with continued shortfalls in revenue compared with forecasts and heavy pressure on yield," it adds.
Cathay's operating profit for the first half of the year plunge 71.9% to HK$664 million ($85.6 million), while net profit slumped from HK$1.97 billion to HK$353 million.
At the time, the airline's chairman John Slosar warned that passenger yield was expected to remain subdued, while the cargo market was being hindered by continuing overcapacity and poor economic growth.
To address the situation, Cathay says that it is conducting a critical review of its business, and considering "all options for improving efficiency and productivity," with the aim of improving revenues and reducing costs.
"At the same time, we understand the need to continue to invest in our businesses and to improve continuously the products and services which we provide to our customers," the airline adds.
Source: Cirium Dashboard