The Cathay Pacific Group posted an operating profit of HK$3.6 billion ($459 million) in 2018, after two years of consecutive losses, as it saw the positive impact from its transformation programme.
The result is a sharp improvement from the HK$1.45 billion loss logged in 2017.
Revenue rose 14.2% to HK$111 billion, boosted by increases in the passenger, cargo and catering businesses. Expenses meanwhile grew 7.9% to HK$107 billion.
Fuel was the most significant cost for the group as prices rose and it flew more, increasing by 31.1% before taking into account fuel hedging. Fuel hedging losses were reduced, however, leading to fuel costs rising 8.9% from 2017.
Attributable net profit came in at HK$2.35 billion, reversing the HK$1.26 billion loss in 2017.
The group had an attributable net profit of HK$2.61 billion in the second half of 2018, compared to a loss of HK$263 million in the first half.
During the year, ASKs grew 3.5% while RPKs climbed 3.1%. Passenger yield improved notably at 6.7%, while load factor slipped 0.3 points.
The cargo business was also strong, with ATKs climbing 3% while RTKs increased 3.6%. Cargo and mail yields shot up 14.7%.
Chairman John Slosar says that capacity in the passenger market resulted in intense competition during the year, especially with airlines from mainland China. This put pressure on yields on key routes, especially in the second half of the year.
The passenger business however benefited from capacity growth, a focus on customer service and improved revenue management. This led to load factors keeping even and yield improving despite competitive pressures.
Slosar says the business environment is expected to remain challenging in 2019, with the forecast strength of the US dollar, and geopolitical discord and global trade tensions likely dampening passenger and cargo demand. Competition will remain especially intense in economy class on long-haul routes.
“We remain confident in the ability of our transformation programme to enable us to deliver sustainable long-term performance," he says.
“We will compete hard by extending our route network to destinations not currently served from Hong Kong, by increasing frequencies on our most popular routes and by operating more fuel-efficient aircraft. We will focus upon, and continue to invest in, customer service and productivity.”