The Cathay Pacific Group's 2017 operating loss ballooned to HK$1.45 billion ($185 million), as overcapacity and intense competition continued to put pressure on yields.
The poor operating result is nearly triple the HK$525 million loss from a year ago.
Revenue rose 4.9% to HK$97.3 billion during the 12 months, boosted by robust cargo demand despite passenger revenue falling 0.8%. Passenger capacity rose 2.8% during the year reflecting the introduction of new routes and increased frequencies. Yield, however, fell 3.3% to HK52.3 cents as load factor slipped 0.1 point to 84.4%.
Operating expenses jumped 6.7% to HK$99.6 billion with increases across the board. Fuel costs, which rose 11.3% after taking hedging losses into account, remains the group’s most significant cost.
Attributable net loss meanwhile swelled to HK$1.26 billion, its largest in nine years, from HK$575 million a year ago.
Several one-off factors impacted its results, including a HK$244 million gain on the deemed partial disposal following Air China’s issue of A shares resulting in the dilution of Cathay’s stake. Cathay also disposed of its interest in TravelSky Technology for a profit of HK$586 million.
The group had an attributed profit of HK$792 million in the second half of 2017, improving from the HK$2.05 billion loss in the first half.
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 US dollar and improved premium class demand.
“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.
“We also look to benefit from a slowing of the decline in passenger yields as global economic conditions improve. The outlook for our cargo business is positive and we will take best advantage of opportunities in the growing global cargo market.”