Cathay Pacific Airways, Asia’s largest international airline, saw its net loss more than double to HK$1.25 billion (US$160 million) in 2017 – the carrier’s first back-to-back loss in its 71-year history – as it restructures to turn around the business, the company announced on Wednesday.
Robust earnings from Cathay Pacific’s cargo unit and a much larger contribution of profits from subsidiaries and associate businesses helped offset the steepest losses in nine years as bad fuel hedging bets, one-off fines and redundancy costs dragged down results.
The huge shortfall highlights the specific challenges for traditional full-service carriers, with the airline having recorded a HK$575 million loss in 2016. Cathay Pacific in 2008 lost HK$8.5 billion during the height of the global financial crisis.
Hong Kong’s biggest airline has cut 600 jobs so far as it overhauls its business in response to stiff competition, particularly as vigorous expansion from mainland Chinese and Middle East airlines and low-cost carriers erode market share.
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The airline is also among the few marquee Asia-Pacific carriers not to operate a budget airline, which has hampered its efforts to compete more effectively.
Cathay shares were down 12 HK cents, or 0.87 per cent, to HK$13.66 while the benchmark Hang Seng Index had lost 395 points, or 1.25 per cent, to 31,206.