The main culprits have been disastrous fuel hedging bets and redundancy costs alongside aggressive competition from mainland Chinese, Middle Eastern and low-cost carriers.
The last 18 months will be times the big cheeses at Cathay Pacific will want to sweep under the carpet of their 71-year history.
Latest figures tell of Hong Kong’s home carrier’s first-ever back-to-back loss, doubling from 2016’s deficit of US$73 million (HK$573 million) to 2017’s US$160 million (HK$1.25 billion).
The main culprits have been disastrous fuel hedging bets and redundancy costs alongside aggressive competition from mainland Chinese, Middle Eastern and low-cost carriers.
And yet, analysts believe the statistics point to an airline that is en route to future profitability.
While income from passengers may be down (although 2017’s statistics count Cathay Pacific and Cathay Dragon carrying 34.8 million passengers, down only 0.1 per cent year-on-year), Cathay’s cargo business has shown robust earnings, with profits from associate subsidiaries and businesses also bolstering the business.
Meanwhile, the airline is soldiering on through its three-year restructuring programme, which will reportedly bring savings of US$510.1 million (HK$4 billion). And the airline in part attributes the second half of the year’s upturn to this, as well as a growth in premium passengers and a weaker currency.
“We took decisive action through our transformation programme to make our businesses leaner and more agile,” says Cathay Pacific chairman John Slosar.
“Our focus in 2017 was on building the right foundations, structure and strategy to improve revenue and to better contain costs. Evidence of progress became apparent in the second half of the year.”
“The trends of the second half were better than the first half,” he added. “It is always hard to say whether trends will continue but they continued through the first couple of months of this year.”
Chief executive Rupert Hogg insists, “We intend to grow. We’re ambitious.”
Look out for seven new destinations in 2018.