On Wednesday, Cathay Pacific release its latest full-year report. One which also presented the company’s first full year loss in over 8 years. This last happened back in 2008, during the global financial crisis.
Cathay Pacific is Hong Kong’s flag carrier. The airliner’s main hub is located at the Hong Kong International Airport. It serves around 180 destinations spread across 44 countries worldwide. Through its main operation and subsidiaries, Cathay Pacific delivers both passengers and cargo services. It is also one of the founding members of the Oneworld alliance.
Cathay Pacific Reports Its First Full-Year Loss
On March 15th, the airline released its 2016 full year report. This revealed the company’s first full-year loss since 2008. The company was already expecting weak results for the second half of 2016. As such, it released several warnings on the matter even before the release.
As it is, for the whole year, Cathay Pacific reported a net loss of $74.01 million or HK$575 million. For 2015, the company revealed a $773 million or HK$6 billion profit. Cathay only reported 2 other full year losses. Since it was founded back in 1946, the company faced only 3 such years.
Cathay Pacific Revealed Some Of The Factors Behind Its Full-Year Loss
The company offered several factors as the reason behind this weak result. Cathay claims that it has been hit by “intense competition”. It has also been facing overcapacity and a drop in demand amongst business travelers. Company passenger revenues fell by 8.4 percent. They reached $8.6 billion and were lower when compared to year-on-year records.
Besides the market overcapacity, this area was also hit by weak foreign currencies. This is all according to the air carrier.
The Hong Kong flight market area has been expanding its presence in the international air travel. However, this also mean a higher number of air carriers, especially Chinese low-cost ones. Such airlines and services had quite an impact on Cathay’s market share.
Cathay Pacific is also facing difficulties in its premium and business areas. The demand for such services marked a decrease. Overcapacity and the increase in competition are amongst the reasons behind this. The airline has been trying to reduce the impact by offering promotions. Through these, leisure travelers could buy top tickets at promotional prices.
Cathay Pacific is expecting a similarly “challenging” 2017. For the past year, the company missed market forecasts. Analysts were expecting an average $57.9 million profit. In order to avoid another full year loss, the air carrier will also be making some changes.
“Our organization will become leaner. Our aim is to reduce our unit costs excluding fuel over the next three years.” This is according to John Slosar, the Cathay Pacific chairman.
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