CATHAY POSTS 1ST LOSS IN 8 YEARS

Com­pe­ti­tion from Chi­nese car­ri­ers dent earn­ings

New Straits Times - - Business -

HONG KONG

CATHAY Pa­cific Air­ways Ltd re­ported its first loss in eight years and scrapped plans for a sec­ond­half div­i­dend af­ter com­pe­ti­tion from Chi­nese air­lines and losses from fuel hedg­ing dented earn­ings.

The stock fell the most in seven months. The net loss to­talled HK$575 mil­lion (RM329.63 mil­lion) last year, while sales dropped 9.4 per cent to HK$92.8 bil­lion, said Cathay, Asia’s largest in­ter­na­tional air­line, in a state­ment yes­ter­day.

Jef­feries Group LLC said the losses could con­tinue in the cur­rent year as well.

Cathay said the op­er­at­ing en­vi­ron­ment this year would re­main chal­leng­ing, and that pre­mium travel from Hong Kong was be­low ex­pec­ta­tions, prompt­ing the air­line to sell such tick­ets at pro­mo­tional prices to leisure trav­ellers.

The car­rier, whose pas­sen­ger yields have been damped by com­pe­ti­tion from full-ser­vice car­ri­ers for busi­ness seats and bud­get air­lines for the mass mar­ket, said it was start­ing a three-year “cor­po­rate trans­for­ma­tion” pro­gramme to im­prove re­turns and op­er­a­tional ef­fi­ciency.

Chief ex­ec­u­tive officer Ivan Chu has seen Cathay’s shares plunge about 25 per cent since his ap­point­ment in March 2014, com­pared with a gain for Hong Kong’s Hang Seng In­dex.

Cathay, whose par­ent is the Swire Group, last posted a loss in 2008, of HK$8.7 bil­lion, ac­cord­ing to data com­piled by Bloomberg.

The car­rier, in which Air China Ltd holds al­most 30 per cent, has been widen­ing its dis­counts to pre­mium of­fer­ings in a bid to fill seats as it com­petes against ri­vals, such as China Eastern Air­lines Corp.

Cathay’s pas­sen­ger yields dropped 9.2 per cent to HK$0.541 last year. Cargo yield de­clined 16 per cent to HK$1.59. Bloomberg

AP PIC

Cathay Pa­cific chair­man John Slosar (right) and chief ex­ec­u­tive officer Ivan Chu at a press con­fer­ence to an­nounce the car­rier’s re­sult in Hong Kong yes­ter­day.

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