Cathay Pacific profits plunge amid fierce competition

Hong Kong-based carrier Cathay Pacific has reported an 82% drop in half-year profits amid fierce competition and the economic slowdown in China.

The airline's net profit in the first half of the year dropped to 353m Hong Kong dollars ($45.5m;), down 82% from the same period last year.

Revenue for the six months to 30 June fell 9.2% to HK$45.68bn.

Cathay is facing challenges on many fronts - air fares, competition from other carriers and fuel hedging losses.

The airline attributed the sharp downturn to slower global economic growth dragging down corporate travel and hitting sales of lucrative premium class seats.

"The operating environment in the first half of 2016 was affected by economic fragility and intense competition," chairman John Slosar said in a statement.

"The slowdown in the mainland China economy caused restrictions to be placed on corporate travel. This adversely affected premium class demand, particularly on long-haul routes," the company said in its report.

The company gave a cautious outlook, saying that the same headwinds would remain in the second half of the year.

Mr Slosar said the overall business outlook "remains challenging".

The carrier is among the airlines that did not benefit fully from the drop in oil prices, as the level at which it has hedged is higher than the spot market price.

Cathay Pacific is also facing fierce competition from mainland Chinese and Middle Eastern airlines that are expanding rapidly in the region.

Carriers such as Air China and China Eastern are offering more direct services from the mainland, making it less attractive for passengers to travel via Hong Kong.

There is also competition from Middle Eastern airlines such as Emirates, Etihad and Qatar Airways.