Cathay Pacific (HKG:0293) posted their first annual loss since 2008, amid increased competition among aircarriers.
The airline reported a net loss of HK$575 million ($74m; £60.1m) for the year, down from a HK$6 billion profit the year previously. The company attributed the loss to increased competition as well as too many empty seats on flights. Notably, the loss is only the third time since its founding in 1946, that the company has reported a loss.
Following the results, John Slosar, chairman of Cathay, warned of future challenges amidst “intense and increasing” competition from other Chinese air-carriers. Whilst the company anticipated a boost from lower fuel prices, ultimately it warned of further losses for the upcoming financial year.
In addition, passenger yield figures which is the average fare per mile per passenger- fell by 9.2 percent in 2016, alongside a 16.3 percent fall on yield on cargo services.
In addition, Mr Slosar dismissed speculation that stake-holder, Air China (HKG:0753) was interested in a takeover bid. He commented: “The subject has never come up and I don’t think it ever will,”. Air China currently holds a 29.9 percent stake in Cathay.
This follows January’s announcement that Cathay of several company restructuring in a bid to streamline costs. Whilst it was confirmed that jobs would be at risk, there has been no clarification of how many will be affected.
In a Wednesday statement to the Hong Kong exchange, chairman John Slosar said “Our organisation will become leaner.”
He added: “Our aim is to reduce our unit costs excluding fuel over the next three years.”
In recent years, Cathay has faced increased pressure from expansion from Hong Kong based rivals – Air China, China Southern Airlines as well as smaller carriers such as Hainan Airlines and Xiamen Airlines. Hong Kong’s small population combined with high costs has ultimately led to a challenging climate for the airline.
Shares in Cathay Pacific initially plunged over 7 percent, however they have since rebounded currently down 1.38 percent as of 13.10PM (GMT).