Cathay Pacific swings to half-year profit on higher revenue, lower fuel costs

[SINGAPORE] Hong Kong's Cathay Pacific Airways Ltd swung to a half-year profit, the first for the January-June period since 2016, as rising passenger revenue and lower fuel costs helped to offset a decline in the air cargo market.

The airline reported an HK$1.35 billion (S$237.4 million) net profit for the six months ended June 30, compared with a HK$263 million loss for the first half of 2018.

Half-year revenue rose 0.9 per cent to HK$53.55 billion at a time when passenger capacity increased by 6.7 per cent.

Cathay said widespread protests in Hong Kong reduced inbound passenger traffic in July and were adversely impacting forward bookings. The carrier cancelled dozens of flights on Monday due to a general strike.

However, Cathay said it normally achieved better financial results in the second half of the year and, despite headwinds and other uncertainties, it expected that to be the case in 2019.

Passenger yields, a measure of the average fare per kilometre flown, fell 0.9 per cent in the first half due to competition in premium classes and long-haul economy class.

Cargo revenue fell 11.4 per cent in a market weakened by the US-China trade war.

Hong Kong is the world's largest air freight hub and Cathay receives a higher proportion of revenue from cargo than peers like Singapore Airlines and Qantas Airways.

The International Air Transport Association in June slashed its 2019 profit forecast for global airlines by 21 per cent, partly due to the impact of the trade war on cargo revenue.

Cathay last month completed the purchase of low-cost airline Hong Kong Express from cash-strapped Chinese conglomerate HNA Group, giving Cathay its first foothold in a rapidly growing budget travel market in Asia.

"We intend to preserve what is unique and special about Hong Kong Express and to keep it as a low-cost carrier, while at the same time broadening its network and maximising synergies with the rest of the Cathay Pacific group," Cathay chairman John Slosar said in a statement.

REUTERS