2018年10月21日星期日
 
專家論市
Martin Hennecke

High fuel costs keep Cathay Pacific in red
 
09/08/2018
 
Cathay Pacific (0293) reported a HK$263 million loss For the first half of 2018 and declared an interim dividend of 10 HK cents, after not paying one last year. In 2017, it posted its worst January-June loss in at least 20 years of HK$2.05 billion. Cathay Pacific is "on track" to achieve sustainable long-term performance, chairman John Slosar wrote yesterday in a note to shareholders after saying earnings were dragged down by oil hedging losses and rising prices of jet fuel. "Our airlines usually perform better in the second half of the year," Slosar said. "We expect this to be the case in 2018," he said, adding fuel costs are set to rise while hedging losses will decline. Slosar also said while a stronger US dollar and economic uncertainty arising from mounting global trade tensions remain challenges, the airline expects a better second-half performance, as is usual. The company expects passenger yields to continue to improve and the cargo business to remain strong, he said. Cargo yields rose by 16.3 percent in the first half. Chief customer and commercial officer Paul Loo Kai-pui said a US-China trade spat had not yet hurt business but the airline was keeping an eye on the situation in case trading volumes shifted. Cathay is expected to swing to a HK$1.2 billion profit for 2018, according to the average of 17 analysts polled by Thomson Reuters. Cathay shares ended down 1.8 percent at HK$11.86 yesterday, off its intraday low of HK$11.68 - the weakest since December. The airline is halfway through its turnaround schedule that has been designed to cut costs and increase revenue, after back-to-back years of losses. Cathay has reduced jobs, invested in product improvements such as better business class meals and new Airbus SE A350 jets and is adding more economy seats to older Boeing Co 777s in a bid to boost business. As a result of its measures, Cathay's costs have spiked, chief executive Rupert Hogg said, adding external factors like higher oil prices had also contributed to the expenses. "We are focusing on unit costs," Hogg told reporters. "Ultimately we were targeting to get to a sustainable financial position in 2019 and we are on track for that at the moment." In a sign its efforts are paying off, Cathay's revenue grew 15.7 percent to HK$53.1 billion ($6.76 billion) in the first half ended June, while regional rival Singapore Airlines saw a 0.5 percent drop over April to June. Cathay added 3.2 percent capacity over the six months to June, but in-flight service and passenger expenses rose by 8.8 percent, outpacing a 7.6 percent rise in yields or passenger fares. Fuel costs and airport charges also rose.

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