World

Cathay Pacific reports profits after 2 years of losses

HONG KONG Cathay Pacific Airways reported a HK$2.35 billion (S$406 million) annual profit after two years of losses, as it benefited from rising airfares and a turnaround plan designed to lower costs and boost revenues.

The airline, however, said the outlook for this year was expected to remain challenging due to geopolitical discord and global trade tensions dampening passenger and cargo demand and intense competition, particularly on long-haul routes in economy class.

The result for the year ended Dec 31, aided also by out-of-the-money fuel hedges rolling off, was in line with Cathay's guidance for HK$2.3 billion profit issued on Feb 20.

Its projection was more than double analyst estimates at the time and sent shares soaring 9 per cent on the day. The airline lost HK$1.25 billion in 2017.

Cathay reported HK$111 billion in revenue last year, up 14.2 per cent from the prior year, driven by its passenger and cargo businesses.

Since launching its revamp programme in 2017, Cathay's initiatives have included cutting jobs at its head office and overseas ports, adding more economy class seats to older Boeing 777 jets and hedging fuel for shorter periods.

It has hedged around 30 per cent of its fuel for this year at prices of between US$62 (S$84) and US$70 a barrel.

Global crude prices are at around US$67 a barrel.

The carrier, which lacks a budget arm, said it was in "active discussions" about acquiring troubled Chinese conglomerate HNA's Hong Kong Express Airways, although an agreement has yet to be reached. - REUTERS

BUSINESS & FINANCE