Cathay Pacific Group made a loss of 575 million Hong Kong dollars ($74 million) in 2016 due to factors including increased competition and cargo overcapacity.
The loss compared to a profit of HK$6 billion in 2015 with revenue falling 9.4 per cent to HK$92.7 billion with other airlines increasing capacity, reduced economic growth in China and a strong Hong Kong dollar.
Cargo revenue was down 13.2 per cent to HK$20 billion with weak demand on European routes, and some growth in demand on transpacific routes in the second half of the year.
The load factor increased 0.2 percentage points to 64.4 per cent and tonnage was up 3.1 per cent, with the market proving very weak at the start of the year, before recovering in the second quarter with a strong end to the year.
Cathay Pacific launched freighter services to Portland, US and Brisbane Wellcamp in Australia, with freighter capacity managed in line with demand and more cargo being carried in the belly of passenger aircraft.
Cathay Pacific chairman, John Slosar says: “We expect the operating environment in 2017 to remain challenging. Strong competition from other airlines and the adverse effect of the strength of the Hong Kong dollar are expected to continue to put pressure on yield. The cargo market got off to a good start, but overcapacity is expected to persist.”
The airline is working on investing strengthening the brand and reducing costs, and Slosar says: “We are working on operational changes intended to improve the reliability of our schedules. This will reduce the costs of disruption and will also enable us to use our assets more efficiently and to improve our on-time performance.”
Cathay Pacific launched Madrid and London Gatwick services in 2016, and this year will increase Gatwick and Manchester frequencies, along with new flights to Tel Aviv, Barcelona and Christchurch throughout 2017.
It upgraded its fleet in 2016 with 10 Airbus A350-900s and its final Boeing 747-8 Freighter, while three Boeing 747-400s and three Airbus A340-300s were retired, with the final A340s to go this year.