Between a rock and a hard place

It is one of Asia’s iconic airlines but Hong Kong’s Cathay Pacific Airways has hit
turbulence. Expected to post losses for its latest financial year, the carrier has
announced its biggest re-engineering exercise in two decades in the face of
woeful yields and mounting competition from Middle East and Chinese rivals.

It has been common knowledge in airline industry circles for some time. Cathay Pacific Airways is facing severe headwinds when it comes to profitability. Net profit in its first half to June 30 last year took a battering, down to just US$45.5 million, an 82 per cent plunge from the same period a year earlier. And its revenues were down 9.2 per cent to $5.9 billion.

It looks like things will get worse. Come March, when the carrier releases its full year result to December 31, 2016, analysts expect Chairman John Slosser and chief executive Ivan Chu will be reporting its first full-year loss since 2008 and only the third in its 70-year history.