The Cathay Pacific Group posted a net loss of HK$575 million (US$74 million) for 2016, compared to a net profit of HK$6 billion (US$770 million) in 2015, according to annual results released by the company.
This was the airline’s first full-year loss since 2008.
Revenue also fell 9.4% year-on-year to HK$92.8 billion (US$11.9 billion).
In the cargo business, revenue came to HK$20.1 billion, a year-on-year decrease of 13.2%. The carrier transported a total of 1.85 million tonnes of cargo and mail in 2016, 3.1% more than 2015.
Available capacity increased by 0.6% and the average load factor was up by 0.2 percentage points at 64.4%.
“The market was very weak in the first quarter,” said John Slosar, chairman of Cathay Pacific. “Tonnage recovered from the second quarter, becoming seasonally strong in the fourth quarter. Yield fell by 16.3% to HK$1.59 [US$0.20], reflecting strong competition, overcapacity and the suspension of Hong Kong fuel surcharges. Demand on European routes was weak. Demand on trans-Pacific routes grew slightly in the second half of the year. Freighter services to Portland and Brisbane West Wellcamp were introduced. We managed freighter capacity in line with demand and carried a higher proportion of cargo in the bellies of our passenger aircraft.”
Slosar said that the operating environment in 2017 would continue to be challenging.
“We expect to continue to benefit in 2017 from the fact that fuel prices are much lower than their previous high levels, but to a lesser extent (because of some increase in oil prices in recent months) than in 2016,” he said. “We also expect to incur further fuel hedging losses in 2017, but these should be less than in 2016. Our subsidiaries and associates are expected to continue to perform satisfactorily.”
The company will also begin a three-year transformation programme to reduce costs and improve productivity.
“The objective of the Cathay Pacific Group is to provide sustainable growth in shareholder value over the long term,” Slosar said. “We are confident of longer-term success. We celebrated our 70th anniversary in 2016 and our commitment to Hong Kong and its people remains unwavering.”