An excess of capacity, slumping business travel demand and intense competition with rival airlines have led to Cathay Pacific Airways seeing its first full-year loss since the 2008 global financial crisis.
The airline reported an attributable loss of HK$575 million (US$74 million) for 2016, down from the HK$6 billion profit in 2015.
Passenger revenue decreased 8.4 per cent from 2015 to HK$66,926 million in 2016. Capacity grew 2.4 per cent on the back of new routes and increased frequencies, but the load factor dropped 1.2 percentage points to 84.5 per cent while yield fell 9.2 per cent to HK54.1 cents.
Fuel is still the group’s most significant cost, accounting for 29.6 per cent of total operating costs in 2016, compared with 34 per cent in 2015. After taking hedging losses into account, the fuel costs decreased by HK$5 billion (or 15.2 per cent) from 2015.
In response to weak revenues, Cathay Pacific will embark on "a three-year programme of corporate transformation" to seek profitability, announced Cathay Pacific’s chairman, John Slosar, in a press statement.
The airline chief also expects the operating environment in 2017 to remain "challenging" as strong competition and a strong Hong Kong dollar will continue to put pressure on yield.