Cathay Pacific 1H2015: 'Our commitment is unwavering.' But the market is not returning loyalty

Cathay Pacific remains attached to its premium business model, which in 1H2015 showed some improvements from a low base while profits from subsidiaries and associates - namely an unhedged Air China - greatly helped the bottom line. "We must be doing something right," chairman John Slosar said.

But the going is getting tough. A 12% decrease in fuel net of hedging losses was largely passed on to consumers with a 9% decrease in yields, although there is some impact from foreign exchange. Premium long haul demand remains soft. Cathay's recipe for relying on efficiency improvements could be reaching a ceiling: aircraft utilisation may be tempered to address growing congestion while load factor is at 86%. A350s, and later, 777Xs bring improvements but other gains will be precious. Cathay must rely on incremental improvements to remain ahead of competitors that have better geography and bigger local markets. Restructuring of China's bloated state-owned airlines was once a fantasy but is now coming into focus, a concern for Cathay.