Cathay Pacific shrinks into profitability as it looks to stay the course amidst choppy waters

Cathay Pacific has been rewarded for its move to decrease capacity for the first time since 2009 as a 4.8% cut in ASKs in 1H2013 has led its Cathay Pacific and Dragonair brands to reverse their operating loss from a year prior and collectively post a modest pre-tax profit of HKD452 million (USD58 million). This is less than half the group's 1H2013 operating profit of HKD1035 million (USD133 million), which includes the profit from third-party catering and other divisions. The group's operating margin was 2.1%, indicating a fundamental weakness remains in the business - although it is performing better than struggling Singapore Airlines.

Yet conservative Cathay is once again offering no new strategy. It is looking to stay the course of being a premium airline with few strategic partners and is banking on a rebound to the corporate and freight markets. But even once those markets rebound, Cathay does not enjoy the entitlement to the traffic it once had. Competition on price and convenience is increasing in almost every region and competitors in once inertia-filled Asia are finally waking up and becoming smarter.