Cathay Pacific: depressed results but there may be rays of hope. Time to regain the initiative
Cathay Pacific on 16-Aug-2017 reports financial results for 1H2017. These results follow from 2016 when Cathay for the first time since 2008 posted a group loss and became a whipping post: Bloomberg referred to "a horror story when it comes to Cathay". The South China Morning Post described "a flawed business model in a changing world".
No reprieve is expected in 1H2017, when Cathay embarked on a restructuring programme, which as is typical has a ramp-up period but front-loaded transformation costs. Fuel hedges are winding down but losses will still be pronounced. Cargo is the bright spot with an unexpected boost in yields. Passenger over-capacity persists in all key markets, and exacerbated especially in Europe and from Cathay's A350 deliveries. Declining passenger yields are closely watched and now may be re-balanced with less aggressive load factors.
There is considerable work ahead for Cathay. Yet any "horror story" would have been magnified by uncertainty. This may be fading with a change in practices and management. Cathay will now seek vindication of its premium hub strategy, geography and brand. While lack of detail will invite criticism, Cathay's future is in focus.
Become a CAPA Member to access Analysis Reports
Our Analysis Reports are only available to CAPA Members. CAPA Membership provides exclusive access to in-depth insights on the latest developments in the aviation and travel industry, developed by our team of dedicated analysts located in Europe, North America, Asia and Australia.
Each report offers a fresh perspective on the latest industry trends and is available online or via the CAPA mobile app, with customisable alerts to help you stay informed and identify new business opportunities.
CAPA Membership also provides access to our full suite of tools, including a tailored selection of more than 1,000 News Briefs every week and comprehensive data and analysis on thousands of companies around the world.