Cathay Pacific looks past 1H2017 loss – 'We are on the right track' – but market proposes detours

Cathay Pacific has reported a 1H2017 loss and faces its first ever consecutive annual loss. Chairman John Slosar sees this period as a difficult, but necessary, transition to a stronger future, remarking: "We are on the right track".

Unfortunately, Mr Slosar's late board meeting on 16-Aug-2017 postponed results by 4.5 hours. This implied late concerns, creating uncertainty for the public and Cathay's people at a time when management needs to instil confidence that the unpleasant parts of its restructuring are over, and forthcoming change is a progression for the better, and for all.

Distractions multiply as the market proposes strategic detours - LCCs, Air China JV, Air China ownership, new management - bringing solutions that won't work for problems that don't significantly exist. There should be more public breathing room now that the worst appears over. But the big question remains of how much better it will get. 2H2017 should be stronger as passenger yields gain traction, adding to a surprising rebound in cargo.

There is an internal countdown to 2019, when Cathay's fuel hedging losses subside. Looking past the great challenge of hedging losses is evidence Mr Slosar has some cause to be optimistic, but the hard yards are to come.