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Battling Cathay ‘disappointing’ and still under pressure

July 20, 2017 Headline News No Comments Email Email

Cathay Pacific’s operating environment remained challenging in the first half of the year and the performance of Cathay Pacific and Cathay Dragon “continued to be disappointing” chief executive Rupert Hogg has admitted.

Hogg’s words seem to have dashed hopes of an early recovery for the airline that’s cutting back staff after its first annual loss in eight years.

Hogg said: “When we announced our results for 2016 in March, we said that we expected the operating environment in 2017 to remain challenging. This has been the case. Our airlines’ performance in the first half of 2017 continued to be disappointing. In particular, strong competition from other airlines put intense and increasing pressure on passenger yield and revenue.”

Cathay Pacific’s general manager revenue management, Navin Chellaram, added that passenger yield remained “under pressure in the face of strong competition.

“The overall load factor remains high, with front-end traffic showing a pick-up, although the back-end, particularly on short-haul routes, has been sluggish. The launch of our new seasonal service to Barcelona in July has been well received, which is a positive sign as we enter the summer peak. Meanwhile, the new codeshare arrangements we have in place with Shenzhen Airlines and MIAT Mongolian Airlines will help us grow our regional network and provide our customers with enhanced connectivity.”

Cathay Pacific shares have rallied 23% this year, as the carrier launched a three-year transformational program involving the axing of 600 jobs – the company’s most drastic revamp in 20 years.

Meanwhile, combined Cathay Pacific and Cathay Dragon traffic figures for June 2017 show a decline in the number of passengers carried and an increase in cargo and mail uplifted compared to the same month in 2016.

Cathay Pacific and Cathay Dragon carried a total of 2.8 million passengers last month – a decrease of 2.1% compared to June 2016. Passenger load factor dropped 0.4 percentage points to 85.1%, while capacity, measured in available seat kilometres (ASKs), increased by 1.6%. In the first six months of 2017, the number of passenger carried declined by 0.5% while capacity rose by 1.1%.

The two airlines carried 170,476 tonnes of cargo and mail last month, an increase of 12.8% compared to the same month last year.

Written by Peter Needham

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