Cathay Pacific Airways is back in the black after achieving a group attributable profit of HKD1.3 billion ($166.4 million) for the first six months of 2019, reversing a HKD263 million loss over the same period in 2018.

According to the Hong Kong-based company, the improved earnings were a result of reduced fuel costs and other expenses, and a 5.6% year-over-year (YOY) improvement in passenger revenue of HKD37.4 billion as a result of introducing new routes and strengthening popular destinations. 

Cathay Pacific chairman John Slosar said the company is in the last year of its three-year transformation and is “moving in the right direction.”

Group revenue was up 0.9% YOY to HKD53.5 billion. Expenses dropped 1.7% YOY to HKD52.5 billion, with fuel costs down 7.7% to HKD14.8 billion, thanks to lower prices and more fuel-efficient aircraft.

In the first six months, the oneworld member took delivery of four Airbus A350-1000s and will receive two A350-900s and two Boeing 777-300ERs by year-end. 

Notable expenses include a data security costs of HKD20 million (following the data breach in October 2018 that affected 9.4 million passengers) and costs of HKD39 million associated with the acquisition of Hong Kong Express.

Although Cathay carried 4.4% more passengers in the 2019 1H and passenger revenue was up 5.6% YOY to HKD37.4 billion, yield fell by 0.9% amid strong competition in premium and long-haul economy class, and adverse foreign currency movements.

Slosar is still optimistic the airline will achieve better results in the second half, despite “headwinds and other uncertainty,” such as the civil unrest in Hong Kong that saw an immediate impact on July bookings, along with geopolitical and trade tensions. 

He said the US-China trade dispute has partially impacted its cargo segment. The group’s cargo revenue was down 11.4% YOY, and yield and load factors were down 2.6% and 4.9 points, respectively, against a 6.7% increase in capacity.

Cargo growth to Southeast Asia is strong, and an expanded joint agreement with Lufthansa Cargo will start eastbound traffic from Europe to Hong Kong.

In addition, Cathay added passenger frequencies to Madrid (5X- to 7X-weekly), Paris (12X- to 14X-weekly) and Frankfurt (7X- to 10X-weekly); volume grew on par with capacity growth.

Chen Chuanren, chuanren@purplelightvisuals.com