Back to black: Cathay expects to end two years of losses

Shares in Cathay Pacific dived 6.5% after the Hong Kong carrier admitted the data of 9.4 million passengers was leaked. (AFP pic)

HONG KONG: Hong Kong flag carrier Cathay Pacific said on Wednesday it is expected to have swung back to profit in 2018, ending two successive losses despite suffering an embarrassing data breach at the end of the year.

The airline said it expects to record a consolidated profit of around US$293 million for 2018, compared with US$160 million losses the year before, according to a preliminary profit alert.

The company’s share price jumped more than 6% after the announcement as investors took comfort in the turnaround after two grim years for Asia’s largest carrier.

“In 2018, the passenger business benefited from capacity growth, a focus on customer service and improved revenue management,” the company said in a statement, adding its cargo sector was also “strong”.

Cathay has been overhauling its business after posting its first losses in eight years in 2016, firing more than 600 workers and paring overseas offices and crew stations as it faced stiff competition from budget rivals on the mainland.

It also added international routes and better services on board its flights in a bid to compete with well-heeled Middle Eastern long-distance carriers.

The profit alert suggests those moves have paid off.

The airline narrowed its losses to US$33.5 million for the first half of 2018 – a tenth of what their losses were for the same period in 2017.

But the second half of the year appears to have brought Cathay squarely back into the black.

Dickie Wong, an analyst with Kingston Securities, said Cathay is expected to further benefit from the end this year of costly fuel-hedging contracts.

“I would say the unfavourable impact to Cathay would continue to reduce,” he told AFP.

Wong said the introduction of a premium economy had attracted new customers while ticket discounts helped it compete against budget carriers.

But he said the company still had “much room to improve in their luxury classes” if it wants to take on Middle Eastern rivals.

Cathay will announce its full-year result next month.

But the year has not been without trouble.

In October, it sparked outrage when it admitted to a massive breach five months after hackers made off with the data of 9.4 million customers, including some passport numbers and credit card details.

And this year its website mistakenly offered first and business class flights for a fraction of their value in two high-profile blunders.