Cathay Pacific is an airline that has been trying to turn themselves around, after a rough 2016 and 2017. In those two years the airline lost significant amounts of money (~73 million USD and ~160 million USD, respectively), despite historically being profitable.
Cathay Pacific’s biggest issue was huge losses related to fuel hedges, though they also faced many of the same challenges as other airlines, but were slow to adopt — this includes too much capacity in some markets, increased competition on some key routes, a fleet that’s not very efficiently configured, and a high cost structure in many areas.
In 2017 Cathay Pacific appointed a new CEO, Rupert Hogg, and under his leadership the airline has been making some necessary changes that are starting to pay off. This has included cutting some routes, reducing the workforce in some areas, and also densifying their 777s, by adding an extra seat per row in economy.
Cathay Pacific has reported impressive results for 2018, and is once again making money. It has been announced today that a preliminary review of the unaudited consolidated management accounts of Cathay Pacific show profits for 2018 to be 2.3 billion HKD (~293 million USD).
Going from a loss of ~160 million USD to a profit of ~293 million USD the next year is quite a turnaround. Notably Cathay Pacific’s results also significantly beat what investors were expecting, as most were only expecting the airline to report a profit about half that much.
Cathay Pacific attributes the positive 2018 performance to capacity growth, a focus on customer service, and improved revenue management. They note that their yields increased year over year, while load factors remained steady, in spite of increased competition.
It’s expected that Cathay Pacific will publish their full 2018 results in March, as this is just a preliminary review.
Bottom line
It’s good to see Cathay Pacific making money again, though this was expected by most. Their previous losses stemmed largely from bad fuel hedging, though there were still some areas they could optimize otherwise, and they’ve done a good job with that.
I just hope they don’t get too many more cost cutting ideas!
Glad to see you focus on the fuel hedging, which the local paper (SCMP) misses. I bet when the results come out almost all the improvement will be due to end of the massive hedging losses they reported several years ago. Operationally they have gotten worse, not better.
The CFO is Scottish, knows how to keep things in line! (us Scots are known for being 'tightwads' ie we dislike spending money, which is kind of true)
Concentrating on "customer service" ? - their coach product is the worst of any North Asian carrier.
Also the same goes for their Premium Economy it is very weak compared to JAL , ANA , CAL , Qantas or Air New Zealand.
Tom
U Lock in the price per gal in the future So u Know what the costs will be .IF they go up over ur price u Saved money BUT if they go down u LOSE Big Time .
Southwest was very good @ this.
CHEERs
Maybe they can start renovations on the ICN Airport Lounge now!
@DougParker - here are some ideas for you to reach your goals: "Cathay Pacific attributes the positive 2018 performance to capacity growth, a focus on customer service, and improved revenue management. "
Now if they could get a decent gate out of LAX to Hong Kong
I stopped flying them when we had to take a bus and walk a mile to get to the gate
It was incredibly pathetic as a First Class PAX
"In those two years the airline lost significant amounts of money (~73 million USD and ~160 million USD, respectively"
Are they significant amounts?? Even combined, they're chump change compared to Etihad, the Indian airlines or Turkish Airlines..
@Debit, I was expecting more from you... slow morning...?
@JIIKDL
Shenzhen Airlines route to LHR has only been performing better than expectation due to below market pricing. Economy fares to S.E Asia are frequently below £300GBP return inc taxes with Business Class pricing below £1600. For the price sensitive this would drive market share to towards them.
I cant comment on them being the best airline in China having not flown them, but in terms of overall offering vs Cathay Pacific, they would have a long way to go
Great to hear one of my favorite airlines is doing better.
But what is fuel hedging though?
I'm not very familiar with that term.
you need to inspect how much % profit is from Air China interlocking shareholding. Air China apparently is more successful, not only more profitable but also has the best airline in China -
Shenzhen Airlines.
Shenzhen Airlines’s new SZX - LHR route is way above expectation. If Shenzhen Airlines continue to expand internationally, it will threat Cathay Pacific.