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Bloomberg
Cathay Pacific Airways Ltd. forecast an end to a record two-year run of losses after job cuts and better service offerings in an overhaul kicked off by Asia’s biggest international carrier start to yield results.
The Hong Kong-based airline expects to announce next month a profit for 2018, helped in part by a strong cargo business and growth from additional routes and seats. Cathay Pacific fired at least 600 workers and pared back some of its overseas operations after losses from fuel hedging plunged the company into losses.
Chief Executive Officer Rupert Hogg, who assumed the top post about two years ago, has been seeking to revive earnings in the face of massive expansion by Chinese carriers that reduced their need to fly to Cathay Pacific’s Hong Kong base for long-distance travel.
A drop in global oil prices and scaling back by rival airlines have helped the cause of Cathay Pacific and Singapore Air, whose profit in the fiscal year ended in March 2018 more than doubled.
Cathay Pacific’s shares jumped as much as 8.8 percent in Hong Kong, their biggest intraday gain in more than seven years. The stock has declined in three of the past four years.
“Its overhaul is delivering,†Rahul Kapoor and Chris Muckensturm wrote after Cathay Pacific’s announcement. “Cathay Pacific’s earnings recovery should accelerate as it benefits from continued improvement in its core passenger business.â€
Cathay Pacific forecast a profit of HK$2.3 billion ($293 million) for 2018, compared with an estimate of HK$934 million by analysts.
Cathay Pacific is in final year of its transformation program that is seeking to reduce HK$4 billion in expenses. CEO Hogg has added more international routes and lured customers with better service offerings, such as improved in-flight me- als for premium passengers. He’s been adding extra econo-my seats in 777-300 family aircraft to squeeze more revenue.
“The company’s transformation program has had a positive impact,†Cathay Pacific said in the filing.