HONG KONG: Hong Kong flag carrier Cathay Pacific on Wednesday reported a massive net loss of HK$2.05 billion ($262.07 million) for the first half of the year as the airline struggled with intense competition from rivals. The results, which were worse than analysts predicted, came after Cathay saw its first annual loss in eight years in 2016, as lower cost Chinese carriers eat into its market share. Wednesday’s results pave the way for the first ever back-to-back annual losses in the company’s 70-year history. Bloomberg analysts had forecast a year-on-year loss of HK$1.2 billion ($153 million) for the first half of 2017. Chairman John Slosar described the results as “disappointing” to reporters and said competition was the most significant factor. Companies like China Eastern and China Southern Airlines are offering direct services to Europe and the United States from the mainland, while budget carriers like Spring Airlines have targeted regional travellers, undermining Cathay’s position. The airline is also losing premium travellers as it comes under pressure from Middle East rivals which are expanding into Asia and offering more luxury touches. That has led to promotional prices for Cathay’s top tickets as they are sold to leisure travellers. The airline said passenger revenue decreased by almost four percent, with passenger yield — the average amount paid per passenger per mile — dropping 5.2 percent. “Demand for air travel continues to grow, which is good, but capacity growth has outstripped demand growth in many of the key markets that we serve,” Slosar told reporters. Higher fuel prices, including the cost of hedging, a strong Hong Kong dollar and rising aircraft maintenance costs also weighed on Cathay, Slosar said, as did fines from the European Commission over the airline’s cargo surcharges. Fuel was the biggest cost, up 12.7 percent year on year from HK$13.26 billion to HK$14.94 billion, Cathay said in a statement to the Hong Kong exchange. That reflected a rise in fuel costs and consumption, even though hedging losses had been reduced, it said. Oil hedging is when an airline locks in prices of fuel at a pre-determined level for a certain amount of time. Published in Daily Times, August 17th 2017.