Cathay posts first-half loss, full-year outlook unclear

Cathay Pacific Airways posted a first-half loss of HK$935 million (US$121 million) for 2012. Chief executive John Slosar, who had in May warned investors of disappointing results, blamed it on the “triple whammy” of soaring fuel prices, weak cargo demand and pressure on passenger yield.

But what’s really new in a landscape of common woes for most airlines? Cathay’s closest rival, Singapore Airlines (SIA), is similarly afflicted. And as they all go into overdrive to implement cost-saving measures, it becomes so easy to lose sight of their individual strengths that give them their competitive edge.

Expectedly, Mr Slosar would capitalise on the 2012 Skytrax award that Cathay won for World’s Best Business Class – an award that for many years has been exclusive to SIA. Middle-east airlines such as Qatar Airways and Emirates Airlines have also increasingly garnered praise for their premium brand. It is understood that Cathay’s new regional business class will be equipped with flat beds by Oct this year.

Like SIA, Cathay is expanding its network in the region. This has boosted Dragonair’s operations; the regional carrier added eight new destinations this year, with more in the pipeline. Meantime, SIA inaugurated services of its new budget arm Scoot to Australia and announced that its regional subsidiary, SilkAir, has placed a record aircraft order of 68 jets, to the tune of S$6.1 billion (US$4.9 billion) for 54 firm orders. Ironically, parent airlines are hitching a ride on their subsidiaries.

Mr Slosar maintained that “the outlook for the rest of the year is still unclear, and short-term uncertainties and challenges certainly remain.” The real challenge lies in how Cathay can continue to brandish its brand in spite of the sluggish global economy and not become just another one of the undifferentiated airlines.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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