Across The Border | Air China feeling the effects of Cathay Pacific’s travails
National carrier’s net profit drops 39.8pc to 1.5 billion yuan in the first quarter, which was in part blamed on its investment losses of 141.6 million yuan, the majority of which was from Cathay, of which it owns 29.99 per cent.
The financial turbulence being felt by Hong Kong’s Cathay Pacific Airways has filtered into Air China, which has come in with losses of its own way below market consensus for early 2017.
The national carrier’s net profit dropped 39.8 per cent to 1.5 billion yuan (US$72.8 million) in the first quarter,which was in part blamed on its investment losses of 141.6 million yuan, the majority of which was from Cathay, of which it owns 29.99 per cent.
Cathay itself expectedly swung into loss of HK$575 million (US$73.8 million) in 2016 and has projected just as turbulent times ahead this year.
Cathay Pacific and Cathay Dragon carried a combined 2,851,661 passengers in March, 3.7 per cent fewer than March last year.
“We consider the result a slight miss on our expectations mainly due to losses at Cathay Pacific,” said Vincent Ha, an analyst at Deutsche Bank who maintains his “Hold” rating on Air China’s Hong Kong shares, but has a “Sell” rating on its A-shares, given their significant valuation premium over the H-shares.
