Cathay Pacific lowers second-half profit forecast as overcapacity, competition take a toll

Cathay Pacific Airways, Hong Kong’s flagship carrier, says it expects its profit in the second half of 2016 to be worse than its own previous forecast, citing worsening overcapacity and tougher competition since late August.

“Since the interim report was issued [in late August], the outlook for our airlines’ business has deteriorated,” the company said in a filing to Hong Kong’s stock exchange.

“Overcapacity and strong competition is putting particular pressure on our passenger business, with continued shortfalls in revenue compared with forecasts and heavy pressure on yield.

“Against this background, it is no longer expected that the Cathay Pacific group’s results for the second half of 2016 will be better than those of the first half.”

Cathay had said in the interim report that it expected second-half results to be better than those in the first-half, when it reported an 82 per cent year-on-year net profit slump to HK$353 million.

The firm said it is doing a “critical review” of its business, aimed at improving revenues and cutting costs, so as to “maintain a strong financial position and to deliver acceptable financial returns.”