Kowloon Motor Bus warns it may have to apply for another fare hike soon if the government fails to offer solutions to help the city's largest bus operator cut its losses amid rising fuel prices.
Transport International, the parent of KMB, said KMB incurred an operating loss of HK$17.8 million last year - a sharp contrast to earnings of HK$295.5 million in 2010.
But after accounting for the gains it made from its staff retirement funds, KMB actually generated a net profit of HK$51.4 million last year, although that is still 87.5 per cent lower than its profit in 2010.
Chung Sze-yuen, Transport International's outgoing chairman and a non-executive KMB director, said in the annual report that it would be hard for the bus operator to maintain its high service standards unless the government explored ways other than the usual cut-back of routes to help the firm counter the rising cost pressures.
Otherwise, 'we have little choice but to apply for fare adjustments', Chung said.
Last year, the government approved a 3.6 per cent fare rise on KMB's 394 routes, but the firm said the extra HK$200 million yearly income was insufficient to offset the increase in fuel and salary expenses.
Fuel costs rose HK$374.7 million last year, while wages increased by HK$140 million.
But not withstanding KMB's financial woes, Transport International actually posted a net profit of HK$242.4 million last year. That is even though its fast-growing RoadShow subsidiary recorded losses due to an impairment loss of HK$109.6 million.
While the parent firm's net profit dived 72 per cent from 2010, that was partly because more than half of the HK$866.9 million in 2010 earnings were due to an exceptional gain from selling its interests in a Kwun Tong industrial site.