Swire Pacific issues profit warning, says competition a headwind for Cathay Pacific
Swire says Cathay Pacific’s results ‘adversely affected’ by competition for passengers, high fuel costs and hedging miscalculations
Hong Kong-listed conglomerate Swire Pacific issued a profit warning Thursday, its second in 10 years, saying the operating environment of its aviation unit Cathay Pacific Airways remained tough in the second half owing to strong competition.
“Cathay Pacific does not expect the operating environment in the second half of 2017 to improve materially,” it said in a filing to the Hong Kong stock exchange on Thursday.
“In particular, the passenger business will continue to be affected by strong competition from other airlines and the group’s results are expected to be adversely affected by higher fuel prices and Cathay Pacific’s fuel hedging positions,” said Swire, which holds a 45 per cent stake in the airline.
However, it said the outlook for the cargo business is good and robust demand and growth in cargo capacity, yield and load factor are expected in the second half.
The benefits of the transformation are expected to start to be seen in the second half of 2017 and the effects will accelerate in 2018.
At the same time, Swire Pacific said demand for Haeco’s airframe services is expected to decline, owing to seasonal factors and deferral of work by some customers.
Demand for airframe services at Haeco Americas and Haeco Xiamen is expected to decrease, the company said.
Haeco Americas will report a worse-than-expected result and record an estimated impairment charges of HK$625 million (US$80.1 million), the company said in the statement.
Swire Pacific’s share of the impairment would be amounted to HK$469 million.
The conglomerate, whose businesses range from aviation, property, trading and marine services, is scheduled to report its full year result in March, 2018.
Shares of Swire Pacific dropped 0.58 per cent to close tat HK$77.1 before the profit warning announcement.