Cathay Pacific Airways Ltd., Asia’s largest international airline by passengers, said its performance in the first half of 2016 was “below expectations” as growth in the number of fliers failed to keep pace with an increase in capacity.
The combined passenger load factor for Cathay Pacific and unit Dragonair fell by 1.7 percentage points to 85.5 percent in the period, the Hong Kong-based carrier said in a statement to the city’s stock exchange. While the capacity increased 4.2 percent, the growth in passenger traffic was 2.7 percent, it said.
The emergence of mainland Chinese carriers and many regional budget airlines are hurting premium operators such as Cathay Pacific and Singapore Airlines Ltd. A rebound in crude oil prices this year may also weigh on earnings. Cathay Pacific reported net income that almost doubled in 2015, aided by a drop in fuel costs.
“The major risk, which is not shown in the figures, is the yield,” said Kelvin Lau, an analyst at Daiwa Capital Markets Hong Kong Ltd. “So far, the comments from the last few months have been consistently talking about pressure on yield, both front- and back-end,” he said, adding the passenger load of 85.5 percent “isn’t too bad.”
Cathay Pacific shares rose almost 2 percent to HK$12.56 on Monday. They have dropped 4.4 percent this year, versus a 0.5 percent decline in the Hang Seng Index.
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