Cathay Pacific abandons forecast, conducts ‘critical review’

Cathay Pacific, Asia’s biggest international carrier, scrapped its profit outlook and said the airline is doing a "critical review" of its business amid a deteriorating outlook. The airline’s result in the second half of the year "is no longer expected" to be better than that of the first half, Hong Kong-based Cathay Pacific said in a statement Wednesday. In August, the carrier reported an 82% drop in net income in the first six months of the year and warned that premium travel was declining. CEO Ivan Chu has struggled to revive profits at Cathay Pacific amid a slump in passenger yields -- a key measure of profitability in the industry. Singapore Airlines has also warned of tougher days as competition with Middle East carriers increases. With Chinese airlines offering more direct services to the US and Europe from the mainland, Cathay Pacific’s Hong Kong hub is no longer so critical for travellers. “Any targets, any projections they had have been thrown into the wind,” said Mohshin Aziz, an analyst at Malayan Banking in Kuala Lumpur. “They will have to relook at their network. They should put their arsenal on where it still works for them.” Cathay and its unit Dragonair carried 1.8% more passengers in the first eight months of this year, taking the number to 23.3m. Yields dropped 10% in the first half amid increased competition. "We are engaged in a critical review of our business, the goal of which is to improve revenues and to reduce costs," Cathay Pacific said. "The review will consider all options for improving efficiency and productivity."<br/>