Cathay Pacific Airways is targeting a 30% cut in head office management costs, the airline revealed, two days after posting half a billion dollars in losses. Layers of bureaucracy will be stripped away, taking effect from the summer, as the premium airline commences a three-year transformation plan to revive the business. The axe will fall on middle and senior management in Hong Kong and the head office, though the final number of jobs to go has yet to be finalised, a source familiar with the matter said. Cathay Pacific reports first loss since 2008 as rivals’ cheaper fares erode margins. At present, 19,000 people work within the Cathay Pacific group’s airline businesses based in Hong Kong. Excluding pilots and cabin crew, that leaves 5,300 employees in a variety of head office functions. On Wednesday, Cathay Pacific revealed that a HK$6b profit in 2015 turned into a HK$575m loss in the last financial year. Out of HK$93.2b in costs, staff costs amounted to HK$19.9b. The financial results, the airline said, reflected a number of challenges from intense competition in the form of more direct flights in mainland China, rival carriers increasing the number of seats on competing routes with Cathay, more passengers paying lower fares, and ongoing losses on fuel hedging.<br/>
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CEO Alan Joyce, who is steering Qantas Airways through a successful three-year transformation, has one word of advice for Cathay Pacific Airways: adapt. On Wednesday, Hong Kong’s flagship carrier reported its first annual loss since 2008 as declining demand for business travel and competition from Chinese rivals eroded earnings. While Joyce’s restructuring at Qantas is set to deliver A$2.1b (US$1.6b) in cost savings by the end of June, the marquee Asian airline just recently set out on a similar course, vowing to improve returns and operational efficiency. “It is a lesson to all carriers around the globe to adapt and change,” Joyce said Thursday. “That’s the way you survive.” Joyce has cut thousands of jobs, deferred aircraft, retired older planes, and dropped unprofitable routes while partnering with ex-nemesis Emirates to help stem losses on international routes. Qantas in August announced its first dividend since 2009 and handed bonuses to 25,000 workers following a record annual profit. He has also targeted to save A$400 million annually in cost and revenue benefits. Qantas shares have more than tripled in value in the past three years, while those of Cathay have declined 26% in the same period. “Airlines go through these phases -- we’ve gone through it a couple of times in our history,” Joyce said. “They are going through it now. Cathay have a good management, have got a great brand and a great franchise. Everybody needs to make sure that they allow Cathay to do the right thing and change their business.”<br/>
Regional carrier LATAM Airlines posted a net profit of $69m for all of 2016 on Wednesday, its first yearly profit since the company formed four years ago, helped by improving conditions in key market Brazil. The Chile-based airline, Latin America's largest, posted a $54m profit for Q4. Both figures beat forecasts by analysts surveyed by Reuters, who saw on average a 2016 profit of $23.5m and a Q4 profit of $8.5m. "The good results can be explained principally by Brazil, given the appreciation of the real currency and the reduction of capacity, as well as fleet readjustments," said Gisela Escobar, direct of investor relations. LATAM said it was reducing its 2016-2018 fleet commitment by $2.2b. It maintained its guidance for a 2017 operating margin of between 6 and 8%. Fleet commitments for 2018 will amount to $555m, a reduction of $1b compared with Sept. 16, the airline said. The company forecast that available seat miles, a measure of capacity, would grow 1 to 2% in 2017, a boost over its 2016 guidance of between -1 and 1%. Economic difficulties in Brazil, LATAM's key market, had caused problems for the carrier in recent years. In 2015, the company posted a net loss of $219m, largely thanks to depreciation in that nation's currency.<br/>