No thanks to "intense and increasing competition".
The Cathay Pacific Group reported an attributable loss of HK$575 million for 2016. This compares to a profit of HK$6,000 million in 2015.
Company release said that the loss per share was HK14.6 cents compared to earnings per share of HK152.5 cents in the previous year.
The operating environment for the Group’s core airline business was difficult in 2016, with a number of factors adversely affecting their performance. Intense and increasing competition with other airlines was the most important.
Other airlines significantly increased capacity. There were more direct flights between Mainland China and international destinations.
Competition from low cost carriers increased. Overcapacity in the market was a particular competitive problem for our cargo business.
Three economic factors were also important, the reduced rate of economic growth in Mainland China, a reduction in the number of visitors to Hong Kong and the strength of the Hong Kong dollar.
Hong Kong dollar strength made Hong Kong an expensive destination and caused revenues earned in other currencies to be reduced on conversion into Hong Kong dollars. All these factors put severe competitive pressure on yields.
The Group benefited from low fuel prices, but the benefit was reduced by fuel hedging losses, largely incurred on hedges put in place when the fuel price was much higher than today.
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