Profits at Cathay Pacific plummeted by 82% in the first half of the year due to “economic fragility and intense competition”.
The Hong Kong-based carrier reported that profits fell to HK$353 million in the first six months of the year from HK$1.92 billion for the same period in 2015.
Revenue was down by 9.3% to HK$45.7 billion year-on-year.
The airline said: “There was sustained pressure on revenues, reflecting suspension of fuel surcharges, weak currencies in some markets, weak premium class demand, particularly on long haul routes, and a higher proportion of passengers transiting through Hong Kong.
“All these factors impacted the group’s operating performance. The contribution from subsidiary and associated companies increased.”
Cathay Pacific chairman, John Slosar, said: “We expect the operating environment in the second half of the year to continue to be impacted by the same adverse factors as in the first half.
“The overall business outlook therefore remains challenging. We expect passenger yield to remain under pressure.
“Overcapacity and economic fragility will dampen cargo demand. Fuel prices have increased this year, but are still lower than in previous periods.
“The benefits from lower fuel prices will continue to be partially offset by losses on our fuel hedging contracts. The fuel surcharge remains suspended.
“In this difficult environment, we will manage capacity and strive to make further improvements in operational efficiency. We will also continue to be vigilant on costs.”
He added: “The strategic objective of the Cathay Pacific Group is to provide sustainable growth in shareholder value over the long term. To that end we will continue to build a modern and fuel-efficient fleet and to strengthen our network and will strive to provide a high standard of customer service.
“We will continue to develop our strategic relationship with Air China. As we celebrate our 70th anniversary, our commitment to the Hong Kong and its people remains unwavering.
“We will continue to make long-term strategic investments to develop and strengthen Hong Kong’s position as Asia’s premier aviation hub.”
The airline is due to open a new first and business class lounge at Heathrow in the third quarter of the year and will start flying from Gatwick next month using new Airbus A350-900XWB aircraft.