Hong Kong flag carrier Cathay Pacific is reportedly preparing for a business overhaul that could include job cuts, cost savings and shifting flights to its short-haul unit Cathay Dragon.
Details of a major business review and a plan to stand up to increasing competition from Chinese and Gulf airlines as well as low-cost carriers will be revealed Jan. 18, according to a Reuters report.
Cathay cancelled its second-half profit forecast in October and said it was reviewing its business. The oneworld carrier saw a sharp profit decline in the first half of 2016 with net profit dropping to HK$353 million ($45 million) for the six months through June 30, compared to a profit of almost HK$2 billion for the same period a year earlier.
Passenger revenue was down 7.8% to HK$33.4 billion for the half year. “Higher competition, weaker currencies in some markets, and soft premium demand on long-haul routes” were cited as the main causes of “sustained pressure on revenue.”
With massive growth in outbound travel by Chinese travelers, Chinese mainland carriers have accelerated their international expansion pace in recent years while the major Gulf carriers have also aggressively expanded their China-Europe routes, China-Africa routes and Kangaroo routes that have been Cathay.
Local low-cost carrier Hong Kong Airlines has also expanded operations and has mapped out long-haul intercontinental ambitions.