Trimmer Cathay Pacific Set To Fly Out Of The Red

Hong Kong flag carrier Cathay Pacific said on Wednesday it expects to have swung back into profit in 2018, ending two successive losses as it embarks on a massive overhaul.

The airline said it expects to record a consolidated profit of around HK$2.3 billion for last year, compared with a HK$1.3 billion loss the year before, according to a preliminary profit alert.

The company's share price jumped more than 7 percent after the announcement as investors took comfort in the turnaround after two grim years for Asia's largest carrier.

"In 2018, the passenger business benefited from capacity growth, a focus on customer service and improved revenue management," the company said in a statement, adding its cargo sector was also "strong".

Cathay has been overhauling its business after posting its first losses in eight years in 2016, firing more than 600 workers and paring overseas offices and crew stations as it faced stiff competition from budget rivals on the mainland.

Dickie Wong, an analyst with Kingston Securities, said Cathay is expected to further benefit from the end this year of costly fuel-hedging contracts.

"I would say the unfavourable impact to Cathay would continue to reduce," he said.

Wong said the introduction of premium economy had attracted new customers while ticket discounts helped it compete against budget carriers. But he said the company still had "much room to improve in their luxury classes" if it wants to take on Middle Eastern rivals.

Cathay will announce its full-year result next month. (AFP)