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Cathay Pacific feels China's pain

Wednesday, August 17, 2016 - 01:14

Hong Kong airline Cathay Pacific Airways's first-half net profit has tumbled 82 percent sending shares down almost 8 percent. As Hayley Platt reports, slower Chinese economic growth and falling consumer demand for premium class seats on long-haul routes is partly to blame.

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If more proof was needed of the slowdown in China - then Cathay Pacific is it. Half year profit at the Hong Kong based airline has tumbled 82 percent. And it's partly down to less demand from mainland China for premium class seats on long-haul routes. Economic fragility elsewhere has also curbed corporate travel - and that too can be linked to China. (SOUNDBITE) (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING: "They are trying to rebalance the economy, that does mean lower growth in the order of 4/5/6 percent. Sometimes I think they tend to be over estimated, but I think the rebalancing of the economy away from investment, away from credit growth, more onto consumption requires a lot more work." Cathay's shares tumbled on the results. It's now stopped hiring and replacing non-critical staff as it sees no change in the next half of the year. It's a far cry from last year's 90 percent profit surge as low oil prices helped reduce fuel costs. They're now higher and Cathay has foreign currency challenges and increased airport fees to deal with too.

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Cathay Pacific feels China's pain

Wednesday, August 17, 2016 - 01:14