Cathay Pacific Airways has made its second annual loss in a row due to factors including overcapacity and high fuel costs.

Following a loss of 575 million Hong Kong dollars ($73 million) in 2016, Cathay Pacific made a loss of HK$1.2 billion in 2017, with the second half profit of HK$792 million not being able to make up for the loss of HK$2 billion in the first half of the year.

The cargo division performed better than the passenger sector, with Cathay Pacific chairman, John Slosar saying: “The outlook for our cargo business is positive and we will take best advantage of opportunities in the growing global cargo market. Increased fuel costs are increasing operating costs and adversely affecting results. Fuel hedging losses are declining.”

Cargo benefitted from robust demand in 2017 with revenue increasing by 19.1 per cent to HK$23.9 billion.

Capacity increased by 3.6 per cent and load factors were up 3.4 percentage points to 67.8 per cent as tonnage carried rose 10.9 per cent.

Yield rose by 11.3 per cent to HK$1.77 benefitting from the resumption of the collection of fuel surcharges in Hong Kong and from strong demand.

The freighter fleet was upgraded during the year with two Boeing 747-400BCFs being retired and Cathay Pacific wet-leasing two Boeing 747-8Fs to increase cargo capacity.

In November, Air Hong Kong agreed to enter into sale and leaseback transitions with DHL International for eight Airbus A300-600Fs and associated equipment, with five transactions being completed in 2017.

Cathay Pacific entered into an agreement with DHL International for Cathay Pacific to acquire DHL’s 40 per cent shareholding in Air Hong Kong to make it a wholly owned subsidiary of Cathay Pacific.

Air Hong Kong will continue to operate a freighter network to destinations in Asia for DHL International under a block space agreement between Air Hong Kong and DHL International for an initial term of 15 years from 1 January 2019.