Cathay Pacific said that while a strong cargo business and weak US dollar had been supportive, its results had been dragged by increased fuel costs

Hong Kong (AFP) - Hong Kong flag carrier Cathay Pacific said on Wednesday its losses had narrowed in the first six months of the year but warned global economic uncertainty would pose a challenge as the firm battles to revive its fortunes.

The firm posted a net loss of HK$263 million ($33.5 million), compared with a HK$2 billion loss for the same period in 2017.

But it still missed a median estimate for a profit of HK$140 million in a Bloomberg News survey of five analysts.

Cathay said although its results had been boosted by a strong cargo business and a weak US dollar they had been dragged by increased fuel prices.

Fuel is the group’s most significant outlay, accounting for 30.1 percent of total operating costs.

Fuel costs including hedging losses in the first half of 2018 stood at HK$16 billion, compared with HK$14.9 billion in the same period in 2017.

Chairman John Slosar predicted the airline’s performance would improve in the second half of the year.

“The strength of the US dollar and economic uncertainty arising from global trade concerns remain challenges,” he said in a statement.

“But we still expect passenger yields to continue to improve and the cargo business to remain strong.”

There was no specific reference to the possibility of further job cuts or restructuring, but Slosar’s statement said the company’s “transformation programme” would continue.

It comes after Hong Kong’s South China Morning Post reported last month there would be a “consolidation” of Cathay’s overseas operations, citing a source familiar with the matter.

The airline has come under pressure from lower-cost Chinese carriers and Middle East rivals, which are expanding into Asia and offering more luxury touches.

It booked its first back-to-back annual loss in its seven-decade history in March.