It was the year that French designer Louis Reard launched the “bikini” in Paris and the United Nation’s first summit was held in London. Crooners Frank Sinatra and Bing Crosby, along with jazz sensation Duke Ellington, dominated the music charts.

Welcome to 1946, and the birth of Cathay Pacific, an airline which appears to have seen better days, judging by its latest figures released on Wednesday.

For the first time since an iconic DC3 aircraft decked out in Cathay livery took to the skies, Hong Kong’s flagship carrier has posted back-to-back annual losses.

On Wednesday, the airline reported that its net loss more than doubled to HK$1.25 billion (US$160 million) in 2017, buffeted by “intense competition” from low-cost Chinese carriers and higher fuel prices.

“Overcapacity in the passenger market led to intense competition with other airlines and continued pressure on yields on many of our key routes,” the Hong Kong-listed airline stressed in a statement.

Cathay, which reported its first annual loss in eight years in March 2017, operates mainly in Asia, Europe and North America, but is being squeezed by budget carriers.

Strong cargo earnings

Still, robust earnings from Cathay’s cargo unit and a much larger contribution from subsidiaries and associate businesses helped offset the steepest loss in nine years as bad fuel hedging bets, one-off fines and redundancy costs dragged down results.

“We took decisive action through our transformation program to make our businesses leaner and more agile, and more effective competitors,” said John Slosar, the group’s chairman.

“Our focus in 2017 was on building the right foundations, structure and strategy to improve revenue and to better contain costs. Evidence of progress became apparent in the second half of the year.”

Indeed, the results were better than some analysts’ estimates of a HK$2.8 billion net loss. Total revenue increased by 4.9% to HK$97.2 billion but operating expenses dropped 7.1% to HK$101.3 billion.

Excluding one-off gains and losses, after a deficit of HK$2.05 billion in the first half of 2017, the carrier managed to record a second-half profit of HK$792 million.

Slosar signaled that Cathay was moving back in the right direction.

“As the year progressed we began to see positive results from our transformation program and our [operations] also benefited from a strong cargo business, a weaker US dollar, and improved premium class passenger demand,” he said.

His view was echoed by Mohshin Aziz, an analyst at Maybank Investment Bank in Kuala Lumpur.

“The surprise in the second-half profit was due to cargo business,” Aziz told Bloomberg. “Cargo performed far better than what was expected. [But] passenger yield is still in pain, though.”

Cathay’s share price recovered from losses in the morning trading session and climbed as much as 3.2% to HK$14.22 in Hong Kong, the highest intraday price since November 2015.

Getting passenger numbers back up might be more difficult.

– with Reuters and Bloomberg