HONG KONG (Reuters) - Shares of Cathay Pacific Airways Ltd (0293.HK) fell 5.6 pct to their lowest in over seven years after the carrier warned of a weaker-than-expected second-half performance, as it conducts a review to cut costs amid deteriorating passenger business.
HSBC downgraded Cathay stock to ‘reduce’ from ‘hold’ and cut its target price to HK$10 from HK$12.50, citing deteriorating business environment and a muted outlook for 2017-18.
The shares slid to HK$10.16 in late morning trade, their lowest since July 6, 2009, and were on for the biggest daily percentage decline since Aug. 17.
The carrier said it no longer expected second-half results would be better than the first half as overcapacity and strong competition continued to put pressure on its passenger business.
“Against this difficult revenue picture, we are engaged in a critical review of our business, the goal of which is to improve revenues and to reduce costs so as to maintain a strong financial position and to deliver acceptable financial returns,” the carrier said.
Cathay canceled profit guidance it made two months ago suggesting a much worse second half on intense yield pressure, HSBC added.
Reporting by Donny Kwok; Editing by Gopakumar Warrier