Hong Kong's troubled flagship airline Cathay Pacific yesterday posted its first annual loss since the height of the financial crisis as it was hit by "intense competition" and a drop in demand from business travelers. The firm is struggling despite an expansion of international air travel in the region as lower cost carriers, particularly from mainland China, eat into its market share.

Companies like China Eastern and China Southern Airlines are offering direct services to Europe and the United States from the mainland, while budget carriers like Spring Airlines offer regional routes, undermining Cathay's once critical Hong Kong hub. The airline is also losing premium travelers as it comes under pressure from Middle East rivals which are expanding into Asia and offering more luxury touches.

Analysts said other established Asian operators were similarly suffering from increased competition, but believed Cathay's major fuel-hedging losses put it in an even weaker position. Its $74 million net loss in 2016 reversed a $773 million profit in the previous year and comes as the firm prepares a wholesale review of its operations, with chairman John Slosar warning 2017 would be similarly "challenging."

The results, the worst since 2008, were also well off expectations, with an average profit of $57.9 million forecast by analysts in a Bloomberg News survey. Cathay announced a major restructuring program in January that will see jobs axed, but it has not said how many.

Passenger revenue dropped 8.4 percent year-on-year to $8.6 billion, hit by overcapacity in the market and weak foreign currencies.