(Yicai Global) Aug. 17 -- Cathay Pacific Airways Ltd. [HKG:0293], Hong Kong's flagship airline, has reported a HKD2.05-billion (USD262-million) net loss for the first six months of this year, marking its greatest first-half loss for almost 20 years, local news outlet Mingpao reported.

The carrier's revenue grew only slightly by 0.4 percent while the HKD2.05 billion net loss significantly exceeded market expectations of HKD500 million.

Cathay's interim performance was adversely affected by two extraordinary incidents: a HKD498 million fine paid to the European Council for breaches of EU competition law and HKD224 million paid out in compensation for redundancies.

Even with these expenses excluded, the airway suffered a loss of around HKD1.3 billion.

The company attributed the losses to rising competition and other major negative factors, including rising oil prices (including hedging impact), exchange rate effects and aircraft maintenance costs.

Cathay is now being attacked from all sides, Jiemian News reported. The firm faces challenges from budget airlines on short-haul air routes, and also from the big three Middle Eastern airlines, Emirates, Qatar Airways and Etihad Airways. As a result, the enterprise has joined a price war leading to declining revenues.

Pressure on Cathay is further exacerbated by the growing number of airlines from mainland China running international direct flights at cheaper prices.

The Hong Kong carrier has only published three annual losses since its establishment in 1946: one during the Asian financial crisis of 1998; another during the global financial crisis of 2008; and the most recent was last year when it bet wrongly on fuel hedging and endured losses caused by fierce competition.

The firm formed a three-year transformation plan earlier this year, cutting about 1,000 employees at its Hong Kong headquarters employees to reduce outgoings.

"We expect no significant improvement in the business environment in the second half of 2017. The transformation effect is expected to start in the second half of this year and the effect will be better reflected in 2018," said John Slosar, chairman.

If nothing else, Cathay Pacific will endure a two-year loss, an unprecedented situation for the company.