Cathay Pacific narrowed its losses to HK$263 million (US33.5 million) for the first half of 2018 according to the financial results released yesterday, though higher fuel costs this year in particular have hampered the airline’s ability to get out of the red.

The loss is a significant improvement over the HK$2.05 billion loss it reported in the first half of last year, and comes as the airline hits the halfway mark in its three-year transformation programme. The scheme aims to make the business “leaner, more agile and more effective competitors”, said chairman John Slosar in a note to shareholders on Wednesday.

The carrier’s performance has been aided by strong revenue from its cargo operations and from a weak US dollar. Passenger revenue and yield have both seen an increase, boosted by the launch of five new routes this year, frequency increases on existing routes and upgauging to larger aircraft on popular services.

Slosar added that the company expects challenges to continue in the second half of the year, but that its two airlines Cathay Pacific and Cathay Dragon typically perform better in the latter half of the year. “We expect this to be the case in 2018,” he said.

Cathay Pacific reported its first ever back-to-back annual loss last year, and has been overhauling a number of its products services as it seeks to return to profitability.

Among these was the introduction of paid advance seat selection in May for travellers who book the cheapest economy class fares, as well as the transition from a nine-across layout on its Boeing 777 fleet to a less spaciousbut higher capacity 10-abreast format. According to Slosar, the airline “expect to generate more ancillary revenue” in the second half of 2018.

However, the carrier has also introduced a number of new routes and aircraft. In June, Cathay Pacific took delivery of its first Airbus A350-1000 aircraft, which will debut on its new route to Washington DC this September. Since then, the airline has announced plans to launch non-stop flights between Hong Kong and Seattle in March next year.

Last month also saw the beginning of the airline’s new business class dining concept rollout, which will be progressively introduced across Cathay Pacific’s long-haul network over the next 10 months.