* Posts loss of HK$263 mln for H1 2018
Said was helped by strong U.S. dollar; hit by high fuel costs
* Forecasts stronger second-half performance (Updates with chairman and analyst quotes)
Aug 8 (Reuters) - Hong Kong's Cathay Pacific Airways Ltd on Wednesday swung to a narrower half-year loss and flagged expectations for a better second half, in a sign its transformation program designed to lift revenue was paying off.
The airline, which last year posted its worst loss for the January-June period in at least 20 years, reported a HK$263 million ($33.51 million) loss for the first half of 2018.
This is below a forecast for a HK$140 million profit issued by investment bank BOCOM International, but better than Daiwa Capital Markets' projection for a net loss of HK$363 million.
Group revenue rose 15.7 percent to HK$53.1 billion in the first half, while passenger yields - a proxy for airfares- rebounded by 7.6 percent, Cathay said in a filing to the Hong Kong bourse. Yield on cargo services rose by 16.3 percent.
It also declared an interim dividend of HK$0.10, after not paying one last year.
The company said in a statement that it benefited from a weak U.S. dollar in the early part of 2018, but added it was adversely impacted by rising fuel prices, which it said would continue to increase.
"Our airlines usually perform better in the second half of the year than in the first half of the year. We expect this to be the case in 2018," Cathay Chairman John Slosar said.
"The strength of the U.S. dollar and economic uncertainty arising from global trade concerns remain challenges. But we still expect passenger yields to continue to improve and the cargo business to remain strong."
Jefferies analyst Andrew Lee said the airline's cargo and passenger yields were better than expected but the results were weighed down by higher costs. He had forecast Cathay to report a breakeven result, or a small first-half profit.
"I expect the second half to be stronger, (which) should probably lead to being profitable," he added.
Cathay is expected to swing to a HK$1.2 billion profit for 2018, according to the average of 17 analysts polled by Thomson Reuters I/B/E/S, as out-of-the-money fuel hedges roll off.
Last year, it had lost HK$2.05 billion in the first half but losses narrowed to HK$1.26 billion for the full year.
Cathay's core airline business, excluding earnings from "associates" like its stake in Air China Ltd and a cargo joint venture, posted a loss of HK$904 million in the first half.
However, it said weaker results at Air China Cargo was a key driver behind a HK$73 million decline in its share of profits from subsidiaries and associations.
Cathay CEO Rupert Hogg in May told Reuters he expected the core airline business, which last reported a profit in 2015, to swing into the black next year as the carrier's turnaround plan bears fruit. ($1 = 7.8491 Hong Kong dollars) (Reporting by Jamie Freed in Singapore and Brenda Goh in Shanghai; Editing by Himani Sarkar)