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Cathay blames expected 'disappointing' first half results

  11.05.2012    

Hong Kong's Cathay Pacific Airways has warned that it expects "disappointing" first half results due to weak demand and high fuel prices, the Shipping Gazette informs.
"Looking ahead, economic uncertainties have continued into the first half of this year - while these uncertainties continue, we expect pressure on economy class yields and our cargo business in particular to remain weak," the airline said in a filing to the Hong Kong stock exchange.
"Fuel prices have risen further. As a result, 2012 is looking even more challenging than 2011 and we are therefore cautious about prospects for this year."
It expected capacity growth to fall to two per cent from the original seven per cent, as frequencies of some long-haul routes to North America and Europe are reduced to cut fuel cost.
And it expected the growth in the cargo business to drop from seven to four per cent. "The cargo business, despite a temporary improvement in March, has shown no sign of a sustained recovery," it said in the statement.
Said Cathay CEO John Slosar: "This is not just a Cathay Pacific problem, it is clearly an industry-wide issue, and continued high fuel prices in particular are hitting airlines hard across the globe. We have no option but to take concerted action to adapt to this volatile operating environment."
In addition to reducing capacity to cut costs, the airline has announced some other cost-cutting measures, including the earlier retirement of older aircraft, deployment of more fuel-efficient planes, a freeze of ground staff hiring and a restart of the voluntary unpaid leave for cabin crew.
But orders for 93 fuel-efficient aircraft would proceed as planned. Worth a total of HK$190 billion (US$24.5 billion), the delivery of the first batch is expected to start from 2019.


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