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Cathay Pacific posts first half loss

  09.08.2012    

Hong Kong's flag air carrier Cathay Pacific Group has posted a net loss of HK$935 million (US$120.55 million), down 133 per cent against the year-on-year profit of HK$2.81 billion in 2011, according to the Shipping Gazette.
The performance was Cathay's worst since the first half loss of $1.24 billion it suffered in 2003 when Hong Kong air travel was badly hit by the outbreak of SARS.
Cathay said in a company statement that the poor performance was due to "persistently high price of jet fuel, passenger yields coming under pressure and weak air cargo demand".
Cathay's cargo revenue for the first half shrank 7.6pc to HK$11.897 billion compared to the same period in 2011. Capacity was down 4.3 per cent while the load factor dropped 4.1 percentage points to 64.3 per cent.
Cathay said demand for cargo shipments was "particularly weak" in the first half on routes to Europe due to the deteriorating EU debt crisis.
Additionally, it said the demand for cargo shipments from its two key markets, Hong Kong and mainland China, "was well below expectations, though the introduction of new hi-tech consumer electronics products in March resulted in a temporary improvement." But both tonnage and revenue for the months were still lower than those of March 2011.
To tackle the harsh environment, it said: "Capacity was adjusted in line with demand. Cathay Pacific continued to develop new markets where demand warranted doing so, introducing freighter services to Zhengzhou in March and to Hyderabad in May."
The airline ordered six Airbus A350-900 aircraft in January. In August, it agreed to acquire 10 Airbus A350-1000 aircraft and to convert 16 previously ordered Airbus A350-900 aircraft into Airbus A350-1000 aircraft featuring bigger capacity and longer range.
In the whole year of 2012, Cathay will take delivery of 19 aircraft to enhance the operational efficiency of the fleet.
Also, it said the retirement of the older and less fuel-efficient Boeing 747-400 passenger aircraft has been accelerated to reduce the operating costs when fuel prices are high. Three Boeing 747-400BCF freighters have also been retired to further reduce costs.
Cathay chairman Christopher Pratt said: "Aviation will always be a volatile and challenging industry and our business will always be subject to factors, including economic fluctuations and fuel prices, which are beyond our control.
"The cost of fuel is the biggest challenge, although the recent reduction in the fuel price will, if sustained, provide welcome relief. We will continue to take whatever measures are necessary to protect the business, managing short-term difficulties while remaining committed to our long-term strategy.
"Our financial position remains strong and we are in a good position to deal with our current challenges. We will continue to invest in the future, using our core strengths - a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong - to ensure the continued success of the Cathay Pacific Group."


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