Cathay Pacific profit plunges as fuel costs rise

Cathay Pacific Airways Ltd, Asia's largest international carrier, posted a 44 per cent drop in first-half operating profit because of higher fuel costs. Operating profit before non-recurring items tumbled to HK$2.8 billion (Dh1.3 billion) from HK$5 billion a year earlier, the Hong Kong-based carrier said in a stock exchange statement released Wednesday. That compares with the HK$1.9 billion median of five analyst estimates in a recent Bloomberg News survey. Net income for the company fell 59 per cent to HK$2.8 billion, after one-time gains a year earlier. Article continues below Cathay followed Singapore Airlines Ltd in reporting lower earnings after its first-half fuel costs, excluding hedging, jumped 49.5 per cent because of higher oil prices and increased services. The airline, the world's largest international freight carrier, also reported a decline in cargo load factors as capacity growth outpaced demand. "Cargo was exceptionally good last year and is reasonably weak at the moment," said Robert Bruce, an analyst at CLSA Ltd in Hong Kong. "The financial situation could also start changing travel policies, which would have an impact on Cathay Pacific's major corporate accounts," he added. Aircraft orders Cathay's sales rose 13 per cent in the first half to HK$46.8 billion. It declared an interim dividend of 18 Hong Kong cents per share, compared with 33 Hong Kong cents a year earlier. The airline separately announced an order for four Boeing Co 777-300ER passenger planes and eight 777-200 freighters. Singapore Airlines also yesterday said it was ordering eight 777- 300ERs. Cathay fell 0.5 per cent to HK$16.20 in Hong Kong trading before the earnings announcement. It has declined 24 per cent this year, compared with a 13 per cent fall in the benchmark Hang Seng Index.