Cathay Pacific reports HK$935m net loss for H1 2012

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Cathay Pacific posted a net loss of HK$935 million ($121 million) for the first half of 2012, a reversal from the net profit of HK$2.81 billion posted in the corresponding period last year.

The carrier's turnover for the six months ended 30 June was HK$48.9 billion, a 4.4% year-on-year increase.

Cathay Pacific says that its core business was significantly affected by the persistently high price of jet fuel and weak air cargo demand. Passenger yields came under pressure, contributing to the loss.

Moreover, profits from associated companies, including Air China, showed a marked decline.

Fuel costs, which accounted for 41.6% of the airline's total operating costs, rose by 6.5% year on year, while total operating expenses climbed 11.6% to HK$49.1 billion.

The airline incurred an operating loss of HK$221 million in the first half, compared with an operating profit of HK$2.8 billion in the same period last year.

Christopher Pratt, chairman of Cathay Pacific Airlines, says: "The cost of fuel is the biggest challenge, although the recent reduction in the fuel price will, if sustained, provide welcome relief."

The carrier adds that increased fuel prices significantly affected the profitability of its passenger services, particular on long-haul routes operated by older, less fuel-efficient Boeing 747-400 and Airbus A340-300 aircraft.

Cathay Pacific and its subsidiary Dragonair carried 14.3 million passengers in the first half of 2012, an 8.6% increase from a year earlier.

The carriers' combined passenger load factor rose by 0.8 percentage points to 80.1%. They carried 754,000t of cargo in the first half, down by 9.8% from the same period in 2011.

Cargo revenue for the first half of 2012 was down by 7.6% to HK$11.9 billion compared with the corresponding period in 2011 as a result of weak demand in major markets.

Cathay Pacific will take delivery of 19 aircraft this year, which is expected to improve the operational efficiency of its fleet. In view of the high fuel prices, it also intends to accelerate the retirement of its 747s - three of this fleet of 21 aircraft will be retired this year, five in 2013 and one in 2014.