HONG KONG AIRCRAFT Engineering (HAECO), reports that profits fell by 20% in 1995, blaming over-capacity in heavy maintenance and strong local inflation, for the disappointing results.

HAECO, a sister company within the Swire Pacific group to Hong Kong airline Cathay Pacific, recorded a profit slide, to HK$332 ($43 million). Sales for the year also edged down to below HK$2.4 billion.

The company says that margins deteriorated further as rates, already hit by over-capacity, failed to keep pace with the rate of Hong Kong inflation. Profits were further, affected by a HK$17 million one-time write-down on its sellback to the Australian Government of a 24.9% stake in ASTA Aircraft Services.

The Hong Kong market reacted badly to HAECO's worse-than-expected result. "People talk about this as a recovery stock, but recovery seems to be further and further away," according to Kay Hian James Capel analyst Shane Matthews.

Source: Flight International