Cathay Pacific Airways Ltd (國泰航空), Hong Kong’s biggest airline, fell into the red in the first half of the year because of persistently high fuel prices, the global economic slump and weak air cargo demand, the company said yesterday.
Cathay, which blamed jet fuel prices for “significantly” affecting profitability, is fighting back by upgrading its fleet and confirmed it’s beefing up a previous order for Airbus A350 jets by adding 10 more to the deal and converting 16 others into larger models.
The company said Europe’s economic instability was having a big effect on both its passenger and cargo services, while revenue from many other international routes was also under pressure because of increased competition.
“Cathay Pacific’s core business was significantly affected by the persistently high price of jet fuel, passenger yields coming under pressure and weak air cargo demand,” chairman Cristopher Pratt said in a statement.
“These factors are common to the aviation industry as a whole. Airlines around the world are being adversely affected by the current business environment,” he said.
Cathay posted a loss of HK$935 million (US$120.5 million) or HK$0.238 a share for the first six months of this year. That’s down from a profit of HK$2.8 billion, or HK$0.714, last year.
Revenue rose 4.4 percent to HK$48.9 million.
Cathay is modernizing its fleet by replacing older, fuel-thirsty jets with newer, more efficient ones and confirmed plans announced last month to upgrade an existing 30-jet Airbus order. It’s adding 10 Airbus A350-1000 jets worth US$3.3 billion to the deal. It’s also converting 16 other jets that were part of the original order to larger A350-1000 models.