Cathay Pacific’s 2011 net profit falls 61 pct

Cathay Pacific’s 2011 net profit falls 61 pct

HONG KONG - Agence France Presse
Cathay Pacific’s 2011 net profit falls 61 pct

Cathay Pacific planes are parked on the tarmac in Hong Kong. High jet fuel costs and weak cargo demand resulted in the airline’s poor 2011 operating results. AFP photo

Cathay Pacific yesterday said its 2011 net profit plunged 61 percent as it struggled with high fuel prices as well as softening demand for its cargo business, and warned of a challenging 2012. The Hong Kong flag carrier said it earned HK$5.5 billion ($709 million) last year, well below the record HK$14.0 billion profit it recorded in 2010, despite a 9.9 percent increase in total revenue to HK$98.41 billion.

“After a record year in 2010, we faced a number of major challenges in 2011,” chairman Christopher Pratt said in a statement to the Hong Kong stock exchange, where the airline is listed.

Passenger revenue for the year rose 14.2 percent to HK$67.78 billion. It carried a total of 27.6 million passengers last year, a rise of 2.9 percent from 2010, as demand for premium class travel remained robust.

Pratt said the challenges included the instability of the global economy, the weakness of the air cargo market, the impact of natural disasters in Japan and Thailand, unrest in the Middle East and continued high jet fuel prices.

Fuel is greatest drain
“Fuel is our biggest single cost and the persistently high jet fuel prices had a significant effect on our operating results in 2011,” Pratt said, adding that gross fuel costs surged HK$12.46 billion, or 44 percent, in 2011.

The airline also noted weakened demand for cargo shipments from its two key markets, Hong Kong and mainland China, as well as the European market, due to falling exports amid weak consumer sentiment.

Cargo revenue for 2011 was up 0.3 percent to HK$25.98 billion compared with 2010, but the load factor fell.