Cathay says H1 profit soars more than eight fold
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Asia's leading carrier Cathay Pacific said Wednesday its net profit in the first half this year soared more than eight fold to reach 6,840 million HK dollars (881 million U.S. dollars), from 812 million HK dollars in the first half of 2009, thanks to robust passenger and cargo demand.
In a statement filed with the Hong Kong stock exchange, the Hong Kong-based carrier said its revenues in the first six months amounted to 41.34 billion HK dollars, up 33.7 percent from that for the same period last year, which stood at 30.92 billion HK dollars.
Earnings per share were up 8.4 times to 173.9 HK cents, according to the statement.
In the first half, Cathay experienced a continuing and significant recovery in its core business following the extremely challenging conditions during much of the previous year, it said.
The turnaround in business, which began in the last quarter of 2009, continued into 2010 and gained momentum. Cathay's passenger and cargo businesses performed well with revenues continuing to increase despite uncertainty over the stability of the global economy, said the company.
Cathay's passenger business had experienced a marked improvement from the lows of 2009, with revenues returning to almost pre-financial crisis levels, it said.
In the first half, Cathay and its subsidiary Dragonair carried a total of 13.0 million passengers, an increase of 8.5 percent year on year. Passenger revenue for the half-year period was 27, 411 million HK dollars, up 25.7 percent from a year earlier.
Cargo business was very robust for the whole of the first half with strong demand in all key markets. In the first half, the amount of freight carried by Cathay and Dragonair increased by 24. 4 percent to 872,000 tons. Cargo revenue jumped by 63.1 percent to 11.84 billion HK dollars.
Fuel is the airline's most significant cost component and fuel prices once again increased in the first half -- by 51.1 percent compared to the same period in 2009. Managing the risk associated with fuel price changes is a key challenge and objective, said the company.
Cathay also said its strategic partnership with Air China continued to go from strength to strength with an important development in the relationship -- the formation of a new cargo joint venture based in Shanghai in February.
The two airlines will use Air China Cargo, in which Cathay Pacific will take equity and economic interest of 49 percent, as the platform for the joint venture, which is expected to begin operations in October.
Meantime, Cathay said it was committed to the Hong Kong hub by recommencing work in March on its own cargo terminal at Hong Kong International Airport -- a state-of-the-art facility designed to enhance the competitiveness and efficiency of Hong Kong as an airfreight hub. Its total cost was estimated at 5.5 billion HK dollars.
"If present trends continue, we expect our financial results to continue to be strong in the second half of 2010. That said, conditions can change rapidly in the airline industry," said Cathay Pacific Chairman Christopher Pratt in the statement.
"Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009."
Pratt, however, warned of "a challenging and unpredictable industry" and that airlines should be mindful of the many things -- economic fluctuations, rising fuel prices, even volcanic eruptions, which could quickly have an impact on business.
Also in the day, Cathay said it had just signed a letter of intent with Airbus to buy 30 A350-900s and also intends to exercise purchase rights with Boeing to buy another six 777-300ERs.
The total value of the two intended aircraft purchases at list price was about 75 billion HK dollars, it said.
It was a sum in addition to the significant investment Cathay would make between now and 2013 that included aircraft already on firm order, the new cargo terminal at Hong Kong International Airport and enhanced products in the cabin and on the ground, it added.
Cathay Pacific was founded in Hong Kong on Sept. 24 of 1946.
It currently operates a fleet of 128 wide-body aircraft, consisting of Airbus A330s and A340s, Boeing 747s and 777s. The airline's operations include scheduled passenger and cargo services to 114 destinations in 36 countries and regions worldwide, including codeshares and joint ventures. (1 U.S. dollar equals to 7.763 HK dollars)
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