Cathay Pacific net profit slumps 83pc

CATHAY Pacific said yesterday that 2012 net profit plunged 83.3 per cent, as the Hong Kong flag carrier was hit by persistently high fuel prices and the eurozone financial crisis.

The airline said profit stood at HK$916 million (RM366.49 million), down from the HK$5.5 billion it recorded in 2011. Revenue rose 1.0 per cent to HK$99.4 billion from HK$98.4 billion in 2011.

Cathay Pacific said it carried a total of 29 million passengers in 2012, a five per cent rise year on-year, but its premium class sales were hit as companies cut back on travel for executives.

"It was a challenging year for the aviation industry generally," Cathay Pacific chairman Christopher Pratt said in a statement to the Hong Kong stock exchange.

The airline said that "sustained high levels" of jet fuel prices, which account for more than 40 per cent of total operation costs, dragged down its performance.

"The high cost of fuel made it more difficult to operate profitably, particularly on long-haul routes operated by older, less fuel-efficient, Boeing 747-400 and Airbus A340-300 aircraft," said Pratt.

Even though Cathay Pacific has accelerated its plans to retire fuel-guzzling aircraft, the chairman said fuel costs will remain its "biggest challenge" this year, as the long-haul routes account for a huge chunk of its business.

"Economic uncertainty, particularly in the eurozone countries, and an increasingly competitive environment added to the difficulties," Pratt said.

"We believe we have taken the right measures to deal with current challenges and will take whatever further measures are necessary should the business environment not improve," he added.

The weak global economy continued to take a toll on Cathay Pacific's air cargo business, with revenue falling 5.5 per cent to HK$24.6 billion in 2012, while demand for shipments in key markets Hong Kong and mainland China "was well below expectations". AFP