Cathay Pacific slides into loss on fuel prices
HONG KONG (AFP) — Hong Kong airline Cathay Pacific said Wednesday it had tumbled to a loss of 663 million Hong Kong dollars (85 million US) in the first half of 2008 due to soaring fuel prices.
The loss came after a profit of 2.58 billion dollars over the same period last year, Cathay said in a statement.
The airline blamed the result on high jet fuel costs, which overshadowed a 22.6 percent rise in turnover to 42.45 billion dollars following a significant increase in both passenger and cargo revenue.
"Global aviation is making a painful adjustment to the new reality of 100-plus US dollar oil," Cathay chairman Christopher Pratt said in the statement.
"Cathay Pacific is reducing other costs where it can but there is a limit to how much cost can be saved before quality and brand are compromised," he said.
Passenger and cargo fares would have to rise to reflect the airline's new operational costs, but it was difficult to forecast whether that would hit still robust demand, Pratt added.
Fuel accounted for 45.3 percent of total operating costs for the first half against 33.6 percent over the same period last year, and Pratt said fuel surcharges approved by Hong Kong regulators fell far short of the higher bill.
The airline said it had also made a provision in its interim results for a 60-million-US-dollar fine it has agreed to pay following a sweeping probe by American regulators into air cargo price fixing by a number of carriers.
Cathay and its subsidiary Dragonair flew 12.5 million passengers in the first six months of 2008, up nearly 14 percent on 2007, and passenger revenue rose almost 22 percent to 25.5 billion dollars, the statement said.
The interim results follow warnings by analysts that high oil prices have sparked the biggest crisis in the Asian airline industry for years, with weaker carriers at risk of going under.
Upstart Hong Kong-based budget carrier Oasis has already folded this year, while other regional airlines have cut flights or closed routes in a desperate scramble to pare back costs.
A report Wednesday said major Japanese carriers Japan Airlines and All Nippon Airways would become the latest to scale back by slashing domestic and international flights.
On Monday the air travel industry body IATA said the number of people travelling by air grew at the lowest rate for five years in June as the global economic slowdown sapped demand.
The body has previously said that 25 airlines went bust or stopped operations in the first six months of 2008 and that more could fold.
Crude oil prices hit record highs above 147 dollars per barrel last month but have since fallen sharply to below 120 dollars, although they remain high by the standards of recent history.
http://afp.google.com/article/ALeqM5iW3799hNd1f9LI12xZstj9nsollA
HONG KONG (AFP) — Hong Kong airline Cathay Pacific said Wednesday it had tumbled to a loss of 663 million Hong Kong dollars (85 million US) in the first half of 2008 due to soaring fuel prices.
The loss came after a profit of 2.58 billion dollars over the same period last year, Cathay said in a statement.
The airline blamed the result on high jet fuel costs, which overshadowed a 22.6 percent rise in turnover to 42.45 billion dollars following a significant increase in both passenger and cargo revenue.
"Global aviation is making a painful adjustment to the new reality of 100-plus US dollar oil," Cathay chairman Christopher Pratt said in the statement.
"Cathay Pacific is reducing other costs where it can but there is a limit to how much cost can be saved before quality and brand are compromised," he said.
Passenger and cargo fares would have to rise to reflect the airline's new operational costs, but it was difficult to forecast whether that would hit still robust demand, Pratt added.
Fuel accounted for 45.3 percent of total operating costs for the first half against 33.6 percent over the same period last year, and Pratt said fuel surcharges approved by Hong Kong regulators fell far short of the higher bill.
The airline said it had also made a provision in its interim results for a 60-million-US-dollar fine it has agreed to pay following a sweeping probe by American regulators into air cargo price fixing by a number of carriers.
Cathay and its subsidiary Dragonair flew 12.5 million passengers in the first six months of 2008, up nearly 14 percent on 2007, and passenger revenue rose almost 22 percent to 25.5 billion dollars, the statement said.
The interim results follow warnings by analysts that high oil prices have sparked the biggest crisis in the Asian airline industry for years, with weaker carriers at risk of going under.
Upstart Hong Kong-based budget carrier Oasis has already folded this year, while other regional airlines have cut flights or closed routes in a desperate scramble to pare back costs.
A report Wednesday said major Japanese carriers Japan Airlines and All Nippon Airways would become the latest to scale back by slashing domestic and international flights.
On Monday the air travel industry body IATA said the number of people travelling by air grew at the lowest rate for five years in June as the global economic slowdown sapped demand.
The body has previously said that 25 airlines went bust or stopped operations in the first six months of 2008 and that more could fold.
Crude oil prices hit record highs above 147 dollars per barrel last month but have since fallen sharply to below 120 dollars, although they remain high by the standards of recent history.
http://afp.google.com/article/ALeqM5iW3799hNd1f9LI12xZstj9nsollA