Cathay Pacific suffers HK$1.1 billion loss for 2008

HONG KONG Cathay Pacific Group announced an attributable loss of HK$8,558 million in 2008, compared to a profit of HK$7,023 million the previous year. The 2008 result is a record annual loss for the airline.

Group turnover rose by 14.9 per cent to HK$86,578 million in 2008. Business in the first six months of the year was generally strong, but extremely high fuel prices in the first half of the year and a plunge in both passenger and cargo demand in the second half as a result of the global financial crisis adversely impacted the financial results.

The price of aviation fuel reached new highs in July 2008 though prices fell significantly towards the end of the year. Fuel surcharges on cargo and passenger tickets only partially offset the additional cost incurred over the course of the year. The fall in fuel prices, though welcome, caused unrealised mark-to-market losses of HK$7.6 billion on fuel hedging contracts for the period 2009-2011 which were entered into in order to give a degree of certainty as to future fuel prices and protection against price increases.

Cathay Pacific and Dragonair between them carried 25.0 million passengers in 2008 - a rise of 7.3 per cent on the previous year. Passenger revenue increased by HK$8,526 million largely as a result of strong demand in the first half. At the same time capacity increased by 12.7 per cent due to the arrival of new aircraft and an increase in services to destinations in Australia, India and the Middle East. Demand from First and Business Class passengers was high until the summer but saw a sharp fall in the wake of the financial crisis. As a result of a strong first-half performance, passenger yield rose by 5.3 per cent to HK cent 63.6.

The Group's cargo business in the first half was stronger than anticipated, but there was a rapid decline in the last quarter of the year as demand fell in all key markets. Cargo revenue for Cathay Pacific and Dragonair combined rose by HK$2,298 million while total tonnage carried fell by 1.6 per cent to 1,644,785 tonnes. Capacity grew by 0.7 per cent though services were trimmed in the second half of the year due to weakening demand. Higher fuel surcharges helped improve yield by 12.4 per cent to HK$2.54.

Source: Schednet