Cathay Pacific profits plummet

City A.M. Reporter
Cathay Pacific Airways, Asia's fourth largest airline, posted a bigger-than-expected 61 per cent drop in 2011 net profit today, amid high fuel costs and a slowing global economy, and warned of a more challenging year ahead.

The firm reported an annual net profit of HK$5.5bn, down from a record high of HK$14.05bn in 2010 which included HK$3bn of profit from the sales of its interests in two units.

The cost of fuel, which is Cathay's biggest single expense, rose 44 percent to HK$12.46bn in 2011.

Global economic instability has continued in the first half of this year and jet fuel prices have risen further, Cathay said in a statement to the Hong Kong Stock Exchange.

"As a result, 2012 is looking even more challenging than 2011 and we are therefore cautious about prospects for this year," chairman Chirstopher Pratt said in the statement.

The notoriously cyclical global airline industry faces headwinds from high fuel prices and sluggish demand, particularly in the premium segment.

Cathay rival Singapore Airlines Ltd has cut cargo capacity and asked its pilots to take non-paid leave to counter the downturn.