Cathay Pacific Airways posts $120 million loss
Aug. 8, 2012, Hong Kong - Cathay Pacific Airways Ltd., Hong Kong's biggest airline, fell into the red in the first half of the year because of persistently high fuel prices, the global economic slump and weak air cargo demand, the company said Wednesday.
Cathay, which blamed jet fuel prices for "significantly" affecting profitability, is fighting back by upgrading its fleet and
confirmed it's beefing up a previous order for Airbus A350 jets by adding 10 more to the deal and converting 16 others into larger models.
The company said Europe's economic instability was having a big effect on both its passenger and cargo services, while revenue from many other international routes was also under pressure because of increased competition.
The Asian carrier is the latest in a string of global airline companies plagued by grim economic conditions that have reported
"Cathay Pacific's core business was significantly affected by the persistently high price of jet fuel, passenger yields coming
under pressure and weak air cargo demand," Chairman Cristopher Pratt said in a statement. "These factors are common to the
aviation industry as a whole. Airlines around the world are being adversely affected by the current business environment."
Cathay posted a loss of 935 million Hong Kong dollars ($120.5 million) or 23.8 Hong Kong cents a share for the first six months of 2012. That's down from a profit of HK$2.8 billion ($360 million), or 71.4 cents, last year.
Revenue rose 4.4 per cent to HK$48.9 million.
The airline had warned in May that first half results would be disappointing and that it would respond to the challenges by
freezing hiring and allowing cabin crew to take unpaid leave.
Cathay is also modernizing its fleet by replacing older, fuel-thirsty jets with newer, more efficient ones and confirmed
plans announced in July to upgrade an existing 30-jet Airbus order. It's adding 10 Airbus A350-1000 jets worth $3.3 billion to the deal. It's also converting 16 other jets that were part of the original order to larger A350-1000 models, adding $1.1 billion to the list price.
However, the airline said it's paying less than the list price because it's getting a "significant'' discount from Airbus. It's
common practice for plane makers to give airlines discounts, and the final selling price for aircraft is rarely disclosed.