Cathay Pacific’s profits shot down

Plummets 83% on punishing high jet fuel prices and the global downturn.

Cathay Pacific Airways Ltd. said fuel prices accounted for 41% of its total expense bill last year. Cathay spent 0.8% more on fuel in 2012 as average fuel prices rose 1.7%.

It noted that sustained high fuel prices throughout most of 2012 had a major impact on operating costs.

Cathay said profit fell 83% to US$118 million from US$709 million in 2011. Revenue, however, inched upwards by just 1% to US$12.8 billion. The results include a first half loss of US$121 million.

Chairman Christopher Pratt said 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.

Pratt pointed out that long-haul routes form a significant part of Cathay’s operations. He described 2012 as a challenging year for the aviation industry.

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

Profit from the more profitable business and first class tickets fell with companies reducing travel while weak demand from major export markets pummeled Cathay’s air cargo business.