Singapore, 5 August (Argus) — Hong Kong-based carrier Cathay Pacific posted a record profit for a six-month period in this year's first half, after resurgent air travel helped it to overcome a near-doubling in jet fuel expenditure.
Cathay Pacific registered a profit of HK$6.84bn ($880mn) for the six months ending June 2010, more than eight times the HK$812mn posted for the same period last year. The sharp rebound is despite fuel costs, which include realised and unrealised hedging losses, rising by 98.2pc to HK$13.17mn.
A 45pc increase from a year earlier to an average jet fuel cost of $92.20/bl in the first half contributed to Cathay Pacific's high fuel expenditure. The company also consumed 750mn bl of jet fuel in the first six months of this year, 3.9pc more than for the same period in 2009. This saw its gross fuel costs rising by 51.1pc to HK$13.07bn. The carrier further incurred hedging losses of HK$104mn from January to June this year, compared with a gain of HK$2bn a year earlier.
Its resurgent passenger and cargo businesses helped the company to more than offset its jet fuel losses. Cathay Pacific and its affiliate Dragonair carried a total of 12.95mn passengers during January-June, compared with 12.84mn for the same period last year. The air cargo sector also saw strong growth, with it carrying 871,585t of cargo and mail in the first half of the year, a 24.4pc increase over the same period last year.
A rise in demand for first and business class travel, new route additions to Italy and Russia, as well higher air traffic generated by the Shanghai Expo in China were among the factors driving Cathay Pacific's air passenger business. Its cargo business benefitted from high demand on the major trunk routes to North America and Europe, as well as the corporate sector's preference to maintain low stocks that resulted in more frequent reordering and use of air freight.
The outlook for the rest of the year remains optimistic if current trends persist, said Cathay Pacific's chairman Christopher Pratt. It will take delivery of 12 new passenger aircraft by 2013 and 10 new freighters by next January. It is also looking to spend HK$75bn on another 36 aircraft, to be delivered by 2019.
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