Fuel price slides Cathay into the red

Hong Kong- Cathay Pacific Airways blamed its US$85 million in first-half losses on high fuel prices, overturning analysts' previous prediction of a US$132 million profit.

Considering profits of US$330 million for the same period last year, this new figure is 125.7% lower. Cathay said this dip in financial performance was due entirely to the surge in cost of jet fuel in recent months.

Fuel as a percentage of total operating cost rose to 45.3% for the first half of 2008, compared to 33.6% this time last year. With the average fuel price at US$132 per barrel, Cathay's fuel bill saw an increase of 83% from US$1.35 billion to US$2.47 billion.

Turnovers from both passenger and cargo revenue rose by 22.6% over the same period in 2007 to approximately US$5.44 million, but these increases were undermined by high fuel prices.

Cathay Pacific Chairman Christopher Pratt said: "Global aviation is making a painful adjustment to the new reality over US$100-plus oil. Cathay Pacific is reducing other costs where it can but there is a limit to how much cost can be saved before quality and brand are compromised.

"It is inevitable that fares for passengers and shippers will have to rise to reflect the new cost of operation," he continued. "The company's priority at this time is to protect the integrity of this network. There will be some redeployment of capacity within the network but it is not envisaged that the company will withdraw from any destination it now serves".