The Cathay Pacific Group has reported an attributable loss of HK$935 million for the first six months of 2012. This compares to the profit of HK$2,808 million in the first half of 2011. Loss per share was HK23.8 cents as compared to the earnings per share of HK71.4 cents in 2011. Turnover for the period rose by 4.4% to HK$48,861 million.

In its report, Cathay Pacific has attributed the losses in first half of 2012 to the persistently high price of jet fuel, passenger yields coming under pressure and weak air cargo demand - factors common to the aviation industry as a whole. Profits from associated companies, including Air China, also showed a marked decline.

In response to these challenges, the Cathay Pacific Group introduced measures designed to protect its business, including schedule changes and capacity reductions, the withdrawal from service of older, less fuel-efficient aircraft, a recruitment freeze and the introduction of voluntary unpaid leave for cabin crew. At the same time the Group kept its network intact and did not allow cost reductions to compromise the brand or service quality. It also continued with major investments – new aircraft, new products and its own HK$5.9 billion cargo terminal at Hong Kong International Airport – that will benefit the business in the long term.

Speaking on the latest announcement, Tom Wright, General Manager, South Asia, Africa & Middle East said "India continues to remain an important market for us as we see a huge potential here and our flights have had good load factors. We are expanding our services in India with increase in flights from Chennai from four weekly flights to daily. We will also launch Dragonair services in Kolkata offering the only direct flight services to Hong Kong this November. The Cathay Pacific cargo business is also doing well and we have recently started our cargo services in Hyderabad. We are optimistic about our growth in India.''

Fuel remains the airline’s most significant cost. The Group’s fuel costs increased by 6.5% compared to the same period in 2011. Fuel accounted for 41.6% of total operating costs. Managing the risk associated with high and volatile fuel prices remains a key challenge. The airline’s fuel hedging programme helps to mitigate the impact of fuel price fluctuations. However, with the fuel price remaining high for the past two years, realised profit from hedging activities in the first half of 2012 fell by 59.4% compared to the same period in 2011.

In the first six months of 2012, the revenue was HK$34,713 million, representing an increase of 9.2% compared to the same period in 2011. Capacity increased by 6.9%. A total of 14.3 million passengers were carried by Cathay Pacific and Dragonair in the first six months, which is a rise of 8.6% compared to the same period in 2011.

The Group’s cargo business was affected by continued weak demand in major markets. Cargo revenue for the first half of 2012 was down by 7.6% to HK$11,897 million compared to the same period in 2011. Yield was down by 0.4% to HK$2.41. Capacity was down by 4.3%, while the load factor was down by 4.1 percentage points to 64.3%.

Cathay Pacific continued to develop new markets where demand warranted doing so, introducing freighter services to Zhengzhou in March and to Hyderabad in May.

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