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Cathay Pacific posts record H1 profit

Cathay Pacific posts record H1 profit
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First Published: Wed, Aug 04 2010. 11 45 AM IST
Updated: Wed, Aug 04 2010. 11 45 AM IST
Hong Kong: Strong freight traffic and a recovery in passenger flow lifted first-half earnings at Hong Kong’s dominant air carrier Cathay Pacific Airways Ltd to a record, as it said it could order up to 30 new aircraft.
Cathay’s profit outlook for the second half is positive as analysts expect premium passenger numbers for Asia’s No.4 carrier by market value to rise faster even as freight volume growth slows from its breakneck pace in May.
“If present trends continue, we expect our financial results to continue to be strong in the second half of 2010,” Cathay Pacific chairman Christopher Pratt said in a statement. “Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.”
Passenger demand is back and now exceeds 2008 levels, taking Cathay’s load factors to the highest June on record, as the aviation industry recovers from a difficult few years of low demand and shrinking volumes.
With demand strong, the company said it would order up to 30 new aircraft from Airbus, a unit of EADS, boosting its total number of planes by about 18%.
Cathay shares rose 1.6% on Wednesday ahead of the results and have risen 22% this year, outperforming a nearly 2% fall on the broader market.
The International Air Transportation Association (IATA) said in June that global airlines would turn a $2.5 billion profit this year with the Asia-Pacific taking the lead as Asian economies excluding Japan expand nearly twice as fast as global gross domestic product (GDP).
Best Interim Profit In Decade
Cathay posted a net profit of HK$6.84 billion ($872 million) for the six months ended June, up from HK$812 million a year ago, despite the interruption of aviation traffic earlier this year when ash from an Icelandic volcano shut down swathes of European airspace.
That represents the best-ever six-month profit for the company and beat an average forecast of HK$4.13 billion from six analysts polled by Reuters.
“The results are much higher than expected and beat all forecasts on the street,” said Jim Wong an analyst at Nomura International. “It will give a good push to its stock after the lunchbreak.”
Larger rival Singapore Airlines Ltd, the world’s No.2 airline, also posted a strong profit for the first-quarter ended June.
Cathay’s earnings for the first half of 2010 were boosted by stronger-than-expected freight volume, disposal gains from the sale of its shares in Hong Kong Aircraft Engineering Co Ltd and Hong Kong Air Cargo Terminals Ltd, and a higher profit contribution from associate Air China Ltd.
Controlled by conglomerate Swire Pacific Ltd, Cathay owns an 18% stake in Air China, which in turn holds nearly 30% of Cathay.
The number of passengers carried by Cathay rose 8.5% to 13 million in the first half of 2010 from a year earlier. Cargo and mail tonnage increased by 24.4% in the same period.
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First Published: Wed, Aug 04 2010. 11 45 AM IST