Cathay Pacific Airways is considering an increase in cargo rates between Europe and Asia as the slowdown in the United States and volatile fuel prices begin to threaten earnings. Paris-based Jean-Luc Py, Cathay's cargo sales manager, France, said January had been an excellent month generating good loads which left the airline 'quietly optimistic' for the coming months. 'Rates to Hong Kong will probably rise about 5 per cent and to Japan by up to 10 per cent, with other destinations such as Taipei, Seoul and Australia likely to remain stable,' he told Reuters. According to Mr Py, the rate increases would become effective in mid-March. May Lam, Cathay's Hong Kong-based corporate communication manager, Europe, Pacific and North Asia, said rates from Hong Kong to Europe were constantly under review but the airline was not ready to make any announcement. Last year, Cathay carried the highest number of passengers in its history - 11.9 million, compared with 10.5 million the previous year. The airline also carried 769,075 tonnes of cargo compared with 771,812 tonnes the previous year. In its latest report, Salomon Smith Barney has cut its profit forecast for Cathay over the next two years as the US economy looks set to realise a harder than expected slowdown. The international broker revised this year's Cathay net profit down by 15.7 per cent to HK$4.7 billion and next year's down by 16.7 per cent to HK$5.69 billion. The aviation report was released as the US produced further gloomy economic figures showing growth in the fourth quarter last year of just 1.4 per cent. 'Due to the worse-than-expected US economic downturn, we have lowered our 2001E earnings [forecast] for Cathay, SIA [Singapore Airlines] and Thai Airways by as much as 16 per cent,' said the report. Conglomerate Swire Pacific, Cathay's majority shareholder, expects the carriers' profits to be hurt by the delivery of 10 new aircraft this year. The broker forecast a 5 per cent impact on Cathay's earnings before tax for every 5 per cent change in oil prices this year, compared with 3 per cent for SIA. SIA is seen as the most attractive among major Asian airlines, with 18 per cent earnings growth projected for the next two years. Despite the downward revision in earnings forecasts, margins in Asia were expected to remain the highest in the world, Salomon Smith Barney said.