WHAT A VAST difference six months can make. Just half a year ago, managers at Cathay Pacific Airways swaggered their way into a press conference to unveil the biggest profit in the firm's history. With plenty of back-slapping and guffaws, chairman James Hughes-Hallett's vision of its future was bright. The mood at Tuesday's media briefing - where net profit was revealed to have dropped more than 39 per cent in the first half - was in stark contrast. A stern-faced Mr Hughes-Hallett warned those gathered that the operating environment was bad - and could get worse before the year was up. His profit warning spooked investors. Cathay's stock price has fallen almost 7 per cent since. So are Cathay's prospects for the remainder of the year indeed that bearish? A case can be made that the worst of the present downturn in the Asian aviation sector is in fact over. This summer - normally an extremely profitable season for airlines - is, without doubt, weak. The global airline industry has been hit hard by the cooling United States economy. Of the major US carriers, only Continental Airlines and Southwest Airlines remained profitable at this year's first quarter. A protracted downturn in the US technology sector has undoubtedly deterred some business travel - the driver of airline profitability - as well as causing leisure travellers to temporarily defer holidays. But while air travel is a good economic indicator, it is also, at best, a lagging one. Booking of airline tickets typically happens weeks in advance of a trip. As such, it could take two to three months for a reduction in demand to manifest itself in lower passenger figures. The first airlines to be hit by the downturn were those that had the largest exposure to the Pacific basin. Ground zero of the present economic meltdown was the West Coast of the US, with its plethora of failed technology start-ups. Executives of companies in trouble tend to, as a rule, cut back on their travel plans. US carriers with the largest trans-Pacific networks, such as United Airlines and Northwest Airlines, were the first to be affected. This was reflected in both carriers' dismal first-quarter results. Asian carriers, such as Cathay, Korean Air and Singapore Airlines, quickly followed the US airlines' pain because of the region's large manufacturing and business exposure in technology and semiconductor products. However, consider that Nasdaq's run-up peaked in April last year and the US economic slowdown was greatest in the final quarter that year. Cathay began to show declining traffic data in April, three months following the worst of the US news. Since then, US economic news has not been nearly as bad. So while Cathay's traffic continues to decline, expectations for the second half of this year are being made against the worst of the US troubles - hardly a fair comparison. Of course, this is not to say that demand for business travel in the Pacific basin will return in a big way soon or that Cathay's troubles are over. The airline still must contend with high jet fuel prices and rising staff costs. Cathay's pilots are still demanding a better pay and roster package - and profits will be badly hit if their threat to strike at the end of this month holds true. Its ground staff and cabin crew will also demand a salary increase near the year-end. Yet simple economics suggests that the sharpest declines in passenger demand have already occurred and the worst that can happen to Cathay and other Asian carriers is zero growth for the rest of the year. In this gloomy environment, that is hardly enough reason to be spooked.