Hong Kong aviation analysts will be watching closely when Singapore Airlines (SIA) unveils its first-half results on Friday. The carrier's results are being seen as a barometer to help gauge Cathay Pacific Airway's financial performance. Analysts expect the Singapore airline to post a 50 per cent to 60 per cent decline in operating profit for the first six months of the year as the company will have been hard hit by the global economic downturn, coupled with the steep decline in global airline traffic since the terrorist attacks in the United States last month. 'Traditionally, SIA has been the closest comparable in Asia for Cathay in terms of trade flow and yields,' said Peter Hilton, head of Hong Kong research for Credit Suisse First Boston (CSFB). 'While there are some differences between the two companies . . . its results announcement will provide analysts covering Cathay with very significant data points for comparison,' he said. SIA's results 'will provide some yield clues' that could be applied to Cathay, Mr Hilton said. SIA is expected to post an interim net profit of about S$220 million (HK$940 million), down from last year's S$565 million profit before exceptionals. Analysts will be looking at SIA's results for evidence of profit margin erosion, especially as the sales volume of high-priced business seats is believed to be slowing faster than the general slowdown in overall passenger traffic. 'We know that overall traffic has fallen off, but the question is how far has yield fallen? That will have the biggest impact on profit,' said a Hong Kong-based aviation analyst with a major European brokerage. CSFB analyst Nam Nguyen said he expected SIA's passenger yield would have fallen two percentage points in the first half compared with last year, while cargo yield was expected to have fallen by about nine percentage points. SIA's drop in yields will accelerate in the second half of the year, falling a further eight percentage points and 12 percentage points respectively. 'Passenger yields have held up reasonably, but that would have been before the terrorist attacks,' Mr Nguyen said. He said Cathay's drop-off in yield during the same period should be 'pretty comparable' but also warned that since SIA's results were for the six months to September 30, it will show only limited effects from the worst of the downturn since the September 11 attacks. However, despite the similarities between the two companies, analysts said the performance of their respective cargo arms would be divergent. Cathay was likely to be harder hit by the downturn than SIA, despite the deeper recession in Singapore. 'Cathay's cargo performance was so strong last year, it won't have locked down many long-term commitments. SIA, on the other hand, operates its cargo with more [long-term] contract work', which would help cushion the fall in demand, Mr Nguyen said. So far, neither Cathay nor SIA has announced sweeping capacity or staff cuts on the scale of most other major carriers. Both have suspended up to 10 per cent of their services, while SIA has taken the additional step of cutting managers' pay by between 7 per cent and 15 per cent. Last week, Cathay said passenger traffic between Hong Kong and North America dropped by as much as 17.6 per cent in September, while overall passenger traffic fell 13.5 per cent. Tiffany Co, an aviation analyst at Salomon Smith Barney, said Cathay's moves to lower costs should be enough to get it through the downturn unless demand continues to fall dramatically.