Cathay Pacific Airways has managed a remarkable turnaround to profit in the first half of the year, defying the lingering ill effects of the downturn that has gripped the world's airline industry since the September 11 attacks.
Hong Kong's de facto flag carrier said yesterday it had recorded a $1.412 billion profit for the first six months, reversing a $662 million loss for the second half of last year. It also represented a seven per cent rise in profits from the first half of last year. Cathay chairman James Hughes-Hallett said the positive result reflected a steady recovery in market conditions.
'Subject to unforeseen circumstances, we anticipate continued demand in the coming months and an improved result in the traditionally stronger second half,' Mr Hughes-Hallett said.
'The principal reason for profit was quick action last year which reduced expenses. We also benefited from the lower price of fuel.'
The turnaround was largely due to cost controls, which helped slash overall operating expenses by nearly eight per cent. At the height of the downturn, Cathay cut marginally profitable routes and reduced available flight seats by nearly nine per cent. Those efforts were aided by lower kerosene jet fuel prices which helped reduce bills by more than $550 million.
The airline continued to bemoan falling numbers of premium travellers in its first and business classes - which together account for some 40 to 50 per cent of overall profits. However, revenue from those passengers fell by just 8.5 per cent during the first half, against expectations of a much bigger fall. That would seem to indicate the decline in premium traffic has almost stabilised, although the prospect of a recovery to levels last seen in 2000, when Cathay posted a $2.2 billion mid-year profit - was uncertain.
Chief executive David Turnbull said that 'bearing in mind the way the economy has been going, I don't think [premium traffic] will come back this year, although it may next year'.
