The eye-popping interim result of Cathay Pacific Airways has emphasised the unpredictability of the airline business, prompting analysts to revise upward their earnings forecasts for the full year.
Cathay posted HK$6.8 billion in net profit for the first half, more than 700 per cent up on the same period last year. The record half-year result has surpassed nearly all the full-year forecasts by analysts, meaning most analysts will now have to double their forecasts to reflect the unexpectedly strong growth in the airline's passenger and cargo divisions.
Citigroup revised up its earnings forecast for 2010 to HK$8.64 billion from HK$3 billion, followed by HK$7.6 billion from HK$4.9 billion in 2011. Morgan Stanley adjusted its earnings forecast to HK$2.37 per share from HK$1.37 per share in 2010 and to HK$1.51 from HK$1.19 next year. Deutsche Bank revised up the forecast for the next two years to HK$12.8 billion from HK$5.3 billion and to HK$10.6 billion from HK$4.8 billion.
Most analysts now agree that Cathay will post a record net profit for 2010 because advance bookings are robust for the second half.
Asian carriers in general have seen a rapid recovery in traffic in the Asia-Pacifict. But Cathay seems to be ahead of the curve. Cathay's passenger yield, which reflects revenue per passenger per mile, grew 17.5 per cent year on year in the first half, compared with Singapore Airlines' 4 per cent increase. Cargo yield at Cathay jumped 36 per cent year on year while Singapore Airlines' rose 30 per cent year on year.
Cathay shares rose up to 7 per cent yesterday before closing at HK$18.94, up 4.75 per cent.
