INTERIM results of Cathay Pacific Airways, which turned out at the lower end of analysts' expectations, must have disappointed more ambitious investors. Some analysts are even considering revising their full-year forecasts downwards following the release of the interims. The airline posted a 17.9 per cent rise in attributable profit to $803 million for the first half, compared with wide-ranging market expectations which were pitched from $780 million to $1.4 billion. Earnings per share rose 17.9 per cent to 28 cents, while net operating profit grew 13.1 per cent to $839 million. ''I think it's disappointing considering that we are comparing with the first half of last year when there was a strike [of cabin crew],'' said Lehman Brothers airlines analyst, Eisha Cheng. Although the tune of the results might not be a surprise for some analysts, investors who had expected the yen appreciation to significantly increase first-half results would have been disappointed. Some people thought a rising Japanese yen, which had fuelled strong growth in Japanese arrivals in the first half, would lift the group's profit. ''I think the yen appreciation also deterred people going to Japan,'' said Ms Cheng. Many have also missed the point that an economic depression could nurture a cautious attitude to consumption which would not disappear all at once, even with a recovering economy. ''Consumers are more price-sensitive now,'' W I Carr analyst Lesley McGregor noted. Although the Japanese consumers were coming out of an economic recession they were still careful about money, she said. Cathay used to have a particularly high exposure to Japan before the depressed market conditions set in. It is still one of the airline's largest markets. Another analyst pointed out the Taiwanese boycott, which called for flight re-scheduling, had resulted in a lower-than-expected yield - derived by dividing the passenger load factor into passenger revenue - for Cathay. Furthermore, the intense competition in the airline business in the region also put pressure on its results. ''In Asia, competition is increasing. It [Cathay Pacific] is competitive. But all the airlines are competitive. That's the problem,'' said Miss Cheng. Moreover, rising labour costs could also have been a big challenge for Cathay, given that high local inflation pushed the average staff cost per employee up by 3.3 per cent last year. The management is attempting to curb cost growth by encouraging expatriate pilots to give up their benefits, relocation of certain maintenance and administrative functions, and fleet replacement. In the first half of this year, the airline's unit operating costs increased 0.4 per cent. Some analysts showed a more approving attitude towards Cathay's interim results. ''The results may not be as bad as they appear at first glance,'' said Schroder Securities' Huw Williams. ''Turnover growth [at 12.5 per cent] has been acceptable. Net finance charges were less than we expected,'' he said. ''Contribution from Dragonair was also better than expected,'' Mr Williams said.