Update | Cathay Pacific Airways set to post profit jump despite likely loss on fuel hedges

Cathay Pacific Airways is expected to report a surge in net profit later today when it posts annual results for 2014, despite being set to record hefty fuel hedging losses of up to HK$14 billion.

The airline locked in fuel prices at higher than spot prices, which then plunged 50 per cent in the second half of last year.

But analysts said the airline, like its rivals, benefited overall from the drop in oil prices to near six-year lows in the second half of last year as its fuel bill, which was HK$38 billion in 2013, accounted for nearly 40 per cent of total expenses.

Analysts polled by Bloomberg expect Cathay to post a net profit of HK$3.43 billion for last year, compared with HK$2.62 billion in 2013.

Bocom International analyst Geoffrey Cheng said: "Cathay's management gave guidance in November that it expected to incur hedging losses of HK$400 million to HK$500 million for the year after posting a hedging gain of HK$1.02 billion in the first half.

"Expect a bigger number [this] week because fuel price has dropped further after November," he said.