Cathay Pacific profit plunges 61% to $709m in '11
Updated: 2012-03-14 18:01
(Xinhua)
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HONG KONG -- Hong Kong-based flagship airline Cathay Pacific said Wednesday that its attributable profit in 2011 stood at HK$5,501 million ($709 million), down 60.8 percent from the record HK$1.404 billion in 2010.
The airline said its 2010 results included HK$3,033 million of significant non-recurring items being the profit on the sales of its shareholdings in Hong Kong Air Cargo Terminals Limited and Hong Kong Aircraft Engineering Company Limited and the gain on the deemed disposal of part of its interest in Air China.
Adjusting for these items, the attributable profit in 2011 decreased by HK$5,514 million or 50.1 percent from 2010, it said in a statement filed to the Hong Kong stock market.
Earnings per share in 2011 fell by 60.9 percent to 139.8 HK cents. Turnover for 2011 increased by 9.9 percent to HK$98.41 billion .
In 2011, the core business of Cathay Pacific and Dragonair was materially affected by instability and uncertainty in the world's major economies. The passenger business of Cathay and Dragonair held up relatively well mainly as a result of strong demand for premium class travel, Cathay Pacific Group Chairman Christopher Pratt said in the statement.
But the cargo business was adversely affected by a substantial reduction in demand for shipments from its two key export markets - - Hong Kong and Chinese Mainland, he said.
Pratt said fuel was the biggest single cost and the persistently high jet fuel prices had a significant effect on Cathay's operating results in 2011. Gross fuel costs in 2011 soared 44.1 percent from a year earlier, or more than HK$12 billion. The increase reflected both higher fuel prices and more flights.
Managing the risk associated with changing fuel prices remains a high priority, he said. In 2011, Cathay realized a profit of HK$1.8 billion from fuel hedging activities, with unrealized mark-to-market gains of HK$436 million in the reserves on December 31, 2011.
Cathay's passenger revenue for 2011 was HK$67.78 billion, an increase of 14.2 percent compared with 2010. Cathay and its subsidiary airlines Dragonair carried a total of 27.6 million passengers last year, a rise of 2.9 percent compared with 2010.
Cargo revenue for 2011 was up by merely 0.3 percent to HK$25.98 billion. From April 2011 onwards, demand for shipments from two most important markets -- Hong Kong and Chinese Mainland, weakened significantly and remained weak for the rest of the year.
Looking ahead, Pratt said that economic uncertainties have continued into the first half of this year. He expected pressure from economy-class yields and cargo business in particular to remain weak. Fuel prices have risen further.
As a result, 2012 is looking even more challenging than 2011 and the company was therefore cautious about prospects for this year, he added.
A research report by CCB International Securities, the subsidiary of China Construction Bank International, had expected Cathay to post an annual profit of HK$6.3 billion for 2011.
It also said the risk to 2012 consensus is oil. Oil would trump cargo recovery of Cathay, and oil was likely the theme post- results, it said.
As Cathay posted lower-than-expected profit for 2011, its shares shed 2.82 percent to end at HK$15.14 on Wednesday in the Hong Kong market.
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