Hong Kong airline Cathay Pacific said Wednesday it had tumbled to a loss of 663 million Hong Kong dollars (85 million US) in the first half of 2008 due to soaring fuel prices. The loss came after a profit of 2.58 billion dollars over the same period last year, Cathay said in a statement.
The airline blamed the result on high jet fuel costs, which overshadowed a 22.6 percent rise in turnover to 42.45 billion dollars following a significant increase in both passenger and cargo revenues.
"The dramatic change to our fortune is down to one factor - the relentless rise in the prices of fuel," Cathay chairman Christopher Pratt told reporters. The average fuel price reached 132 US dollars per barrel in the first half of the year, a 60 percent rise against the same period last year, according to the statement.
"Suffice to say, at this price, our business model is severely challenged," Pratt said. Fuel accounted for 45.3 percent of total operating costs for the first half against 33.6 percent over the same period last year, and Pratt said fuel surcharges approved by Hong Kong regulators fell far short of the higher bill.
Passenger and cargo fares would have to increase to reflect the airline's new operational costs, but it was difficult to forecast whether that would hit still robust demand, Pratt added. "Cathay Pacific is reducing other costs where it can but there is a limit to how much cost can be saved before quality and brand are compromised," he said.
The airline would adjust flights to North America as long-haul routes required a large amount of fuel, but deploy more aircraft for trips to regions such as Australia and the Middle East where demand was growing, Pratt added.
Comments
Comments are closed.