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August 6, 2009

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Cathay Pacific fuels initiative

CATHAY Pacific Airways Ltd has returned to profit in the first half of this year thanks to fuel-hedging gains that offset a decrease in air traffic.

The largest carrier in Hong Kong reported a net income of HK$812 million (US$104.77) in the six months, compared with a loss of HK$760 million a year earlier, and sales fell 27 percent to HK$31 billion.

It reported the figures in a statement to the Hong Kong Stock Exchange yesterday.

However, it said it made an operating loss of HK$765 million in the first half before fuel hedging and tax.

"The global aviation industry, hit hard by soaring fuel prices in 2008, is now having to confront one of the most severe demand downturns in living memory," said Cathay Pacific Chairman Christopher Pratt.

"There are cautious signs that the fall in demand has bottomed but there is, as yet, no indication when a sustained pick-up will begin."

Its fuel-hedging contracts in the six months generated mark-to-market gains of HK$2.1 billion, compared with a loss of HK$7.6 billion for the whole of last year.

"The recent strengthening in fuel prices is a cause for concern," he said. "Cathay Pacific has taken appropriate measures to get through the current slump and will take further measures as necessary should the cost and demand picture not improve."

The carrier and its subsidiary Dragonair delivered 11.9 million passengers in the first half, dropping 4.2 percent from a year earlier, the statement said.

The overall passenger load factor fell 1.5 percentage points to 78.5 percent.

It attributed the decline to the shortfall in premium business as many major corporate clients either reduced or downgraded travel.

The amount of freight carried by the two carriers decreased by 15.3 percent to 700,693 tons, and the cargo load factor fell by 0.2 percentage point to 66.2 percent.

International air traffic dropped 15 percent in June across the Asia-Pacific region on concerns about the economy and the H1N1 virus, said the International Air Transport Association.


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