1H results likely 'disappointing': Cathay Pacific
Cathay Pacific said Wednesday its 2012 first half results are likely to be "disappointing", as it announced a raft of cost-cutting measures in response to higher fuel prices. The Hong Kong flag carrier, which announced a 61 percent plunge in its 2011 net profit in March, said there was "no sign of a sustained recovery" in its cargo business due to high fuel prices. "The financial results of Cathay Pacific for the first half of 2012 are expected to be disappointing," the firm said in a filing to the Hong Kong stock exchange, advising investors to exercise caution in dealing in its shares. Cathay is scheduled to release its first half results on August 8. The airline said it expected capacity growth to fall to two percent from the original seven percent, as frequencies of some long-haul routes to North America and Europe are cut to reduce fuel outlays. It also cut growth forecast in the cargo business from seven to four percent. Other cost-cutting measures would include the earlier retirement of older aircraft, deployment of more fuel-efficient jets, a ground staff hiring freeze and voluntary unpaid leave for cabin crew. Orders for 93 fuel-efficient aircraft would proceed as planned, worth a combined HK$190 billion ($24.5 billion). Delivery is slated for 2019. "This is not just a Cathay Pacific problem, it is clearly an industry-wide issue, and continued high fuel prices in particular are hitting airlines hard across the globe," chief executive John Slosar said. "We have no option but to take concerted action to adapt to this volatile operating environment," he added. The airline warned in March that 2012 could be "even more challenging" than 2011. Last year's net profit fell 61 percent to HK$5.5 billion, from a record HK$14.0 billion in 2010. Singapore Airlines, Qantas, Malaysia Airlines and Air New Zealand have posted dismal earnings recently as higher oil prices hit carriers' bottom lines. The International Air Transport Association in December cut its forecast for the sector's profits this year to $3.5 billion, down from its earlier forecast of $4.9 billion. Cathay released its statement after the Hong Kong sharemarket had closed. It's shares ended the day at HK$13.36, 18.44 percent down on their 2012 high of HK$16.38 reached on February 20.
