HONG KONG, Aug 11 (AFP) - Hong Kong flag carrier Cathay Pacific Airways reported Wednesday lower-than-expected net profit of 1.77 billion Hong Kong dollars (0.23 billion US dollars) for the six months to June as high oil prices took their toll.
But it was still a sharp improvement on the year ago net loss of 1.24 billion dollars, when passenger numbers slumped as a result of the Severe Acute Respiratory Syndrome outbreak.
Analysts had expected the company to report net profit in the range of 1.775-2.527 billion dollars.
"Prospects for the traditionally stronger second half of the year appear to be good, although the high fuel price remains a concern, which if sustained, could dampen global economic growth and the demand for air travel," said company chairman James Hughes-Hallett.
Speaking at a press conference, the chairman said the results were buoyed by a improving Hong Kong and global economy as well as strong demand for leisure travel.
Record high fuel prices remain a concern and will "cleary have an impact on the second half (figures) but demand has been very strong," he said.
Overall, he was positive about the future.
"The general outlook is rather bright barring unforeseen circumstances," he told reporters.
David Turnbull, deputy chairman and chief executive, said the group has been in talks to launch flights to Turkey and it also hopes to fly to Moscow next summer following a codeshare deal signed in June with Aeroflot. But he said the group's "goal for this year will be increase services to places we fly to."
At market close, the company shares fell 0.65 dollars or 4.64 percent to 13.35 as investors took profit on the results news.
Strong passenger demand, particularly on long-haul services, pushed revenues in the half sharply higher to 18.19 billion dollars from 12.3 billion dollars a year ago.
The number of passengers carried rose 59.3 percent to 6.4 million, while the amount of cargo carried reached 469,909 tonnes, a 15.8 percent rise from the same period last year.
But revenue growth was partially offset by a sharp increase in fuel prices. Fuel accounts for 21.8 percent of the company's total operating costs compared with 17 percent in 2002.
The company noted that the average fuel price was 16.9 percent higher than for the same period last year. Fuel surcharges for both cargo and passenger services only partly offset the additional cost, it said.
The airlines imposed a surcharge of five US dollars per person on short-haul flights and 14 US dollars on long-haul serices in early June. It has applied from regulators to raise this further but the size of the increase was not disclosed.
Cathay had a very strong first quarter last year but the outbreak of SARS had a devastating impact on passenger numbers in the second quarter, which fell dramatically to below one-fifth of normal levels.
At the height of the SARS outbreak, Cathay issued its first ever profit warning, parked 22 aircraft and then reduced its schedule, cancelling up to half its normal services in May and June.