Rising jet fuel costs hurt bottom line

HONG KONG – Cathay Pacific Airways Ltd. warned yesterday that its profits would be “disappointing” this year because of rapidly rising fuel costs.

The Hong Kong-based airline said it paid 60 per cent more for jet fuel in the first half of the year compared to the same period in 2007. The most recent spot price for jet fuel was more than 90 per cent higher than the company’s average price last year, it said.Earnings during the first-half and full-year periods “are expected to be disappointing,” the carrier said in a filing to the Hong Kong Stock Exchange.”It is not possible to estimate accurately the effect of high jet fuel prices on the 2008 financial results.”The airline hiked its ticket surcharge by 37 per cent last month to help offset high fuel prices after receiving approval from regulators.Cathay shares fell 5,4 per cent to close at HK$14,06 after the warning.Its stock has shed more than 27 per cent this year amid worries over fuel prices.Cathay’s earnings were already expected to drop this year, with analysts surveyed by Thomson forecasting its 2008 net income at US$551 million.The company’s 2007 net profit surged 72 per cent on strong demand for first- and business-class travel despite the rise in fuel prices that began at midyear.Net profit for the 12 months that ended December 31 rose to US$900 million, Airlines around Asia are struggling to cope with record fuel costs.Australia’s Qantas announced in May it would lay off staff and lower capacity across its domestic and international networks.Also in May, Singapore Airlines increased its fuel surcharge on all flights.Nampa-APThe most recent spot price for jet fuel was more than 90 per cent higher than the company’s average price last year, it said.Earnings during the first-half and full-year periods “are expected to be disappointing,” the carrier said in a filing to the Hong Kong Stock Exchange.”It is not possible to estimate accurately the effect of high jet fuel prices on the 2008 financial results.”The airline hiked its ticket surcharge by 37 per cent last month to help offset high fuel prices after receiving approval from regulators.Cathay shares fell 5,4 per cent to close at HK$14,06 after the warning.Its stock has shed more than 27 per cent this year amid worries over fuel prices.Cathay’s earnings were already expected to drop this year, with analysts surveyed by Thomson forecasting its 2008 net income at US$551 million.The company’s 2007 net profit surged 72 per cent on strong demand for first- and business-class travel despite the rise in fuel prices that began at midyear.Net profit for the 12 months that ended December 31 rose to US$900 million, Airlines around Asia are struggling to cope with record fuel costs.Australia’s Qantas announced in May it would lay off staff and lower capacity across its domestic and international networks.Also in May, Singapore Airlines increased its fuel surcharge on all flights.Nampa-AP