Hong Kong-based Cathay Pacific has announced profits have fallen 83 percent amid higher fuel costs and a drop in demand for corporate travel.
The carrier made a net profit of HK$916 million in 2012, down from HK$5.5 billion a year ago.
In a statement, Cathay said in 2012 the Group’s core business “was adversely affected by the high price of jet fuel, pressure on passenger yields and weak air cargo demand”.
Economic uncertainty in the Eurozone and an increasingly competitive environment “added” to the difficulties, it said.
“It was a challenging year for the aviation industry generally. The Group’s share of profits from associated companies, including Air China, showed a marked decline.”
Passenger revenue for the year increased 3.5 percent compared to 2011.
Capacity increased by 2.6 percent.
“Premium class yields were affected by travel restrictions imposed by corporations,” Christopher Pratt, chairman of Cathay Pacific said. “Economic uncertainty, particularly in the eurozone countries, and an increasingly competitive environment added to the difficulties.”
Mr Pratt added that high fuel costs had hurt profitability, especially on long-haul routes, which Cathay said were dominated by “older, less fuel-efficient” Boeing 747-400 and Airbus A340-300 aircraft.
Cathay has taken various steps to reduce costs in recent months including offering unpaid leave to its cabin crew, reducing capacity on some long-haul flights and retiring less fuel-efficient planes.
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