Hong Kong-based Cathay Pacific has posted a surprising first-half net loss with higher fuel costs, a fall in demand for business travel and a drop in cargo carriage hitting the bottom line.

Cathay said it lost HK$935 million in the six months to June 30th, compared to a profit of HK$2.8bn for the same period of 2011.

In May this year Cathay stopped hiring ground staff, offered cabin crew voluntary unpaid leave and pared capacity growth to help pare costs.

“Increased fuel prices significantly affected the profitability of our passenger services, particular on long-haul routes operated by older, less fuel-efficient aircraft,” the carrier said in a statement.

Cathay said in May it would start using more fuel-efficient 777-300ER aircraft as it retired older 747-400 passenger planes.

The Hong Kong-based carrier said demand for premium class travel also fell during the period “as employees of major corporations started to travel less, in response to economic uncertainty”.

The problem was particularly acute on travel demand in the United States, Cathay said.