Cathay Pacific has seen a sharp increase in share prices this morning, following the release of better than expected financial results for 2009.
The Hong Kong based airline posted a HK$4.69 billion (£400 million) profit for the year ending December 31st, reversing a net loss of HK$8.70 billion (£750 million) in 2008.
However, revenue for the period fell 23 per cent to HK$66.98 billion (£5.7 billion), down from HK$86.56 billion (£7.4 billion) a year earlier; illustrating continued weakness in core operations.
The blue-chip airline returned to profit through fuel hedging gains, cuts in capacity and the sale of a stake in the Hong Kong Aircraft Engineering Company.
Cathay Pacific sold its holding in the Hong Kong based maintenance venture for a HK$1.25 billion (£100 million) profit last year.
Following the announcement Cathay - controlled by Swire Pacific - rose by as much as five per cent on the market, up to HK$15.24.
The carrier will pay an annual dividend of 10 Hong Kong cents a share.
Despite “very solid” first-quarter forward bookings, the airline maintains a cautious outlook for 2010; with volatile fuel prices and increased competition likely to impact upon the airline.
“Revenues and yields remain below levels experienced prior to the recent downturn and there hasn’t yet been a sustained improvement in premium passenger demand which accounts for a high proportion of total revenues,” explained Cathay Pacific chairman Christopher Pratt.
The airline shares concerns initially raised International Air Travel Association (IATA) that “adverse changes” in passenger and cargo markets could be structural rather than cyclical, raising questions about whether the airline will need to adjust its heavy focus on the premium travel market.
Cathay presently maintains a fleet of 163 aircraft, with a further 36 on order. The figure includes aircraft operated by Dragonair and Air Hong Kong (a cargo venture in partnership with DHL).
Seven new passenger planes are due to arrive this year.