Strong performance at Cathay Pacific

Hong Kong airline Cathay Pacific has said it expects performance to improve further in the second half of financial 2010 after reporting record profits for the past six months.

The airline – the dominate carrier in the region – reported a net profit of HK$6.84 billion for the six months ended June, up from HK$812 million a year earlier.

This is despite an interruption of aviation traffic earlier this year, when ash from an Icelandic volcano shut down swathes of European airspace for a number of days.

The figure represented the best-ever six-month profit for the company, beating an average forecast of HK$4.13 billion from six analysts polled by Reuters news agency.

Following the results Cathay climbed as much as 7.3 per cent to HK$19.40 this morning, the largest intraday trading rise since October 2009.

Turnover for the period increased by 33.7 per cent to HK$41,337 million.

A cautiously optimistic Cathay Pacific chairman, Christopher Pratt, said: “If present trends continue, we expect our financial results to continue to be strong in the second half of 2010.

“That said, conditions can change rapidly in the airline industry. Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.”

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Future Developments

Cathay Pacific confirmed it has signed a letter of intent with European manufacturer Airbus to buy 30 A350-900s. The airline also intends to exercise purchase rights with Boeing to buy another six 777-300ERs.

The total catalogue price of both orders will be about HK$75 billion.

The new A350s will be delivered between 2016 and 2019 and will be used partly to replace some of the airline’s older aircraft and partly to accommodate future growth.

The Airbus A350s are also expected to allow Cathay to fly to secondary cities in Europe and the United States, where limited demand does not allow the operation of larger aircraft.

Cathay Pacific chief executive, Tony Tyler, said: “The A350-900 is a perfect fit for the development of our fleet - a mid-size long-haul aircraft that is fuel efficient, environmentally friendly, and provides the kind of capacity, range and operating economics that we need to complement and enhance our existing fleet.”

Cathay Pacific’s strategic partnership with Air China has also continued to mature, following the formation of a new cargo joint venture based in Shanghai – announced in February.

The two airlines will use an existing Air China subsidiary, Air China Cargo, in which Cathay Pacific will take equity and economic interest of 49 per cent, as the platform for the joint venture, which is expected to begin operations in October.