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Cathay Pacific suffers $1.1 billion loss for 2008

Cathay Pacific suffers $1.1 billion loss for 2008

Cathay Pacific Airways Ltd. racked up its first annual loss in 10 years Wednesday as bad bets on jet fuel costs and plummeting demand due to the economic crisis took a toll on Asia's third-largest carrier.
Hong Kong's flagship airline reported a loss for the 12 months ended Dec. 31 of about $8.6 billion Hong Kong dollars ($1.1 billion).
"Having made a painful adjustment to high fuel prices, the aviation industry now has to adjust to a severe economic downturn," Cathay Chairman Christopher Pratt said in a statement. "Cathay Pacific expects an extremely challenging year in 2009."
The loss, far worse than expected, compared to a profit of HK$7 billion ($900 million) for 2007 and was the airline's first annual red ink since the height of the Asian financial crisis in 1998. For all of 2008, revenue grew by about 15 percent to nearly HK$87 billion, the company said.
The market had expected a loss of HK$6.8 billion, according to analysts polled by Thomson Reuters.
Cathay has repeatedly warned its full-year results would disappoint.
As with a number of airlines around the world, Cathay suffered massive losses from bad bets on contracts meant to hedge against a rise in jet fuel prices during the first half of 2008. Paper losses on hedge contracts running from 2009 to 2011 have surged to HK$7.6 billion, the company said.
The second half was equally turbulent as passenger demand fell off sharply amid the accelerating global slowdown.
Passenger traffic at Cathay and its subsidiary Dragonair climbed 7.3 percent to 25 million last year compared to the previous year. But cargo volumes slipped 1.6 percent.
To cope with the downturn, Cathay has previously announced plans to park two freighters, offer unpaid leave to employees and possibly delay construction on a cargo terminal to cut costs.
The company has said it will keep passenger growth flat in 2009 by scaling back services to North America and adding flights to Australia, the Middle East and Europe, but the airline won't cut any destinations.
Cathay shares traded 2.1 percent higher at HK$7.15 in Hong Kong trade Wednesday.


Updated : 2021-03-08 18:11 GMT+08:00