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HONG KONG - Cathay Pacific said Wednesday it returned to profit in 2009 despite a drop in the Hong Kong-based carrier's sales amid global economic turbulence.
The airline said the bulk of its HK$4.7 billion (US$606 million) profit came from cost cutting and gains on fuel hedging bets, which caused Cathay's massive HK$8.7 billion loss in 2008.
Airlines buy a portion of fuel -- often their single-biggest cost -- through contracts to counter their exposure to price swings.
Hedging is "an expensive and tricky game to get right and it can whiplash you severely," Cathay chairman Christopher Pratt told a news conference to announce the carrier's year-end results.
Cathay said it posted a modest HK$285 million operating profit last year as it wrestled with weak demand. Revenues in 2009 were down 23 percent year-on-year to HK$67 billion, it said.
"The global economic slump last year resulted in extremely challenging business conditions for the Cathay Pacific Group and commercial aviation in general," it said in a statement.
"While there was some pick-up in the airline's passenger and cargo businesses towards the end of 2009, overall there was a deep downturn in key markets, which in turn led to sharply reduced revenues."
Fuel prices reached "uncomfortably high" levels in mid-2009 while Cathay and its Dragonair unit carried 24.6 million passengers last year, a 1.6 percent drop from 2008, it said.
Cargo revenue tumbled almost 30 percent in the midst of "exceptionally weak" freight business during the first half of the year.
Last April, chief executive Tony Tyler said the global economic crisis had hit Cathay harder than the SARS outbreak and September 11 attacks on the United States.
In response, the company slashed flights and asked its 20,000 staff to take unpaid leave.
On Wednesday, Pratt said weak demand for first-class seats and lower-than-usual sales remained a concern, although there had been a recent pick-up in demand among premium ticket customers.
"We remain cautious, but cautiously optimistic for 2010," Pratt said. "Our business is in much better fundamental shape than it was last year."
- AFP/ir
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