Cathay Pacific rides out high fuel costs

The carrier has hedged 50% of its expected fuel needs for the rest of 2006, and so far is committed to hedging 25% for next year, said a company spokeswoman.

Fuel hedging gains increased to HK$720 million in the first half of 2006 from HK$513 million last year and included unrealised mark-to-market gains of HK$590 million (compared with HK$52 million in 2005), added Cathay.

This helped the airline to post a net profit of HK$8.68 billion, only 0.1% lower than that in the first half of 2005, although this came on the back of a 13.4% increase in turnover to$27.1 billion. “The biggest obstacle to a satisfactory profit was again the price of fuel,” said Cathay chairman Christopher Pratt at a post-results press conference on August 9. “For every HK$100 we earned, HK$38 went to the fuel suppliers. This is very frustrating.”