Cathay: profits won't rebound anytime soon
Updated: 2009-11-21 08:38
(HK Edition)
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HONG KONG: Cathay Pacific Airways Ltd, Asia's third-most valuable airline, expects yields will take a long time to recover as the global recession continues to damp business and leisure travel.
"It's very unlikely that things will be as good as they were in 2007 for some time to come," Chief Executive Officer Tony Tyler told reporters in Singapore Friday. Cathay made a HK$7 billion ($903 million) profit that year, the biggest since at least 1990, according to data compiled by Bloomberg.
The Hong Kong-based carrier's yields, or average revenue per passenger, have fallen, even as the company has slashed fares to lure back travelers. The airline has also parked planes, given staff unpaid leave and delayed a cargo terminal to pare costs.
"Demand seems to have rebounded, but it's most likely just driven by low ticket prices," said Jay Ryu, a Mirae Asset Securities analyst in Hong Kong, adding, "Paying higher fares is the last thing that passengers want to do."
Asian carriers will likely post "heavy losses" this year, according to the Association of Asia Pacific Airlines, after losing $4.8 billion last year.
Cathay fell 1.9 percent, to HK$13.50, at the close of trading in Hong Kong, although the shares have surged 55 percent this year.
Cathay has seen some recovery in premium traffic and cargo though, Chief Operating Officer John Slosar said in a Bloomberg Television interview Friday in Hong Kong.
"The real question is if that will carry on till next year," he added.
Bloomberg News
(HK Edition 11/21/2009 page2)