HONG Kong-based carrier Cathay Pacific said net profit almost doubled last year as tumbling oil prices slashed fuel costs and boosted passenger numbers, although global demand dented the cargo unit.
With fuel accounting for a huge chunk of most airlines’ outlay, the slump in crude since mid-2014 has provided a much-needed boost to their bottom lines. Cathay reported a net profit of HK$6 billion (US$773 million) in 2015, up 90 percent from HK$3.15 billion the year before and beating an average forecast of HK$5.32 billion in a Bloomberg News survey.
“The group’s performance in 2015 was better … the business benefited from low fuel prices,” Chairman John Slosar said in a statement filed to the Hong Kong stock exchange. He added that there was a “significant reduction in fuel surcharges.”
Cathay said it and subsidiary Dragonair had seen their fuel costs sink 37.8 percent, although that was partly offset by huge losses in its hedging exposure — when an airline locks in prices at a pre-determined level for a certain amount of time. “Fuel hedging losses reduced the benefit of lower fuel costs,” Slosar said.
The lower surcharges helped boost passenger numbers 7.9 percent, driven by strong economy class demand, the company said.
“Overall passenger demand remains strong and we expect to continue to benefit from low fuel prices,” Slosar said.
