Cathay Pacific Group's profit for 2012 fell 83.3 percent, year over year, to HK$916 million ($118 million) due to a mix of high fuel prices, weak air cargo demand and passenger yield pressure.
Officials also pointed to the tough European economy and increased competition as factors for the severe drop in profitability.
Air cargo revenue fell by 5.5 percent, year over year, in 2011. The HK$24.55-million finish accompanied a 3.1-percent drop in capacity and a 3 percent decline in load factor. Cargo was specifically affected by weak demand out of Hong Kong and mainland China, although fuel remained a major driver in the carrier's results.
These results came amid business changes for the carrier. In May, Cathay retired its Boeing 747-400 passenger aircraft and four Boeing 747-400BCFs. Management also reduced capacity on long-haul routes and shifted services to more profitable areas of its network. The carrier canceled its order of eight Boeing 777-200 freighters, replacing those with an order for three 747-8F planes. But Cathay has also recently been expanding, announcing new cargo services to Colombo, Hyderabad and Zhengzhou. The carrier opened a new cargo terminal at Hong Kong International Airport last month.
While acknowledging the current industry is extremely volatile and challenging, Christopher Pratt, Cathay's chairman, said officials had taken the right measures to deal with the current setbacks.
"Our focus will remain on protecting the business and managing short-term difficulties while remaining committed to our long-term strategy. Our financial position remains strong and we will continue to invest in the future," he said in a statement. "Our core strengths remain the same as ever: a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.” - Jon Ross