Cathay Pacific posts record $1.1bn loss

Fuel hedging drags profits down 221.9%

Cathay Pacific has announced a record loss of HK$8,558m ($1,099m) in 2008, down 221.9% compared to HK$7,023m ($902m) the previous year.

Hong Kong's largest carrier blamed "extremely high fuel prices" and a decline in passenger and cargo demand, only partially offset by fuel surcharges.

It said falling fuel prices "though welcome" had caused losses of HK$7.6bn ($976m) from fuel hedging contracts for the period 2009-2011.

Cathay is the second major airline to issue poor financial results today (March 11) after Lufthansa reported a 63.8% slump in profits.

"Having made a painful adjustment to high fuel prices, the aviation industry now has to adjust to a severe economic downturn," said Cathay's chairman Christopher Pratt.

Mr Pratt said 2009 would be "an extremely challenging year" with weak passenger and cargo, mirroring comments made today by Lufthansa's ceo and chairman Wolfgang Mayrhuber.

Mr Pratt said losses from hedging contracts would continue but at lower levels than 2008.

Cathay's dividend plummeted to HK$0.03 per share, down 96.4% compared to HK$0.84 in 2007.

www.cathaypacific.com