Cathay Pacific returns to profit

Cathay pacific, one of Asia’s biggest airlines, has reported that it returns to profit. The cost cutting and bets on the price of fuel paid off.

Fuel hedging, which has a lot of risk in it, helped the airline to avoid a fall in revenue of almost a quarter over the period. Despite the profit they made in the fourth quarter of the year, Cathay said it was cautions about prospects for 2010. They used fuel hedging which has a lot of risk so it could go wrong, luckily for them it did not.

The global economic slump last year resulted in extremely challenging business conditions for Cathay Pacific Group and commercial aviation in general, a lot of other airlines had a harsh time as well. They also had to make cuts in effort to survive the economic slump.

Cathay Pacific Group reported an increase in passenger numbers and cargo business in the second half of the year, but it would not be enough to cover the sharply reduced revenues for the first half of the year. They would still have take measures to recover and return to profit.

The other problem they had to face was the cost of fuel, which rose steadily from the middle of 2009. That could undermine the profitability.

According to the International Air Transport Association, 2009 saw the biggest decline in air passenger traffic in the post-war era. It estimated that airlines lost around $11bn together.

Now with the most of the global economic slump behind us they will have to keep up the cost cutting and keep the price of fuel in mind. The business conditions for commercial aviation are better in general, but there are still some airlines who are struggling to survive.

Thibaut Delsoir
source: http://news.bbc.co.uk/2/hi/business/8559328.stm