Cathay issues profit warning
HONG KONG – Cathay Pacific has warned that its 2008 results will be “disappointing” as revenue is hit by losses of HK$2.8 billion on fuel hedging contracts.
“The recent rapid fall in the jet fuel price has caused mark-to-market losses to be incurred on fuel hedging contracts,” the carrier said in a statement.
Cathay said mark-to-market losses on the contracts, mainly Brent crude options, were based on the difference between the spot fuel price and that set in the contract, while the level of actual losses incurred and payable depended on future fuel price movements.
Cathay projected total fuel expenses to more than double this year to HK$40 billion from HK$15.86 billion in 2007.
Cathay said advance bookings of first and business-class tickets were down on last year, and demand for economy-class seats was also weaker.
“Corporate travel volumes in all classes are of concern as corporate clients begin to impose stricter travel policies on their employees,” said the carrier.
Ian Jarrett
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