Cathay Pacific 777-300ER. Courtesy, Boeing

Cathay Pacific (CX) Group posted a net profit of HKD5.5 billion ($709 million) for 2011, down 62% over net income of HKD14.05 billion in 2010. CX said the results were affected by “persistently high jet fuel prices” and weak cargo demand due to “instability and uncertainty in the world’s major economies.”

Operating revenue climbed 9.9% to HKD98.4 billion while operating expenses jumped 19.4% to HKD92.9 billion. Fuel costs rose 37.5% to HKD38.88 billion.

“After a record year in 2010, we faced a number of major challenges in 2011: the instability of the global economy, the weakness of the air cargo market, the reduction of yields in economy class, the impact of natural disasters in Japan and Thailand, unrest in the Middle East and continued high jet fuel prices,” CX chairman Christopher Pratt said a written statement.

Passenger revenue for the year was HKD67.8 billion, up 14.2% compared with 2010, because of a strong demand for premium class travel. Capacity increased 9.2% to 126.34 billion ASKs. Passenger boardings rose 2.9% to 27.6 million while load factor fell by 3.0 points to 83.4%.

Cargo revenue for 2011 increased by 0.3% to HKD25.98 billion year-over-year against a 6.9% increase in ATKs to 14.37 billion, due to the earthquake and tsunami in Japan in March 2011 that disrupted the supply chain for high technology products. As a result, the manufacture of such products in Mainland China was affected, reducing cargo shipments through Hong Kong.

Looking ahead, Pratt said, “Economic uncertainties have continued into the first half of this year—while these uncertainties continue, we expect pressure on economy class yields and our cargo business in particular to remain weak. Fuel prices have risen further. As a result, 2012 is looking even more challenging than 2011. We will continue to be vigilant in managing our costs while not compromising the quality of our products and services or our long-term strategic investment in the business,” he said.

 In 2011, the Hong Kong-based carrier took delivery of six Boeing 777-300ERs, three Airbus A330-300s and four 747-8Fs. This year it is scheduled to take delivery of 19 new aircraft. Earlier this year, CX committed to six A350s (ATW Daily News, Jan. 23).