Hong Kong flag carrier Cathay Pacific said Wednesday it swung to a first-half lower than expected net profit of HK$24 million ($3.1 million), with passenger gains offset by persistently high fuel prices and falling cargo revenue.
The profit for the six months ending June 30 represents a huge upswing, coming after the blue-chip Asian airline suffered a first-half net loss of HK$935 million a year earlier.
But it fell short of the average HK$721 million forecast by seven analysts in a poll by Dow Jones Newswires.
Revenue slipped 0.6 percent to HK$48.58 billion, while passenger numbers increased 1.3 percent to 14.50 million.
Company chairman Christopher Pratt said fuel costs decreased 8.5 percent compared to the same period last year but remained expensive, accounting for 39 percent of total operating costs.
"We continued to operate in a challenging business environment in the first half of 2013, though there was improvement in our passenger business," he said in a statement.
"Our cargo business has been affected by weak demand for more than two years, which is unprecedented.
"The persistently high price of jet fuel continued to affect our business adversely."
The Hong Kong flag carrier said it had helped combat high fuel prices by withdrawing older planes and operating more long-haul services using fuel-efficient Boeing 777-300ER aircraft.
Cathay, which also owns Dragon Airlines Ltd, said cargo revenue for the first half of 2013 was down by 5.2 percent to HK$11.3 billion compared to the same period in 2012.
Daniel Tsang, an analyst at Hong Kong-based aviation consultancy Aspire Aviation, said there had already been several false dawns indicating a recovery.
"Cathay can only be said to be out of the woods when this cargo conundrum ends. But there have already been several false dawns," he said in an email to AFP.
The airline faced a difficult year in 2012 when profit plunged more than 83 percent to HK$916 million, buffeted by high fuel prices and the global financial crisis.
Pratt said despite the difficult conditions there had been improvements, which "mainly reflected stronger passenger business and cost reductions".
"Our financial position remains strong. We will continue to invest to make our business stronger," he said.
But he added: "The business outlook for the rest of 2013 remains unclear."
Cathay said it had taken delivery of six new aircraft in the first six months of 2013, including two Airbus A330-300, three Boeing 777-300ER and one Boeing 747-8F freighter.
The airline restored flights to Los Angeles and Toronto, and introduced a fifth daily flight to London. It will resume flights to New York from September.
Pratt said the premium economy class introduced in 2012 was "growing in popularity".
"We continued to strengthen Dragonair's regional network, adding services to Da Nang, Wenzhou, Yangon and Zhengzhou and will, subject to government approval, introduce a new three-times-weekly seasonal service to Siem Reap in Cambodia in October," he added.
The International Air Transport Association said in July that demand from the Asia-Pacific region and a steadying business climate in the eurozone was helping to boost global traffic, though oil prices remained high.
In the first six months of the year, traffic increased by 4.8 percent on a 12-month comparison, and the industry could turn in an overall net profit this year of nearly $13.0 billion, IATA said.