Fuel hedging
Cathay Pacific Airways Ltd., Asia’s largest international airline by passengers, reported net income that lagged behind analyst estimates after it had losses from fuel hedging and passenger yields dropped. The Shares plunged.
Profit jumped almost sixfold to HK$1.97 billion ($254 million) in the six months ended in June, trailing the HK$2.22 billion median estimate in a Bloomberg News survey of six analysts, Hong Kong-based Cathay said in a statement Wednesday. Sales in the first six months declined 0.9 percent to HK$50.4 billion.
Cathay shares fell the most in more than six years after the results, which included a HK$3.74 billion loss from fuel hedges. Last year’s slump in the crude oil market had left several Asian carriers holding hedges placed when oil prices were higher, adding to the challenges for Chief Executive Officer Ivan Chu.
“It’s a mixed set of earnings,” said Mohshin Aziz, a Malayan Banking Bhd. analyst in Kuala Lumpur. “On the revenue side things were very weak, much weaker than expected. Fortunately on the cost side, they seem to be making a lot of improvements.”
The airline had an unrealized fuel hedging loss of HK$7.42 billion at the end of June, Cathay said in the statement.
Cathay’s shares fell 7.7 percent, the biggest decline since April 27, 2009, to close at HK$15.38 in Hong Kong. The stock dropped for an eighth consecutive day, the longest losing streak in more than two years.