Cathay Pacific’s Profit Rose 72% Last Year

HONG KONG — Cathay Pacific, the international air carrier based here, said Wednesday that its profit rose 71.8 percent in 2007 on booming growth in Asia, despite historically high oil prices.

The increase, at more than 7 billion Hong Kong dollars, or $900 million, was well above the expectations of analysts. Other top regional carriers, including Qantas and Singapore Airlines, have turned in similar performances in recent weeks.

“This is an impressive result and it was principally driven by consistently high passenger demand throughout the year,” Cathay’s chairman, Christopher Pratt, told reporters. “Demand from business and first-class passengers was particularly strong.”

But as the major airlines revel in their good fortune, industry executives and analysts are concerned about a softening United States economy and a weaker performance in cargo traffic.

For now, the numbers for Cathay could not look better. The strong full-year profit result was matched by a record 75.4 billion Hong Kong dollars in revenue, a 24 percent increase. The positive results were achieved despite a 21.8 percent higher bill for fuel, only part of which was passed on to passengers in the form of fuel surcharges.

Qantas had a record profit before taxes of 905 million Australian dollars, or $843.6 million, in the six months to the end of December, a 73 percent increase from a year earlier. Singapore Airlines reported an operating profit of about 1.7 billion Singapore dollars, or $1.22 billion, in the nine months to the end of December, a 68.9 percent increase.

Cathay’s results beat analysts’ expectations — some were forecasting profit as low as 5.6 billion Hong Kong dollars — and its shares closed up 12 cents, or 0.7 percent, at 16.32 dollars in Hong Kong.

While Cathay’s growing business in China is a significant advantage, analysts note that some 60 percent of its business lies outside China, leaving it vulnerable to any weakness in the global or Asian economies.

“You cannot get away from that,” said Mark Webb, regional transport analyst at HSBC in Hong Kong. “If growth slows substantially in Asia and Hong Kong, they will be affected.”

Still, the latest results confirm the benefits of Cathay’s acquisitions in China — the takeover of Dragonair, which has an extensive network of connections between Hong Kong and the mainland, and a stake in Air China.

Mr. Pratt said that those acquisitions in late 2006, which have now produced their first full-year contribution to the results, were “already having a positive impact on the business of the Cathay Pacific Group and we are confident the benefits will continue to grow.”

An issue of continuing concern for Cathay and other airlines is the performance of air cargo. While Cathay logged a record weight of freight in 2007, it acknowledged that the market had been “soft,” partly because of weak demand from Europe and North Asia, a shift to ocean transport because of high aviation fuel costs and increased competition.

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