Cathay Pacific full-year profit drops 83% Cathay Pacific Airways, the Hong Kong-based airline, said its net profit dropped 83 per cent in 2012 as cargo shipments from mainland China were weak and the airline was buffeted by higher fuel costs. However, the full-year net profit of HK$916m (US$118m) was a marked improvement on the airline's net loss in the first six months of 2012 of HK$935m. Cathay said on Wednesday that demand for leisure travel out of Hong Kong had remained strong through the year but that "yields were under pressure" as travellers sought out "the best deals." Revenues rose 1 per cent to HK$99.4bn. Like many other airlines, Cathay said it was hurt by higher fuel costs. Fuel is our most significant cost. Throughout much of 2012, fuel prices were at sustained high levels and this had a major impact on our operating results," said Christopher Pratt, chairman. Fuel accounted for 41 per cent of the carrier's total operating costs, the company said. The airline, owned by closely held Asian conglomerate Swire, said it had retired three less fuel-efficient Boeing 747-400 passenger planes in November and also withdrew four converted freight aircraft last year. In other cost-cutting measures, Cathay reduced the frequency of freight flights to Europe by 63 per cent to 11 flights per week and said that increased competition in the cargo business had exacerbated the slowdown in trade. Cargo revenue for the airline in 2012 was HK$24.6bn, a decrease of 5.5 per cent compared with 2011. The airline's cargo business is also a bellwether for how robust demand for electronics exported from China is as these are often shipped by air. "Demand increased in the last quarter, the seasonal peak for airfreight shipments," the airline said. There was no sustained cargo peak in 2012, rather a short two-month period of improved demand. Passenger revenues rose to HK$70.13bn, up 3.5 per cent year on year. Passenger yield increased just 1.2 per cent because of higher fuel surcharges. Cathay introduced "fanfares" in autumn, a promotional strategy based on offering steep discounts every Tuesday on certain routes. The airline said it was also seeing increasing traffic from the Pearl River Delta, the highly industrialised and affluent area in southern China that acts as the country's export powerhouse, but warned that this business was under pressure because more mainland Chinese airlines have begun flying direct to overseas destinations. Cathay said demand from the other Asian giant, India, was "strong" but that the persistent weakness of the rupee had affected revenues from India. Cathay's affiliate airline Dragonair introduced flights to Kolkata in November and Cathay itself introduced flights to the southern Indian business hub of Hyderabad in December. Yields to South Asia and the Middle East increased 2.4 per cent.