Cathay Pacific shares rise

Singapore

CATHAY Pacific Airways shares rose as much as 6 per cent on Thursday, as analysts said they believed losses had bottomed for the Hong Kong airline after it reported its worst first-half result in at least two decades.

The carrier, in a briefing with analysts on Wednesday, said the corporate travel market was recovering and passenger yields, a proxy for ticket prices, would see a smaller drop in the second half than the 5.2 per cent fall in the first six months.

"We see some bottom out effect in some routes in terms of lower fares," Cathay chief customer and commercial officer Paul Loo said in a webcast of the briefing, which was not open to members of media. "It is from a low base but at least the continuous decline is narrowing."

These comments spurred optimism among analysts, with Crucial Perspective's Corrine Png saying "the worst was nearly over" for the carrier, that in recent years has seen its market share on international routes eroded by aggressively expanding mainland Chinese and Gulf airlines. Poor fuel hedges and its lack of a budget arm have also hurt Cathay's competitiveness.

Its first-half loss was worse than expected, but the outlook will improve from next year with forward bookings suggesting stronger passenger revenue growth, Ms Png said.

Cathay shares closed about a per cent higher at HK$11.80, after earlier hitting a 10-day high of HK$12.42, versus the benchmark index that closed down 0.2 per cent. REUTERS