Airlines Information

HONG KONG - Cathay Pacific Airways Ltd. returned to profit in 2009 as cost-cutting measures and bets on fuel prices helped Asia's No. 3 carrier rebound from its biggest loss ever the year before.

Hong Kong's flagship airline reported profit of $4.7 billion Hong Kong dollars ($601 million) in the 12 months ended Dec. 31, the company said in a statement Wednesday.

That compared to a record loss of HK$8.6 billion ($1.1 billion) in 2008 amid plummeting demand for travel and volatile fuel prices that soured the company's hedging contracts.

For all of 2009, revenue declined by nearly 23 per cent to around $HK70 billion (close to $9 billion).

Cathay said there was a pickup in passenger and cargo traffic as the recession abated but demand had yet to bounce back to levels seen before the slump.

Also helping the airline were measures it took to drastically reduce costs and the sale of part of its stake in Hong Kong Aircraft Engineering for $243 million.

Higher fuel prices, meanwhile, helped the company recoup on its hedging bets. Cathay reported a gains of nearly $258 million last year on its hedging contracts.

"While we welcomed the improvement in business in the latter part of 2009, we remain cautious about the prospects for 2010," Cathay's chairman Christopher Pratt said in a statement

Passenger traffic at Cathay and its subsidiary Dragonair was down by 1.6 per cent. Meanwhile, the company brought in about 30 per cent less revenue from cargo traffic, with the amount of freight carried by Cathay and Dragon slipping around 7 per cent.

Cathay shares were up 1.9 per cent in afternoon trade.

GENEVA (AP) — Global airlines are undergoing a surprisingly strong recovery with Asian and Latin American carriers leading the way, the leading industry group said Thursday as it halved its loss forecast for 2010 to $2.8 billion.

The International Air Transport Association said carriers began bouncing back late last year, and have continued to see stronger demand after posting record losses during the global economic crisis. The group also lowered its 2009 loss estimate to $9.4 billion from $11 billion because of the year-end rally.

"We are starting to see some blue skies ahead of us," said IATA chief executive Giovanni Bisignani.




The group, which represents 240 airline companies worldwide, had predicted in December that 2010 losses would total $5.6 billion because of the "extraordinarily low" yields airlines are generating — the average price someone pays to fly one mile.

Yields are now expected to improve 2 percent for passenger planes, and 3.1 percent for cargo traffic this year, despite a glut of planes on the market and lower corporate travel budgets. Both key statistics dived 14 percent in 2009.

Passenger demand should grow 5.6 percent for the year, while cargo demand could jump 12 percent, IATA added. It said strong growth in Asia and Latin America was offsetting lagging demand in Europe and the United States.

"We are seeing a definite two-speed industry," Bisignani told reporters. He noted that American and European travelers may take a longer time to return to higher-priced business class seats for short-haul flights, and said markets in their regions continued to contract.

European carriers are expected to post a $2.2 billion loss, the largest in the world, while North American airlines could lose $1.8 billion because of a jobless recovery and poor consumer confidence, the group said. By contrast, Asian-Pacific companies could make $2.7 billion and Latin American carriers another $800 million.

Bisignani said 2010 represents the halfway point in a recovery effort that could take three years — even if that still doesn't mean profits. Airlines should generate $44 billion in revenues more than last year, but that is still be $43 billion below the industry's 2008 peak, he said.

IATA warned, however, that higher fuel costs would hamper any industrywide rebound. It is now gauging an average oil price of $79 a barrel for the year, meaning $132 billion in costs for carriers. That's over a quarter of all operating costs.

"Oil is a wild card," Bisignani conceded.

Speaking on industry developments, he noted over 30 airlines were knocked out of business since the crisis began and that carriers have lost nearly $50 billion in the last decade. They now hold over $200 billion in debts.

"This is not the time for increases in salaries or prices for services," Bisignani said, without mentioning specifically Lufthansa's strike last month or similar action threatened at British Airways.

"It's certainly not the time for strikes," he said. "All the partners need to work together to get out of these red numbers."

Creditors of South Korea's cash-strapped Kumho Asiana group are considering a capital write-down of Asiana Airlines in return for a fresh fund injection, the group's top lender said, sending Asiana shares down 15 percent.

State-run Korea Development Bank is restructuring key units including Asiana Airlines, the country's second-biggest carrier, after the conglomerate's aggressive acquisitions prompted temporary cash shortages late last year.

"We have asked major shareholders (of Asiana) to take some responsibility, including capital write-downs, in return for a new capital injection," a KDB spokesman said on Friday.

"Nothing has been decided regarding which shareholders should sacrifice how much. The capital write-down may not take place at all, if we find Asiana Airlines financially sound enough," he said.

Creditors, which have agreed to provide KRW120 billion won (USD$106 million) in financial support to the airline, plan to complete their due diligence on the company by the end of March.

The group is burdened by the cost of its 2006 acquisition of Daewoo Engineering & Construction, having agreed to buy back Daewoo shares held by financial investors at a price far above current levels. It also bought logistics firm Korea Express in 2008.

Shares in Asiana Airlines dropped 14.7 percent to a three-week low before closing down 12.5 percent at 3,700 won, versus the broader market's 0.4 percent gain

Air France's insurance company said on Friday it will appeal a Brazilian court's ruling for the airline to pay USD$1.16 million in compensation to the family of a victim of a fatal crash last year.

French insurance company Axa said in a statement it did not accept Thursday's ruling as a precedent because compensation should be decided by a committee set up after the crash by Brazil's government, associations of victims' families and insurers. That committee agreed to define the criteria for fair compensation for the families.

Air France flight AF447 between Rio de Janeiro and Paris crashed into the Atlantic Ocean during a storm on June 1, 2009, killing all 228 people on board.

A Rio civil court judge ordered Air France on Thursday to pay BRR2.04 million reais (USD$1.16 million) as compensation for the death of Marcelle Valpacos Fonseca Lima, a 41-year-old woman who was the Rio state attorney-general.

Judge Mauro Nicolau Junior said in his ruling that the crash, the cause of which is still unclear, was in large part due to the "negligent conduct of the accused."

An Air France spokeswoman declined to comment while the airline studies the ruling.

The company said after the crash that it would compensate families of the victims through its insurers, with payments of around EUR€100,000 euros (USD$137,000) per victim as a compassionate gesture rather than an admission of liability.

Passengers from 32 nationalities were killed in the crash of the Airbus A330. Among them were 61 French and 58 Brazilians.

An international search to locate the wreckage failed to find the black box recorders that are crucial to pinpointing the cause of crash. It is due to resume this month.