Cathay Pacific Airways reported a 6% drop in its first-half net profit on rising fuel costs and warned its second-half result could be worse if high oil prices persist.

Cathay Pacific Airways recorded an attributable profit of HK$1,670 million during the first six months of the year compared to a HK$1,771 million first-half profit last year.

Fuel costs represented 27.9% of the airline's total net operating cost in the first half of 2005, up from 21.8% in the same period a year ago, as the average price of fuel into plane increased from US$46 to US$65 per barrel. Passenger and cargo fuel surcharges only partially offset this additional cost.

Turnover increased by HK$4,225 million (US$542 million) to HK$23,884 million (US$3,062 million) as the airline carried 7.3 million passengers and 517,920 tonnes of cargo, up from 6.4 million passenger and 469,909 tonnes of cargo carried in the first half of 2004. Passengers carried increased by 14.5% over the period, ahead of a corresponding 12.2% increase in passenger capacity. Passenger yield was HK 47.2 cents (US 6.1 cents), compared to HK 45.7 cents (US 5.9 cents) last year.

Cargo demand out of Hong Kong remained strong. The cargo load factor was 65.9% and cargo yield was HK$1.75 (US 22 cents) up from HK$1.72 (US 22 cents) last year.

The airline expanded its fleet and extended services during the period, taking delivery of a Boeing 747-400 freighter, one B777-300 and two Airbus 330-300 passenger aircraft. A further A330-300 was delivered in July.

Cathay Pacific Chairman David Turnbull said: While forward bookings are encouraging the high price of fuel, which could yet dampen world growth, may well make it difficult for us to achieve a similar result in the second half. This year we have already won a number of major international service awards, including the Airline of the Year 2005. Delivering superior service and value for money remains our focus as we continue to expand our network and strengthen Hong Kong as a global aviation hub.