Cathay Pacific books $A1.35 billion loss
January 7, 2009 - 11:08PM

Hong Kong-based airline Cathay Pacific will include a writedown of $HK7.6 billion ($A1.35 billion) in its 2008 results due to potential losses on oil hedging contracts.

The carrier said in a statement to the Hong Kong stock exchange on Wednesday that the provision increased from $HK2.8 billion (about $A502 million) in October as the oil price continued to decline.

It added that weakening customer demand would also hit its year-end results, which it expected to be "disappointing".

"Since (November) revenue has continued to weaken. First and business class traffic in particular have fallen significantly," the statement said.

"This decline and the impact of currency movements have caused a weakening of passenger yields. Advance bookings for the first quarter of 2009 are markedly down on the same period in 2008."

The statement added that the air cargo market out of Hong Kong and mainland China was also struggling.

Cathay said the potential oil hedge loss was booked after the prices tumbled 69 per cent between July and the end of the year, although it said its realised losses so far were only $HK300 million ($A53 million).

Fuel hedging contracts were taken out to counter the high cost of oil earlier in the year.

Cathay Pacific said last month its passenger and cargo traffic continued to drop in November as global demand was hit by the dire economic environment.