Cathay Pacific’s major shareholder, Swire Pacific, expects its aviation unit Cathay Pacific to drag down Swire’s full year profit.
Swire said Cathay (in which it holds a 45% stake) has continued to post profit declines during the second half of the year due to overcapacity and intense competition. Cathay suffered an 82% drop in interim profit and was unlikely to post better second half earnings, Swire said.
“Passenger yields will remain under pressure. Cargo demand will continue to be affected by overcapacity and economic fragility,” Swire said in a statement reported in Hong Kong’s South China Morning Post.
“The benefit from lower fuel prices will continue to be partially offset by fuel hedging.”
Swire Pacific’s businesses range from aviation, property, trading and marine services.
It has been linked with Cathay virtually from the carrier’s inception. In 1948 Butterfield & Swire (now known as Swire Group) bought 45% of Cathay Pacific, with Australian National Airways taking 35%. Cathay’s founders, American Roy Farrell and Australian Sydney de Kantzow (who established the airline in 1946), took 10% each.
Written by Peter Needham