Cathay says 2010 prospects improving

Cathay says 2010 prospects improving    Air carrier Cathay Pacific said it expects stronger than previously forecast results for 2010 due to improved revenue from its cargo and premium passenger businesses.
   Since the previous forecast was made, 'the trading position has been strong, particularly on the cargo side,' Cathay said in a note to the Hong Kong Stock Exchange Monday. 'The improved cargo and premium passenger revenues which became apparent in the last quarter of 2009 have continued into this year. This means that, despite higher fuel prices, we expect strong financial results for the first half of 2010 and, if present trends continue, for the second half also. That said, conditions can change very rapidly in the airline industry. Our results would be adversely affected, and very quickly so, by a significant increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.'
   The airline had previously warned that 'revenues and yields remain below levels experienced prior to the recent downturn and there has not yet been a sustained improvement in premium passenger demand which accounts for a high proportion of total revenues. There are concerns that the adverse changes which we have seen in the pattern of passenger and freight demand could be structural rather than cyclical. In addition, the cost of fuel, which rose steadily from the middle of 2009, remains stubbornly high and threatens to undermine profitability.'
   Cathay had operating profits of $36 million in 2009 after losing $185 million in 2008. Its air freight volume, including sister airline Dragonair, was up 24.1 percent in the first quarter of 2010.