Cathay Pacific Airways today announced a profit attributable to shareholders of HK$1,668 million in its 2006 Interim Results, compared with a profit of HK$1,670 million the previous year, as high fuel prices continued to undermine increased productivity and revenue.

Group turnover increased 13.4% to HK$27,086 million. The Group's fuel expenditure for the period increased 30.4% to HK$8,681 million as the average price of fuel into plane increased by 28.5% to US$2.0 per American gallon. Passenger and cargo fuel surcharges only partially offset this additional cost. The airline's unit cost excluding fuel decreased by 1.3% with continued efforts to increase productivity and reduce controllable overheads.

Passenger revenue increased 8.7% to HK$15,941 million. The number of passengers carried in the first six months of the year increased 11.1% to 8.1 million, compared with a 10.8% increase in capacity. Passenger yield declined 3.0% to HK45.8 cents despite strong demand from first and business class passengers.

Demand for cargo services out of Hong Kong was strong. Cargo tonnage carried increased 10.6% to 572,552 tonnes. Cargo yield was HK$1.69, down from HK$1.75 last year.

The Group's commitment to Hong Kong was underlined by continued investments in the hub. Foremost among them, the move to make Dragonair a wholly owned subsidiary will, if ratified by shareholders later in August, create significant value. The airline's wish to build and operate its own cargo terminal at Hong Kong International Airport, with an eventual planned annual capacity of five million tonnes, will enable the pursuit of aggressive cargo growth plans and strengthen Hong Kong's position as a global logistics hub.

Fleet expansion is continuing apace. In July, the airline took delivery of a Boeing 777-300 and a second Boeing 747-400BCF, Boeing Converted Freighter. A third converted freighter is due in September. Three more will arrive in 2007 and the airline has conversion options on a further six. Cathay Pacific's 100th aircraft, an Airbus A330-300, will arrive at the end of August 2006. The 2,000th pilot and 7,000th cabin crew member joined the airline's staff.

Looking forward, Cathay Pacific has ordered a further two Boeing 777-300ER long-range passenger aircraft, raising its commitment to 18 aircraft, with options on a further 20, and ordered six new Boeing 747-400ERF, Extended Range Freighters, for delivery in 2008 and 2009.

Additional services strengthened the airline's network. A new freighter service commenced to Chennai in India and frequencies were increased to Atlanta, Dallas, Delhi, Mumbai, Penang and Singapore. The inclusion of Stockholm and Toronto from September will bring to 30 the number of destinations in the airline's freighter network. Additional passenger services were mounted to Adelaide, Frankfurt, Rome and Seoul.

Cathay Pacific Chairman Christopher Pratt said: "This was a creditable performance given the high cost of fuel. Nonetheless, expansion plans announced in the first half of our 60th anniversary year show the confidence we have in the airline's future and in the future of Hong Kong. Our full-year results, which should benefit from the acquisition of Dragonair, will continue to be heavily influenced by the price of fuel and related surcharges. Yet we remain single-minded in our mission to deliver superior service and value to our customers, to grow our business profitably and to strengthen Hong Kong as a global aviation and logistics hub and gateway to Mainland China."