Cathay Pacific Airways Ltd’s share price down, first-half profit rises 14 times, but misses analysts’ forecasts

August 13, 2014 9:14 am

Mr. John Slosar, who is a Chairman of Cathay Pacific Airways Ltd said in the company’s statement, which was cited by Bloomberg: “The operating environment for the Cathay Pacific Group and the aviation industry as a whole remains challenging. This makes it difficult to maintain yields. We expect business to be better in the second half of 2014.”

According to a stock exchange statement of Cathay Pacific Airways Ltd, the carrier’s net income increased 14 times and reached 345 million Hong Kong dollars (45 million dollars) over the six months ended June. However, the net profit fell short of the median analysts’ forecast of 462 million Hong Kong dollars. In comparison, the net profit of the company over the same period a year ago was 24 million Hong Kong dollars due to decreased demand for premium seats and unstable air-cargo market.

The revenue of the company over the first six months of the current financial year rose by 4.6% from 48.58 billion to 50.84 billion Hong Kong dollars due to increasing demand for air traffic. The yields of Cathay Pacific Airways Ltd fell by 3.5% and reached 66.6 Hong Kong cents due to strong competition from Emirates and Etihad Airways PJSC.

Cathay Pacific Airways Ltd, which is based in Hong Kong, also made a warning that fierce competition will likely neutralize the increasing demand for air travel by passengers.

One of the analysts, who work at CIMB Group Holdings Bhd – Mr. Andrew Orchard commented on the company’s results for Bloomberg: “Yields are disappointing. Yields in the first half were a bigger drop than some of its peers. They had to put in promotional fares because of the long-haul routes that were added to the network and that has had a negative impact on pricing.”

Cathay Pacific Airways Ltd was 1.74% down to close at 14.68 Hong Kong dollars per share today, marking a one-year change of +3.09%. According to the information published on the Financial Times, the 22 analysts offering 12-month price targets for Cathay Pacific Airways Ltd have a median target of 17.28, with a high estimate of 19.82 and a low estimate of 12.50. The median estimate represents a 16.72% increase from the last price of 14.80.

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