Hong Kong's Cathay Pacific is forecast to post strong earnings growth for 2007 on the back of high passenger traffic and yields when the group announces its earnings on today March 5.
Cathay's net income is anticipated to have increased by 43.1 per cent to HK$5.85 billion (US$751.76 million) from HK$4.09 billion in 2006, according to a poll of analysts by Thomson Financial.
Merrill Lynch is forecasting growth of 45 per cent for Cathay's 2007 profit to HK$5.94 billion dollars. Paul Dewberry, a Merrill Lynch analyst, said in a research note, "Higher passenger yields from price increases, fuel surcharges and new products mean we expect the company to report a record net income for the year."
The carrier's consolidated traffic increased by 12.1 per cent last year. Passenger yield, or revenue per passenger, rose 12 per cent, said Merrill Lynch. The yield, excluding fuel surcharges and data from subsidiary airline Dragonair, was up 10.9 per cent at 51 cents, Cathay's highest in 10 years, said Nomura International.
Cathay's earnings are also expected to receive a boost by the 17.5 per cent stake it owns in China's largest international carrier Air China. Merrill Lynch expects the contribution from Air China to reach up to HK$600 million.
Cathay reported 55 per cent growth in net profit to HK2.58 billion dollars in the first half of last year driven by higher average passenger prices, particularly on long-haul flights to North America and Europe, which helped offset falling cargo demand and higher fuel prices.
On the other hand, some analysts were bearish, maintaining that passenger yield peaked in 2007 and jet fuel prices will remain high for 2008, particularly as global air traffic was 4.3 per cent higher in January 2008, down from 7.6 per cent growth the previous year, due to slowing US demand.
"We see Cathay Pacific as one of the most exposed to a downturn, given its focus on the long-haul, premium and air cargo markets, which are our main areas of concern," said Merrill Lynch's analyst, Mr Dewberry.
He predicted Cathay's net profit will decline by 20 per cent in 2008 owing to the slowdown in the US, Japan and Europe.
Furthermore, it was noted that Cathay also faces stiffer competition from the low-cost carrier Oasis Hong Kong Airlines as well fast-growing Middle-East based airlines such as Emirates, Qatar Airways and Etihad Airways.
Cathay's net income is anticipated to have increased by 43.1 per cent to HK$5.85 billion (US$751.76 million) from HK$4.09 billion in 2006, according to a poll of analysts by Thomson Financial.
Merrill Lynch is forecasting growth of 45 per cent for Cathay's 2007 profit to HK$5.94 billion dollars. Paul Dewberry, a Merrill Lynch analyst, said in a research note, "Higher passenger yields from price increases, fuel surcharges and new products mean we expect the company to report a record net income for the year."
The carrier's consolidated traffic increased by 12.1 per cent last year. Passenger yield, or revenue per passenger, rose 12 per cent, said Merrill Lynch. The yield, excluding fuel surcharges and data from subsidiary airline Dragonair, was up 10.9 per cent at 51 cents, Cathay's highest in 10 years, said Nomura International.
Cathay's earnings are also expected to receive a boost by the 17.5 per cent stake it owns in China's largest international carrier Air China. Merrill Lynch expects the contribution from Air China to reach up to HK$600 million.
Cathay reported 55 per cent growth in net profit to HK2.58 billion dollars in the first half of last year driven by higher average passenger prices, particularly on long-haul flights to North America and Europe, which helped offset falling cargo demand and higher fuel prices.
On the other hand, some analysts were bearish, maintaining that passenger yield peaked in 2007 and jet fuel prices will remain high for 2008, particularly as global air traffic was 4.3 per cent higher in January 2008, down from 7.6 per cent growth the previous year, due to slowing US demand.
"We see Cathay Pacific as one of the most exposed to a downturn, given its focus on the long-haul, premium and air cargo markets, which are our main areas of concern," said Merrill Lynch's analyst, Mr Dewberry.
He predicted Cathay's net profit will decline by 20 per cent in 2008 owing to the slowdown in the US, Japan and Europe.
Furthermore, it was noted that Cathay also faces stiffer competition from the low-cost carrier Oasis Hong Kong Airlines as well fast-growing Middle-East based airlines such as Emirates, Qatar Airways and Etihad Airways.