Cathay Pacific hit by fuel costs

Price rises can't offset massive fuel costs

Cathay Pacific has reported a 25% drop in annual profits as higher passenger numbers failed to offset a surging fuel bill at the Hong Kong airline.

Net profit was 3.3bn Hong Kong dollars ($425m; £244m) in the year ending 31 December, from HK$4.4bn a year earlier.

Cathay said fuel costs jumped 67% and accounted for a third of total annual expenses - more than it paid in wages.

The airline is the latest to be hit by fuel prices. The industry has warned that many firms may continue to suffer.

Shares in Cathay fell 3.2% to HK$13.65 after the announcement, as the profit and sales figures were less than many analysts had expected.

Sales rose 19% to HK$50.91bn, from HK$42.76bn in the year before.

Cathay said that its total passenger traffic rose 14% during 2005.

It added that it planned an annual dividend of HK$0.28, down from HK$0.45 in the previous year.