4-May-2011 10:07 AM

Cathay sees fuel costs as large challenge; yields back to pre-financial crisis levels

Cathay Pacific's new CEO John Slosar stated oil is one of the carrier's largest challenges, lowering the company's yield, which has returned to the level prior to the 2008 global financial crisis (The Standard/Dow Jones Newswire, 04-May-2011). "Oil price is up 50% from a year ago. Oil hedging is like insurance; cheap insurance is usually bad while better insurance costs you more." He stated the company's strong hedging programme and the fuel surcharge would help offset part of the rising costs, although if oil prices continue to rise, it would dampen the global economy and demand for air travel. He noted fuel surcharges could cover around half of the additional fuel costs.