HONG KONG: Cathay Pacific said yesterday that its first-half net profit soared to HK$347 million (RM142.7 million) on higher passenger demand, but the Hong Kong flag carrier warned of a "challenging" outlook as surging competition held down fares.

The figure for the six months ending June 30 compared with a net profit of HK$24 million in the same period last year. Revenue in the reported period jumped 4.6 per cent to HK$50.84 billion.

But despite its upbeat performance, the blue-chip airline faces several challenges including persistently high jet fuel prices, said group chairman John Slosar.

"The operating environment for the Cathay Pacific group remains challenging," Slosar said in a filing to the Hong Kong Stock Exchange.

"On the plus side, we continue to strengthen our passenger network and the connections available through Hong Kong," he said.

Aviation analyst Daniel Tsang said the huge rise in net profits was on account of the airline's improving passenger operations, which contributed to a jump in revenues.

The airline's passenger revenue in the reported period was up 4.4 per cent to HK$36.52 billion, compared with the previous year, helped by the introduction of new long-haul routes to destinations such as Doha and Newark.

However, he said the airline will need to improve its passenger yields, a key measure of airlines' profitability, to maintain this earnings trend. AFP