Cathay Pacific's shares tumbled 7.8 percent to a two-year low after it warned of disappointing first-half earnings due to high fuel prices, triggering a round of selling in aviation shares in China and Singapore.
Cathay, Asia's third most valuable carrier by market capitalization, said on Wednesday that it was forced to pay 60 percent more for jet fuel in the first six months of the year.
The most recent market prices for jet fuel, which have risen this year alongside skyrocketing crude oil, were nearly double what it paid in 2007, it added. Fuel accounts for a major share of airlines' costs.
Cathay shares reversed a 1.5 percent opening gain and fell to HKD$13.70, their lowest level since July 2006, shortly after the profit warning. The stock closed down 5.9 percent at HKD$13.98.
Cathay's warning also dragged shares in its controlling shareholder, Swire Pacific down 5.71 percent and sent Chinese airlines to their lowest levels in more than a year.
Air China, Asia's second largest airline and a shareholder of Cathay, fell 3.7 percent to HKD$3.70.
China Southern Airlines lost 4.8 percent to HKD$2.95 and China Eastern Airlines also ended down 4.1 percent.
"After the profit warning from Cathay Pacific investors are worried there will be more to come, especially from the locally-listed Chinese firms," said Alex Tang, research director with Core-Pacific Yamaichi International.
Singapore Airlines, the world's most valuable airline, tumbled by 2.7 percent to hit a 15 week low of SGD$14.20.
"The market took the news quite seriously and badly because Cathay Pacific is efficiently-run, and it tells you that SIA might face the same problem because of oil prices," said a dealer in Singapore.
