High jet fuel prices and the weakness in major economies sent profits tumbling at Cathay Pacific last year.
Hong Kong's biggest airline saw profits fall by 61% year on year to 5.5 billion Hong Kong dollars (£454 million).
Fuel prices had a "significant effect" on operating results. Cathay spent 12.5 billion HK dollars more on fuel in 2011 than the year before, reflecting both higher jet fuel costs and that it flew more routes.
Chairman Christopher Pratt said: “2012 is looking even more challenging than 2011. We expect pressure on economy-class yields and our cargo business in particular to remain weak.”
Cathay is introducing new business-class cabins to attract business travellers, as well as introducing premium- economy seating.
It took delivery of its first Boeing 777-300ER fitted with a premium-economy cabin and with new long-haul economy seats last month.
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