Cathay Pacific Airways, Hong Kong's top carrier, said on Wednesday that its first-half and full-year profit will be 'disappointing' as higher oil prices squeeze earnings.

"Cathay Pacific's financial performance is being materially and adversely affected by the high price of jet fuel,' the airline told the Hong Kong stock exchange after the close of morning trading."

"The financial results of Cathay Pacific, including those for the first half, are expected to be disappointing."

For the first half, the airline said its fuel costs rose 60 percent from a year ago. While the most recent spot price of jet fuel is 93 percent higher than the average price paid by the airline last year.

Cathay, Asia's third-largest airline by market value, and other carriers are facing a tough year given the continued rise in oil prices.

Crude oil futures traded close to record highs at above $142 a barrel in Asia on Wednesday, after OPEC's president talked of uncertainty surrounding future investment in energy facilities to boost crude output.

'The decline in profit not just of airlines but other transportation companies such as shipping is expected because of the continued rise in oil prices,' said Tony Tong, deputy head of research at China Everbright Securities.

"This situation will continue in the near term. I don't think oil prices will drop sharply from current levels."

Cathay Pacific posted a 72 percent jump in net profit in 2007 to HK$7.02 billion. Shares of Cathay ended the morning session up 1.1 percent to HK$15.02.

($1 = HK$7.80)