The floor was full of glass shards from shattered crystal balls yesterday as Cathay Pacific Airways chairman Christopher Pratt delivered a report showing how badly the severe turbulence of rising fuel costs have rocked the region's third-biggest airline by market capitalization.

The interim results were far worse than analysts' most pessimistic forecast.

For the first six months, a net loss of HK$663 million was booked - a plunge of nearly 128 percent compared to a net profit of HK$2.6 billion the previous year. And this loss came despite revenues jumping 22.6 percent to HK$42.45 billion.

The numbers were reminiscent of the bitter experience the carrier endured during the SARS outbreak in 2003 when it recorded a first-half loss of HK$1.2 billion compared to a profit of HK$1.4 billion the year before.

The latest figures are alarming, showing a gap of HK$3.26 billion between the peak and the valley year-on- year. During SARS, the difference was only HK$2.4 billion.

It is now clear why Cathay chief executive Tony Tyler warned the other day that the operation is suffering a bigger impact from the current high oil prices than from the doldrums triggered by SARS and the September 11, 2001, terrorist attacks in the United States.

His boss Pratt went much further yesterday to paint a more alarming future for the aviation industry. Has Pratt overshot the runway in portending that the industry will not survive in its current form, and predicting more smaller carriers will go under as global aviation adjusts to the reality of oil costing more than US$100 (HK$780) per barrel?

While the CX head honcho appears to be laying the bricks to build a case for justifying increased fares and fuel surcharges with his warning that "it is thus inevitable that fares for passengers and shippers will have to rise to reflect the new cost of operation," Pratt may actually have more on his mind.

There is no doubt that had it not been for Cathay's HK$468 million provision to cover the fine slapped on by the US government as part of a settlement over a conspiracy to fix prices for cargo fuel surcharges on flights between Hong Kong and the United States, the city's de facto flag carrier would have been a big wing span closer to breaking even.

Cathay was one of the four airlines that had reached a deal with the US Justice Department to pay fines totaling US$504 million, the others being Air France-KLM, Martinair and SAS Cargo Group.

The US lawsuit is over, but there are others still pending. Last year, Cathay was charged by the European Union with price-fixing, also related to air- freight fuel surcharges.

This year, the New Zealand anti- trust regulator joined its US and EU counterparts in pressing similar charges against Cathay, Singapore Airlines and Aerolineas Argentinas. The cases are still ongoing.

Therefore, anyone in Pratt's shoes would be able to see the bigger concern on his mind.

High oil prices are naturally a concern but are temporary. The tough operating environment blamed on high fuel costs will improve with the bursting of the commodities bubble. With oil correcting from a peak close to US$150 a barrel to a level below US$120, clearer skies are on the horizon.

Anti-trust actions are a far bigger concern, potentially altering the way the aviation industry has been operating.

Will the portrayal of a painful, difficult operating environment win Pratt friends in the anti-trust regulators?