HONG KONG, Mar 8 (AP) -- Cathay Pacific Airways Ltd., Hong Kong's leading carrier, said Wednesday its 2005 net profit fell 25.3 percent from a year earlier as surging jet fuel prices offset strong growth in passenger demand.

Net profit for the year through December totaled HK$3.3 billion (US$425 million; euro357 million), down from HK$4.42 billion in 2004. The average estimate of 13 analysts polled by Thomson Financial had put the company's 2005 net profit at HK$3.61 billion (US$465 million; euro391 million).

Revenue rose to HK$50.91 billion (US$6.56 billion; euro5.51 billion) from HK$42.76 billion on strong passenger demand. Cathay's total passenger traffic rose 14 percent to 65.11 billion revenue passenger kilometers -- a measure of passenger sales volume.

But earnings were hit by soaring fuel costs. The carrier said during the year its fuel costs rose 67 percent to HK$15.59 billion (US$2.01 billion; euro1.69 billion), accounting for 33 percent of its operating expenses, which totaled HK$46.77 billion.

Cathay said fuel prices now account for about a third of its total costs, surpassing the amount it pays in staff wages. It said passenger and cargo fuel surcharges only partially offset this additional cost.

During the year, the airline added nine jets to its fleet of 96 aircraft and expanded its flight network, boosting its frequencies to major gateways such as London, Sydney and Los Angeles.

The airline recommended a final dividend of 28 Hong Kong cents, down from 45 HK cents the previous year.