Earnings at the colony's flag-carrier, Cathay Pacific Airways Ltd., slipped in the year through last Dec. 31, and managers are skittish about the immediate future.

After-tax profit of US$378 million (HK$2.95 billion), or HK$1.03 a share, was 1.5 percent lower than the HK$2.99 billion, or HK$1.04 a share, of a year earlier. Revenue increased 5.6 percent to HK$20.93 billion from HK$19.81 billion.The results show a clawing back of some lost ground in the second half. At the interim stage, earnings were off 21 percent from the comparable six-month period of 1990.

Cathay's profit was "greatly influenced by the (Persian) Gulf war and continuing worldwide recession," Chairman D.A. Gledhill said Tuesday. He had warned earlier that 1991 would be "an extremely difficult year."

Cathay, which is 50 percent owned by the Swire Pacific Ltd. unit of privately held John Swire & Sons Ltd. of London, also suffers from continued high inflation at its home base.

Cargo and mail had a generally good year. Those revenues jumped 10 percent over 1990 levels even though cargo tonnage slipped a fraction. The cargo and mail load factor fell 2 percent to 62 percent, but yield improved by nearly 10 percent.

The carrier moved 7.4 million passengers, down 4 percent, while capacity increased 3 percent. That brought a drop in load factor of 2.3 percent to 73.6 percent.

Mr. Gledhill, who retires in May to be replaced as chairman by Peter Sutch, said the world economy "is forecast by some to be picking up, albeit slowly, but the signs are not very clear."

Against that, the carrier's greater capacity, an expected return of Japanese traffic and a strong performance by most regional economies should see improved revenue this year, he said. Controlling costs, however, will be crucial to achieving that.

Cathay ranked second in the world in profitability in 1990, after Singapore Airlines. Late last year, a study by Wardley-Thomson (Securities) Ltd. forecast a further two years of turbulence. That could "put a brake" on years of above-average growth.

While the carrier is recovering from the buffeting of the gulf war, "there are certain factors, some of which Cathay has little control over, that could hinder potential medium- to long-term growth."

The analysis cites weak economic growth worldwide, tougher competition, increased capacity and higher costs, especially of labor. Wardley-Thomson is a unit of Hongkong & Shanghai Banking Corp., which holds 13 percent of Cathay.