UPDATE 1-Cathay Pacific warns of disappointing 2008 earnings

(Adds reasons behind profit warning, share price)

HONG KONG, Jan 7 (Reuters) - Cathay Pacific Airways (0293.HK: Quote, Profile, Research), Hong Kong's dominant airline, said on Wednesday 2008 earnings will be disappointing due to weak revenue and losses on fuel hedging -- its second profit warning in about two months.

The airline said it expects to lose HK$7.6 billion ($974 million) on fuel hedging, worse than the HK$2.8 billion in estimated losses it revealed in November, when the airline also warned of potentially disappointing results.

Cathay said revenue has continued to weaken since November, with first and business-class traffic falling significantly and softness in the air cargo market from Hong Kong and mainland China.

It said the increase in unrealised mark-to-market fuel hedging losses was caused by the slide in oil prices in the final two months of the year.

Shares in the carrier have fallen by more than half over the past year and rose 0.21 percent on Wednesday to close at HK$9.71.

For a link to Cathay's statement click here (US$1=HK$7.8) (Reporting by Tony Munroe, Editing by Jacqueline Wong and Elaine Hardcastle)