Home' Asian Aviation : AAV Sept 2010 Contents 34 AsianAviation | SEPTEMBER 2010
Cathay Pacific Airways, Hong
Kong's biggest airline, is
refocusing its business on its core
air transport and cargo activities
as it enjoys a rebound in demand
and surging pro tability.
In early August, the carrier reported that its pro t
for the rst half of the 2010 multiplied more than
eight-fold to HK$6.84 billion (US$879 million),
from a year-earlier result of HK$812 million. In the
same period, passenger numbers rose 9 percent to
13 million and load factors increased 5.5 percentage
points to 84 percent, as freight volumes jumped 24
e same day Cathay unveiled its triumphant
nancial results, the carrier announced that it had
signed a letter of intent with Airbus to acquire 30
of the Toulouse-based manufacturer's new A350
XWB twinjets, which the airline says will form
"the backbone of Cathay Paci c's future mid-size
widebody eet". at came alongside a decision to
exercise existing purchase rights on six Boeing 777-
300ER aircra .
" e total value of the intended aircra purchases
at list price is about HK$75 billion," Cathay said.
" is is a sum in addition to the signi cant investment
Cathay Paci c will make between now and 2013 that
includes aircra already on rm order, the new cargo
terminal at Hong Kong International Airport and
enhanced products in the cabin and on the ground."
The developments followed recent moves by
the airline aimed at concentrating the company's
resources on its primary business. In June, Cathay sold
its 15 percent shareholding in maintenance, repair
and overhaul ser vices provider Hong Kong Aircra
Engineering (HAECO) to its parent company Swire
Paci c for HK$2.62 billion. A month earlier, the
carrier sold its 10 percent stake in Hong Kong Air
Cargo Terminals (HACTL) for HK$640 million.
While these sales gave Cathay's rst-half results a boost,
industry analysts still agree that the pro t gure was a
remarkable comeback. A er all, the far weaker year-
earlier result had itself only been achieved thanks to a
HK$2.1 billion gain from fuel-hedging a er revenue for
the rst half of 2009 plunged 27 percent.
is time, the carrier happily reported that earnings
per share for the rst six months of 2010 rose by a factor
of 8.4 to HK173.9 cents as sales surged 33.7 percent to
"In the rst half of the year the Cathay Paci c Group
experienced a continuing and signi cant recovery in
its core business following the extremely challenging
conditions experienced for much of the previous
year," the airline said. " e turnaround in business
that began in the last quarter of 2009 continued into
2010 and gained momentum. Both the passenger and
cargo businesses of Cathay Paci c and [wholly owned
subsidiary] Dragonair performed well with revenues
continuing to increase despite uncertainty over the
stability of the global economy."
e carrier added that it will reward its sta by paying
an advance pro t-share in the form of an ex-gratia
payment of 14 days' salary to "all eligible members" of
its workforce. " is is a down payment on the nal share
of pro t that will be calculated on the basis of the full-
year results for 2010," Cathay said.
e carrier acknowledged a "marked improvement"
in its passenger business compared with the 2009
slump, with revenue returning "to almost pre- nancial
crisis levels". Economy-class load factors remained high,
as they had been during much of last year, while yields
Cathay said demand for more pro table business-
class travel originating in Hong Kong showed a
"sharp increase", although "this was not matched by a
comparable increase in demand for travel originating in
other major cities".
e airline and Dragonair carried a combined total
of 13 million passengers in the six-month period,
up 8.5 percent from a year earlier. At the same time,
capacity increased just 0.1 percent. Revenue from the
passenger business jumped 25.7 percent year-on-year
to HK$27.41 billion, while yields rose 17.5 percent
to HK58.4 cents.
"Cargo business was very robust for the whole of the
rst half, with strong demand in all key markets," the
Freight volumes in the rst half increased 24.4
percent to 872,000 tonnes as load factor gained as
much as 11.8 percentage points to a record 78 percent.
Cargo revenue surged 63.1 percent to HK$11.84
billion with yields rising 36.1 percent to HK$2.26.
Fuel prices rose signi cantly in the period, gaining
51.1 percent from a year earlier. "Managing the risk
associated with fuel price is a key challenge and
objective," Cathay said.
" e turnaround has enabled the Group to rebuild
its balance sheet and strengthen its nancial position,
putting it in a better position to proceed with its
core objectives of growing its airlines and further
strengthening the position of Hong Kong as one of
the world's leading international aviation hubs," the
Cathay adds that its strategic partnership with Air
Cathay refocuses as demand grows
Cathay Pacific Airways has reported an eight-fold increase in its first half profit and announced substantial
new aircraft orders, as it concentrates its efforts on its core business, writes Andrzej Jeziorski.
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