Home' Asian Aviation : AAV September 2011 Contents In Focus
ising fuel costs have taken their
toll on Hong Kong’s Cathay
Pacific Air ways, which said in
Aug ust that profit for the first
half of this year fell 59 percent,
in the wake of an exceptionally
strong 2010 and despite rising passenger demand
and increased revenue.
Profit for the first six months fell to HK$2.81
billion (US$361 million) from a total of HK$6.84
billion in the same period of last year. Earnings per
share fell 58.9 percent to 71.4 Hong Kong cents,
while sales rose 13.2 percent to HK$46.79 million.
“Revenues were boosted by the relative strength of
a number of key operating currencies,” the airline says.
“In the first half of 2011, the core business of the
group remained generally robust, following the very
strong performance of 2010,” Cathay says. “ The
passenger businesses of both Cathay Pacific and [its
subsidiary] Drag onair performed well, with strong
demand for premium-cla ss travel, despite economic
uncertainty in some of the world’s major e conomies.”
Cargo performed “reasonably in the first quarter”,
the airline says, but was weaker in the second quarter.
Surging fuel costs
Surging jet-fuel prices had “a significant effect” on
the carrier’s op erating results, as fuel is the group’s
biggest single cost. In the six-month period, fuel
costs increased 49.5 percent compared with the same
period of 2010 – an increase of HK$6.46 million.
“Managing the risk associated with fuel prices is a
key objective and the group has a robust fuel-hedging
programme in place,” Cathay says. “In the first half of
2011, hedging activities resulted in a realised profit
of HK$962 million, with additional unrealised
mark-to -market gains of [HK$1.2 billion] being
recognised in reser ves.”
Passenger revenue in the six months rose 15.9
percent from the year-earlier period, reaching
HK$31.8 billion. At the same time, capacity
increased 9.8 percent, while Cathay and Drag onair
together saw an increase of 1.7 percent in passenger
numbers, to a total of 13.2 million . With capacity
outpacing demand, passenger load factors fell 4.7
percentag e points as the airline filled fe wer of its
available seats. Nevertheless, Cathay says its yield rose
11.8 percent to HK65.3 Hong Kong cents.
“Load factors in economy class remained high,
particularly on the North American and South-East
Asian routes, while demand for premium-class travel
remained strong and yields continues to increase,”
“However, the earthquake and tsunami in Japan in
March resulted in a significant reduction in demand
in one of the Group’s most important markets. By
June we were se eing recovery on the Japan routes,
though volumes remain well below those achieved
before the earthquake and tsunami,” the carrier adds.
The Cathay Pacific and Drag onair cargo business
performed “reasonably” in the first three months
of the year, although there was a significant drop in
demand from the carriers’ most important markets –
Hong Kong and Mainland China .
In the first half, cargo revenue rose 7.7 percent from
the same period of 2010, to HK$11.63 billion. Yield
increased 7.1 percent to HK$2.42, while capacity was
up 14.6 percent. Load factor fell by 9.6 percentag e
points to 68.4 percent.
Six new aircraft were delivered to the airline in the
six-month period, with eight more expected in the
se cond half. In March, Cathay announced plans to
acquire 27 more aircraft – t wo Airbus A350-900s,
15 A330-300s and ten Boeing 777-300ERs. The same
day that the airline released its first-half financial
results, it revealed plans to acquire an additional four
777-300ERs and eight 777-200F freighters.
The latest 12 aircraft orders have a combined
value at list prices of about HK$25.6 billion, but are
being acquired “at a considerable discount, as is the
usual practice in such transactions”, the airline says.
Deliveries are scheduled betwe en 2013 and 2016,
and the aircraft are to be powered by General Electric
Cathay Pacific already operates 22 777-300ERs on
key long-haul routes. The latest purchase brings the
carrier’s outstanding orders for the type to 28, with
deliveries taking place up to 2015. By the end of the
Cathay Pacific hurt by fuel prices
Despite rising revenue and passenger demand, Hong Kong’s largest airline has said its profit fell by more
than half in the first six month of this year, writes Andrzej Jeziorski.
“ The Boeing 777-200Fs, together with the other new aircraft
types, will provide us with exactly the right balance in our
fleet portfolio through to the end of the decade.” – Cathay
Chief Executive John Slosar.
28 AsianAviation | SEPTEMBER 2011
Including its latest orders, Cathay
is expecting to take delivery of 97
new aircraft up to 2019.
2/09/11 5:55 PM
Links Archive AAV July August 2011 AAV October 2011 Navigation Previous Page Next Page