Category Archives: Cathay Pacific Group

Cathay Pacific Group issues profit warning, carried only 900 passengers a day in June

The Cathay Pacific Group issued a profit warning and released combined Cathay Pacific and Cathay Dragon traffic figures for June 2020.


Profit Warning

In its 2019 annual results announcement dated 11 March 2020, the Group had disclosed that it expected to incur a substantial loss for the first half of 2020. Based on the unaudited results of the Group for the six months ended 30 June 2020, and on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the annual report for the year ended 31 December 2019, the Directors of Cathay Pacific Airways Limited estimate that for the six months ended 30 June 2020, the Group will record a net loss attributable to shareholders of approximately HK$9.9 billion, which compares to a net profit to shareholders of HK$1.3 billion for the same period in 2019. This includes impairment charges amounting to approximately HK$2.4 billion, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service again before the 2021 summer season together with certain airline service subsidiaries assets. This estimated interim net loss is in the process of being reviewed by our auditors and may be subject to adjustments.

Traffic Figures for June 2020

Cathay Pacific and Cathay Dragon carried a total of 27,106 passengers last month, a decrease of 99.1% compared to June 2019. The month’s revenue passenger kilometres (RPKs) fell 98.8% year-on-year. Passenger load factor dropped by 59.3 percentage points to 27.3%, while capacity, measured in available seat kilometres (ASKs), decreased by 96.1%. In the first six months of 2020, the number of passengers carried dropped by 76% against a 65.7% decrease in capacity and a 72.6% decrease in RPKs, as compared to the same half-year period for 2019.

The two airlines carried 93,228 tons of cargo and mail last month, a decrease of 43.1% compared to June 2019. The month’s revenue freight tonne kilometres (RFTKs) fell 35.8% year-on-year. The cargo and mail load factor increased by 11.7 percentage points to 74.5%, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 45.9%. In the first six months of 2020, the tonnage fell by 31.9% against a 31% drop in capacity and a 24.6% decrease in RFTKs, as compared to the first-half period for 2019.

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said: “The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe. Although we have begun to see some initial developments, notably a slight increase in the number of transit passengers following the easing of transit restrictions through Hong Kong International Airport, we are still yet to see any significant signs of immediate improvement.”


Mr Lam said of the airlines’ June traffic performance: “Demand continued to be very weak in June with our airlines carrying less than 1% of the passengers we carried in the same month in 2019. We operated about 4% of our normal passenger flight capacity in June. This was slightly more than we operated in May, having resumed services to some destinations such as New York, San Francisco, Amsterdam and Melbourne in late June. Load factor remained low at 27.3%, and on average we carried approximately 900 passengers a day only.

“We observed a gradual pickup in connecting passenger demand as the ban on transit traffic through Hong Kong International Airport began being partially eased. Towards the end of the month, transit traffic reached about 32% of overall traffic, with notable demand from destinations in Southeast Asia such as the Philippines and Vietnam to North America. This change in traffic mix meant a more tapered average yield performance though.”


Cathay Pacific continued to operate a full freighter schedule as well as chartered flights from its all-cargo subsidiary, Air Hong Kong, in June. There were fewer cargo-only passenger flights compared with May.

Mr Lam said: “Despite a mild pickup in general airfreight movements, our cargo tonnage fell by 5% month-on-month as demand for medical supplies waned following a peak month in May. The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from Southeast Asia and the Indian sub-continent as local lockdown measures eased.

“Meanwhile, the improvement in inbound Hong Kong loads and network support led to a higher load factor, which increased 11.7 percentage points year-on-year to 74.5%. Yields came down following the significant rise seen in May.“



Earlier this week, Cathay Pacific’s shareholders passed the resolutions pertaining to the company’s HK$39 billion recapitalisation plan. The management team is moving forward with a comprehensive review of all aspects of the Group’s operations and will make its recommendations to the Board on the future size and shape of the airlines by the fourth quarter.

Mr Lam said: “While some markets are starting to relax border restrictions and quarantine requirements in July, we remain cautious and agile in our approach to resuming our passenger flight services. We have adjusted our overall capacity for July to approximately 7%, which remains subject to the potential further relaxation or tightening of government health measures. We expect that our airlines will operate up to 10% of the normal flight schedule in August and will continue to assess the potential of increasing more flights and adding destinations for our customers in the coming months.

“The one certainty facing the global aviation industry is that the landscape will be significantly changed when international air travel recovers. The Group is moving decisively to best position the business to be competitive and to secure its financial health over the long term in a new normal. What will not change is our resolute commitment to safety, to serving our customers and our dedication to contributing to the success of the Hong Kong international aviation hub. We remain absolutely confident in the long-term prospects of both the Cathay Pacific Group and our home hub.”




JUN % Change Cumulative %


2020 VS JUN 2019


JUN 2020 YTD


RPK (000)
 – Chinese mainland 3,350 -99.5% 757,639 -83.4%
 – North East Asia 5,791 -99.6% 2,007,121 -76.1%
 – South East Asia 17,796 -98.8% 2,308,206 -74.1%
– South Asia, Middle East  & Africa -100.0% 1,449,874 -72.6%
 – South West Pacific 21,713 -98.2% 3,102,322 -61.3%
 – North America 71,010 -97.9% 5,276,304 -71.4%
 – Europe 26,053 -99.1% 3,766,593 -74.0%
RPK Total (000) 145,713 -98.8% 18,668,059 -72.6%
Passengers carried 27,106 -99.1% 4,389,092 -76.0%
Cargo and mail revenue tonne km (000) 596,037 -35.8% 4,129,114 -24.6%
Cargo and mail carried (000kg) 93,228 -43.1% 666,525 -31.9%
Number of flights 1,110 -83.7% 15,713 -61.7%




JUN % Change Cumulative %


2020 VS JUN 2019


JUN 2020 YTD


ASK (000)
 – Chinese mainland 22,811 -97.6% 1,244,583 -78.7%
 – North East Asia 26,101 -98.4% 2,970,028 -71.1%
 – South East Asia 74,624 -95.9% 3,667,936 -65.7%
– South Asia, Middle East  & Africa -100.0% 2,278,996 -64.1%
 – South West Pacific 67,500 -95.2% 4,385,990 -53.3%
 – North America 234,994 -93.7% 7,639,514 -64.5%
 – Europe 107,117 -96.5% 5,544,914 -66.9%
ASK Total (000) 533,147 -96.1% 27,731,961 -65.7%
Passenger load factor 27.3% -59.3pt 67.3% -16.9pt
Available cargo/mail tonne km (000) 799,987 -45.9% 5,958,145 -31.0%
Cargo and mail load factor 74.5% 11.7pt 69.3% 5.9pt
ATK (000) 850,713 -69.4% 8,594,749 -47.3%
Cathay Pacific Airways aircraft photo gallery:
Cathay Pacific Airways aircraft slide show:

Cathay Pacific Group traffic declines by 3.8% in January, will drop capacity by 40%

Cathay Pacific Group issued this statement:

The Cathay Pacific Group has released combined Cathay Pacific and Cathay Dragon traffic figures for January 2020 that show decreases in the number of passengers carried and the amount of cargo and mail uplifted compared to the same month in 2019. 

Cathay Pacific and Cathay Dragon carried a total of 3,010,012 passengers last month – a decrease of 3.8% compared to January 2019. Passenger load factor decreased by 1.3 percentage points to 84.7%, while capacity, measured in available seat kilometres (ASKs), decreased by 0.3%.

The two airlines carried 151,964 tons of cargo and mail last month, a decrease of 8.9% compared to the same month last year. The cargo and mail load factor declined by 1.4 percentage points to 60.2%. Capacity, measured in available freight tonne kilometres (AFTKs), was down by 3.2% while cargo and mail revenue freight tonne kilometres (RFTKs) decreased by 5.4%.

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said:  “This was the most challenging Chinese New Year period we have experienced. As the novel coronavirus outbreak in mainland China intensified towards the end of the holiday period, travel demand dropped substantially. With more governments worldwide having imposed travel restrictions on passengers from mainland China and in some cases Hong Kong, we are seeing continued cancellations of bookings.

“We have since taken a series of short-term measures in response. These notably include the sharp reduction of capacity across our global network. For February and March, we have now reduced our overall passenger flight capacity by approximately 40%, representing further reduction since our recent announcement. Passenger capacity reduction is also likely for April as we continue to monitor and match market demand. Meanwhile, we have kept our freighter capacity intact.


“Our overall passenger performance in January was slightly behind that of 2019. Inbound passenger traffic to Hong Kong was down 40% year-on-year, a slight improvement over the 46% declines seen in November and December. For the first time in the past few months we saw growth in our outbound traffic – 1% – though this was largely due to the Chinese New Year holiday starting earlier this year. We remain heavily reliant on lower-yield transit traffic through Hong Kong, which grew by 7% versus the same period last year.

“We started off 2020 fairly positively, seeing satisfactory passenger traffic volume through the first three weeks of the year. This was particularly evident with our long-haul routes, which showed improved load factors and yield over 2019. However, our performance deteriorated rapidly in the last week of January as the novel coronavirus situation became more severe, and it continues to weaken significantly. We saw significant cancellation of bookings within a short period of time.


“We saw reasonably solid demand across our network for the first three weeks of January. Our mainland China point of sales particularly stood out, recording year-on-year tonnage growth. By the last week of January, however, overall demand plummeted as manufacturing came to a halt in mainland China during the Chinese New Year holiday.

“The delay of the post-Chinese New Year resumption of manufacturing across mainland China has significantly affected both our Hong Kong and mainland China markets. However, demand elsewhere across our network remains buoyant, especially on trade lanes that have seen significant reductions in passenger capacity.


“The first half of 2020 was already expected to be extremely challenging financially. As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year.

“We have an incredible brand with a reputation and track record of premium service and commitment to our customers that differentiates us from our competitors. These qualities and values remain at the heart of everything we do and are what will help us come back stronger when we emerge from this current crisis.”



JAN % change Cumulative %


  2020 v JAN19


JAN 2020


v YTD19


RPK (000)        
 – Mainland China 623,620 -18.9% 623,620 -18.9%
 – North East Asia 1,379,130 -3.2% 1,379,130 -3.2%
 – South East Asia 1,537,014 1.1% 1,537,014 1.1%
– South Asia, Middle East  & Africa 1,006,997 -0.8% 1,006,997 -0.8%
 – South West Pacific 1,765,853 9.6% 1,765,853 9.6%
 – North America 3,222,357 -3.2% 3,222,357 -3.2%
 – Europe 2,295,604 -3.8% 2,295,604 -3.8%
RPK Total (000) 11,830,575 -1.8% 11,830,575 -1.8%
Passengers carried 3,010,012 -3.8% 3,010,012 -3.8%
RFTK Total (000) 855,433 -5.4% 855,433 -5.4%
Cargo and mail carried (000Kg) 151,964 -8.9% 151,964 -8.9%
Number of flights 6,649 -5.3% 6,649 -5.3%




  2020 v JAN19


JAN 2020 v YTD19


ASK (000)        
 – Mainland China 896,694 -11.7% 896,694 -11.7%
 – North East Asia 1,749,611 2.5% 1,749,611 2.5%
 – South East Asia 1,866,848 3.7% 1,866,848 3.7%
– South Asia, Middle East  & Africa 1,198,208 -0.5% 1,198,208 -0.5%
 – South West Pacific 2,016,481 6.8% 2,016,481 6.8%
 – North America 3,571,618 -2.2% 3,571,618 -2.2%
 – Europe 2,663,279 -2.6% 2,663,279 -2.6%
ASK Total (000) 13,962,739 -0.3% 13,962,739 -0.3%
Passenger load factor 84.7% -1.3pt 84.7% -1.3pt
AFTK Total (000) 1,422,019 -3.2% 1,422,019 -3.2%
Cargo and mail load factor 60.2% -1.4pt 60.2% -1.4pt
ATK (000) 2,749,499 -1.8% 2,749,499 -1.8%
Cathay Pacific aircraft photo gallery:

Cathay Pacific Group modifies inflight services on mainland China flights

The Cathay Pacific Group is implementing temporary service modifications on all Cathay Pacific and Cathay Dragon flights to and from destinations in mainland China effective January 30, 2020 until further notice.

This modified service offering is strictly a temporary measure designed to further strengthen our health and safety protocols in light of the evolving situation regarding coronavirus cases in mainland China. These changes will enable us to provide enhanced protection for our customers and crew while at the same time continuing to deliver a satisfactory inflight experience for passengers.

During this period, the meal service in First and Business Class cabins on mainland China flights will be modified to comprise a single tray with appetiser, main course and dessert served together. Trolley services will be suspended and the meal offering in First Class will be the same as that offered in Business Class.

Passengers travelling in Premium Economy and Economy Class on medium to long-duration mainland China flights (such as Shanghai Pudong, Beijing, Ningbo, Hangzhou, Wenzhou, Chengdu, Qingdao, etc.) will be served a disposable snack bag including a hot handheld snack and other items. The meal offering on shorter sectors (such as Guangzhou, Changsha, Haikou, Sanya, Xiamen, Fuzhou, etc.), which already comprises a snack service, will remain unchanged.

Amenities including hot towels, pillows, blankets and magazines will also not be offered to passengers in any classes during this period. Inflight duty-free sales will also be temporarily suspended.

We would like to offer our sincere apologies to our customers for any inconvenience caused and we appreciate their understanding. We are monitoring the situation closely and will continue to coordinate with the health authorities in Hong Kong and in all the ports to which we operate flights.

Cathay Pacific agrees to acquire Hong Kong Express (HK Express)

Third Airbus A320neo, delivered on March 15, 2017

Cathay Pacific Airways has issued this statement:

Cathay Pacific Airways Limited on March 27, 2019 announced it has reached agreement to acquire Hong Kong Express Holding Company Limited for HK$4.93 billion, comprising (i) a cash consideration of HK$2.25 billion payable in cash; and (ii) a non-cash consideration of HK$2.68 billion settled through the issue and novation of promissory loan notes.

Completion is conditional upon certain conditions being fulfilled, including clearances required from relevant competition authorities, consents under relevant contracts of HKE and the termination or variation of certain arrangements between HKE and its related parties.

The performance of the Seller’s obligations under the Share Purchase Agreement is guaranteed by the Seller’s Guarantor.

Upon completion of the Transaction on or before December 31, 2019, HKE will become a wholly-owned subsidiary of Cathay Pacific.

For more information: CLICK HERE

Top Copyright Photo (all others by HK Express): HK Express Airbus A320-271N WL B-LCN (msn 7512) NRT (Michael B. Ing). Image: 940421.

HK Express aircraft slide show:


Cathay Dragon celebrates the launch of services to Jinan

Cathay Dragon Airbus A320-232 B-HSO (msn 4023) HKG (Javier Rodriguez). Image: 935958.

The Cathay Pacific Group celebrated the launch of its four-times-weekly service between Hong Kong and Jinan in Shandong province, further strengthening its network in mainland China.

The new service to the ‘City of Springs’ complements the existing ten weekly flights to Qingdao, providing more options for travellers to and from Shandong. The flight is operated by Cathay Dragon’s Airbus A320 aircraft in a two class configuration.

At a ceremony held on March 26, 2018, Cathay Pacific Chief Customer and Commercial Officer Paul Loo expressed his gratitude to the ceremony’s guest of honour, Mr Li Zijun, Deputy Mayor of Jinan City.


2018 is set to be a year of considerable expansion for the Cathay Pacific Group. In addition to Jinan and Nanning in mainland China, new services to Brussels have also been launched, with Copenhagen, Dublin, Washington DC and Cape Town all coming online in the coming months.

Copyright Photo: Cathay Dragon Airbus A320-232 B-HSO (msn 4023) HKG (Javier Rodriguez). Image: 935958.

Cathay Dragon aircraft slide show:

Airbus delivers its 1,000th A330 to Cathay Pacific Airways

Cathay Pacific A330-300 B-LBB (94-We are flying the 1000th A330)(Nose)(Airbus)(LRW)

Airbus (Toulouse) yesterday (July 19) celebrated the delivery of the 1,000th A330. The aircraft, an A330-343X registered B-LBB (msn 1436), powered by Rolls-Royce Trent 700 engines, was handed over to Cathay Pacific Airways (Hong Kong) at special ceremony in Toulouse. Cathay Pacific together with its sister airline Dragonair (Hong Kong) is the world’s largest operator of the A330, with a total of 56 now in service.

Since its first delivery of the A330 in 1995, Cathay Pacific’s Airbus fleet now comprises 38 A330-300s and 11 A340s, while Dragonair flies 21 single aisle A320 Family aircraft and 18 A330-300s. The Cathay Pacific Group has outstanding orders for 10 more A330-300s. The airline will also take delivery of 48 all-new A350 XWBs in the future, including 46 ordered from Airbus and two leased aircraft.

The wide market appeal of the A330 Family is demonstrated daily by over 100 operators, including network carriers, low cost, charter and flag carriers, who fly A330s on all missions from 30 minutes to over 14 hours. About 1.2 billion passengers have enjoyed traveling on board the light, bright and spacious A330 cabin to and from the 300 airports it serves today. More than 1,250 A330s have been ordered to date.

Copyright Photo: Airbus. B-LBB wears a special “We are flying the 1000th A330” inscription below the main titles.

Cathay Pacific Airways: AG Slide Show

Cathay Pacific’s 2012 annual profit drops 83.3% to $118 million, accelerates the retirement of the Boeing 747-400

Cathay Pacific Group (Cathay Pacific Airways) (Hong Kong) has issued the following financial report for 2012:

The Cathay Pacific Group reported an attributable profit of HK$916 million ($118 million) for 2012 – an 83.3% fall compared to the profit of HK$5,501 million ($709 million) reported for 2011. Earnings per share fell by 83.3% to HK23.3 cents. Turnover for the year increased by 1.0% to HK$99,376 million.

In 2012 the Group’s core business was adversely affected by the high price of jet fuel, pressure on passenger yields and weak air cargo demand. Economic uncertainty, particularly in the Eurozone countries, and an increasingly competitive environment added to the difficulties. It was a challenging year for the aviation industry generally. The Group’s share of profits from associated companies, including Air China, showed a marked decline.

Passenger revenue for the year was HK$70,133 million, an increase of 3.5% compared to 2011. Capacity increased by 2.6%. The two airlines carried a total of 29.0 million passengers in 2012, up 5.0% on the previous year. The passenger load factor fell by 0.3 percentage points. Yield increased by 1.2% to HK67.3 cents, largely due to higher fuel surcharges consequent upon a 1.7% increase in average fuel prices. Uncertain economic conditions and strong competition on key routes put pressure on yields while premium class yields were affected by travel restrictions imposed by corporations. The high cost of fuel made it more difficult to operate profitably, particularly on long-haul routes operated by older, less fuel-efficient aircraft.

The Group’s cargo revenue in 2012 was HK$24,555 million, a decrease of 5.5% compared to 2011. Yield for Cathay Pacific and Dragonair remained the same as last year at HK$2.42. Capacity was down by 3.1% while the cargo load factor dropped by 3.0 percentage points to 64.2%. The airlines’ cargo business was affected by weak demand in major markets, particularly from Asia to Europe. Demand for shipments from the two key markets of Hong Kong and Mainland China, was well below expectations, although there were short-term upturns in March and in the last quarter. Capacity was adjusted in line with demand.

Fuel remained the most significant cost. Throughout much of 2012, fuel prices were at sustained high levels and this had a major impact on operating results. The Group’s fuel costs (disregarding the effect of fuel hedging) increased by 0.8% compared to 2011. Fuel accounted for 41.1% of total operating costs – a decrease of 0.4 of a percentage point from the previous year. Managing the risk associated with high and sometimes volatile fuel prices remains a key challenge. The Group took advantage of a reduction in fuel prices in May and June to do more hedging with a view to mitigating the impact of future fuel price increases.

In May 2012, Cathay Pacific announced measures designed to protect its business in an environment of high fuel prices and weak revenues. These measures included the accelerated retirement of the less fuel-efficient Boeing 747-400 passenger aircraft; the withdrawal from service of four Boeing 747-400BCF converted freighters; and an adjustment of schedules and reduced capacity on some long-haul routes. At the same time as addressing the challenges to its business, the Cathay Pacific Group kept a clear focus on its key strategic goals: developing its network and its Hong Kong base; maintaining and enhancing the quality of its services; strengthening its relationship with Air China; and maintaining a prudent approach to financial risk management.

The airline continued with its major investments in new aircraft and new products, and opened its own cargo terminal at Hong Kong International Airport in February 2013. Despite the need to adjust schedules in 2012 in light of the challenging business environment and the high cost of fuel, the Group remained committed to maintaining the integrity of its network. On the passenger side, Cathay Pacific added frequencies on routes to India, Japan, Malaysia, Singapore, Taiwan, Thailand and Vietnam and introduced a new service to Hyderabad in India last year. Dragonair added frequencies on routes to secondary cities in Mainland China and introduced or resumed flights to eight destinations in 2012. In the first quarter of 2013, Dragonair is launching another four new destinations. On the cargo side, Cathay Pacific introduced freighter services to Zhengzhou, Hyderabad and Colombo last year.

The upgrading of the Cathay Pacific and Dragonair fleets continued in 2012, with 19 new aircraft received. As at 31 December 2012, the Group had 92 aircraft on order for delivery up to 2020. An order was placed for six Airbus A350-900 aircraft in January 2012. In August the Group ordered 10 Airbus A350-1000 aircraft and converted an existing order for 16 Airbus A350-900 aircraft into an order for 16 Airbus A350-1000 aircraft. In March 2013, Cathay Pacific entered into an agreement with The Boeing Company under which it agreed to buy three Boeing 747-8F freighter aircraft and cancel the agreement to purchase eight Boeing 777-200F freighters that was entered into in August 2011. Under the agreements, the Company also acquired options to purchase five Boeing 777-200F freighters and The Boeing Company agreed to purchase four Boeing 747-400BCF converted freighters, which were taken out of service in 2012 and early 2013. The transaction is part of a package of transactions between the Group, The Boeing Company, Air China Cargo Co., Ltd and Air China Limited.

In an increasingly competitive environment it is crucial to maintain and develop passenger loyalty by providing high quality products and services. This remains a key focus of the Cathay Pacific Group. To this end, Cathay Pacific has introduced a new Premium Economy Class product, a new long-haul Economy Class seat and a new Regional Business Class seat. The airline’s long-haul Business Class was named World’s Best Business Class in 2012 at the World Airline Awards run by Skytrax. Dragonair will also get new Business Class and Economy Class seats from March 2013. On the ground, refurbishment of the Level 7 Business Class Lounge in The Wing at Hong Kong International Airport was completed in January 2012 and the First Class Lounge was reopened in February 2013. In August 2012, Cathay Pacific opened a new lounge in Paris.

Cathay Pacific Chairman Christopher Pratt said: “The Cathay Pacific Group operates in a volatile and challenging industry, one that will always be highly susceptible to external factors that remain largely beyond our control. The cost of fuel remains the biggest challenge, particularly for an airline such as ours where long-haul operations form a significant part of our total operations.

“We believe we have taken the right measures to deal with current challenges and will take whatever further measures are necessary should the business environment not improve. Our focus will remain on protecting the business and managing short-term difficulties while remaining committed to our long-term strategy. Our financial position remains strong and we will continue to invest in the future. Our core strengths remain the same as ever: a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.”

Copyright Photo: Keith Burton. The company is now accelerating the retirement of the Boeing 747-400 fleet. Boeing 747-467 B-HOO (msn 23814) climbs away from London (Heathrow).

Cathay Pacific Airways: AG Slide Show

Cathay Pacific Group slips into a first half loss of $120.5 million

Cathay Pacific Group (Cathay Pacific Airways) (Hong Kong) slipped into the red for the first half of 2012, reporting a new loss of $120.5 million (US). The company issued the following report:




Turnover HK$ million       48,861



(Loss)/profit attributable to owners of Cathay Pacific HK$ million          (935)



(Loss)/earnings per share HK cents         (23.8)



Dividend per share HK$                –



The Cathay Pacific Group reported an attributable loss of HK$935 million for the first six months of 2012. This compares to the profit of HK$2,808 million in the first half of 2011. Loss per share was HK23.8 cents as compared to the earnings per share of HK71.4 cents in 2011. Turnover for the period rose by 4.4% to HK$48,861 million.

In the first half of 2012, Cathay Pacific’s core business was significantly affected by the persistently high price of jet fuel, passenger yields coming under pressure and weak air cargo demand – factors common to the aviation industry as a whole. Profits from associated companies, including Air China, also showed a marked decline. In response to these challenges, the Cathay Pacific Group introduced measures designed to protect its business, including schedule changes and capacity reductions, the withdrawal from service of older, less fuel-efficient aircraft, a recruitment freeze and the introduction of voluntary unpaid leave for cabin crew. At the same time the Group kept its network intact and did not allow cost reductions to compromise the brand or service quality. It also continued with major investments – new aircraft, new products and its own HK$5.9 billion cargo terminal at Hong Kong International Airport – that will benefit the business in the long term.

Fuel remains the airline’s most significant cost. Fuel prices were at historical high during the first half of 2012 (although they decreased significantly at the end of the period) and this had a major impact on Cathay Pacific’s operating results. In the first six months of 2012, the Group’s fuel costs (disregarding the effect of fuel hedging) increased by 6.5% compared to the same period in 2011. Fuel accounted for 41.6% of total operating costs. Managing the risk associated with high and volatile fuel prices remains a key challenge. The airline’s fuel hedging programme helps to mitigate the impact of fuel price fluctuations. However, with the fuel price remaining high for the past two years, realised profit from hedging activities in the first half of 2012 fell by 59.4% compared to the same period in 2011.

In the first six months of 2012, the passenger business of the Cathay Pacific Group was affected by pressure on yields against the background of increased fuel prices and higher operating costs. Revenue for the period was HK$34,713 million, representing an increase of 9.2% compared to the same period in 2011. Capacity increased by 6.9%. A total of 14.3 million passengers were carried by Cathay Pacific and Dragonair in the first six months, which is a rise of 8.6% compared to the same period in 2011. The load factor rose by 0.8 percentage points. Yield increased by 1.2% to HK66.1 cents. The high cost of fuel made it more difficult to operate profitably, particularly on long-haul routes operated by older, less fuel-efficient, Boeing 747-400 and Airbus A340-300 aircraft.

The Group’s cargo business was affected by continued weak demand in major markets. Cargo revenue for the first half of 2012 was down by 7.6% to HK$11,897 million compared to the same period in 2011. Yield was down by 0.4% to HK$2.41. Capacity was down by 4.3%, while the load factor was down by 4.1 percentage points to 64.3%. Demand for shipments from the Group’s two key markets, Hong Kong and Mainland China, was well below expectations, though the introduction of new hi-tech consumer electronics products in March resulted in a temporary improvement. Capacity was adjusted in line with demand. Cathay Pacific continued to develop new markets where demand warranted doing so, introducing freighter services to Zhengzhou in March and to Hyderabad in May.

Six Airbus A350-900 aircraft were ordered in January. In August, the airline agreed to acquire 10 Airbus A350-1000 aircraft and to convert 16 previously ordered Airbus A350-900 aircraft into Airbus A350-1000 aircraft which has a bigger capacity and longer range. The Cathay Pacific Group will take delivery of 19 aircraft in 2012 which will help to improve the operational efficiency of the fleet. In view of their high operating costs when fuel prices are high, the retirement of the airline’s Boeing 747-400 passenger aircraft has been accelerated. Three Boeing 747-400BCF freighters have also been withdrawn from service in order to reduce costs.

In May, Cathay Pacific announced its intention to reduce some passenger services on transpacific routes. This will enable fuel-efficient Boeing 777-300 ER aircraft to operate on routes currently served by older less fuel efficient Boeing 747-400 aircraft. The Group remains committed nevertheless to maintaining its network and has increased some services in Asia, where demand is relatively robust. Dragonair introduced or resumed flights to six destinations – Xi’an, Guilin, Clark, Jeju, Taichung and Chiang Mai – and will introduce flights to Kolkata and Haikou later in the year. Cathay Pacific continues to improve products and services in the air and on the ground. A new Premium Economy Class was launched alongside new long-haul Economy Class seats. The airline also continued to install its popular new Business Class on long-haul services. Cathay Pacific was proud to be named World’s Best Business Class in the 2012 World Airline Awards organized by Skytrax.

Copyright Photo: TMK Photography. Boeing 777-367 ER B-KPF (msn 36832) in the special Hong Kong-Asia’s world city motif arrives at Toronto (Pearson).

Cathy Pacific Airways: