Category Archives: Cathay Pacific Group

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

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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:

          1H2012

 1H2011

Change

Turnover HK$ million       48,861

46,791

+4.4%

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

2,808

-133.3%

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

71.4

-133.3%

Dividend per share HK$                –

0.18

-100.0%

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: