Cathay back with positive interim results

HONG KONG's Cathay Pacific has reported a profit of HK$6,840 million for the first six months of 2010 against last year's first half profit of HK$812 million.

Cathay Pacific has committed to investing in new aircraft and other items such as the new cargo terminal at Hong Kong International Airport and upgrades to its product in the cabin and on the ground between now and 2013. In addition, the airline has just signed a Letter of Intent with Airbus to buy 30 A350-900s and also intends to exercise purchase rights with Boeing to buy another six 777-300ERs. The total catalogue price of these aircraft will be about HK$75 billion. The new A350s will be delivered between 2016 and 2019 and will be used partly to replace some of the airline's older aircraft and partly to accommodate future growth.

In the first half of the year the Cathay Pacific Group experienced a continuing and significant recovery in its core business following the extremely challenging conditions experienced for much of the previous year. The turnround in business that began in the last quarter of 2009 continued into 2010 and gained momentum. Both the passenger and cargo businesses of Cathay Pacific and Dragonair performed well with revenues continuing to increase despite uncertainty over the stability of the global economy.

Cargo business was very robust for the whole of the first half with strong demand in all key markets. The cargo load factor increased by 11.8 per cent points compared with the first half of 2009, hitting a record of 78.0 per cent. By July the airline had brought back into service all five aircraft parked in the desert during last year's downturn which helped it to meet demand. In the half year the amount of freight carried by both airlines increased by 24.4 per cent to 872,000 tonnes. Cargo revenue increased by 63.1 per cent to HK$11,844 million while yield increased by 36.1 per cent to HK$2.26.

Fuel is the airline's most significant cost component and fuel prices once again increased in the first half of 2010 - by 51.1 per cent compared to the same period in 2009. Managing the risk associated with fuel price changes is a key challenge and objective.

The partnership with Air China continues with an important development in the relationship - the formation of a new cargo joint venture based in Shanghai - announced in February. The two airlines will use an existing Air China subsidiary, Air China Cargo, in which Cathay Pacific will take equity and economic interest of 49 per cent, as the platform for the joint venture, which is expected to begin operations in October. At the same time Cathay Pacific reaffirmed its commitment to the Hong Kong hub by recommencing work in March on its own cargo terminal at Hong Kong International Airport - a state-of-the-art HK$5.5 billion facility designed to enhance the competitiveness and efficiency of Hong Kong as an airfreight hub.

Cathay Pacific Chairman Christopher Pratt said: "If present trends continue, we expect our financial results to continue to be strong in the second half of 2010. That said, conditions can change rapidly in the airline industry. Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.

"We remain confident in the long-term future of the Cathay Pacific Group and Hong Kong. We are in a challenging and unpredictable industry and we have to be mindful of the many things - economic fluctuations, rising fuel prices, even volcanic eruptions - that can quickly have an impact on our business. Nevertheless, we have a number of things working in our favour, including our capable, supportive and committed team, a superb international network, effective management of costs, our quality service and product offering, a strong relationship with Air China, and our position in Hong Kong - one of the world's great cities and a premier international aviation hub. These core strengths will, I believe, ensure the continued success of the Company."
(Source:www.schednet.com)