Cathay’s December volume plummets 24%

Cathay Pacific and sister airline Dragonair saw cargo volume drop 23.9 percent to 115,232 tons in December, compared to the same month in 2007.

   The drop came as Cathay and Dragonair withdrew 14 percent of its capacity to better meet falling demand. The airlines’ cargo and mail load factor dropped 5.7 percent to 62.9 percent.

   For 2008, cargo volume fell 1.6 percent to 1.6 million tons compared to a capacity rise of 0.7 percent.

   “There was no sign of any pre-Christmas rush in 2008 and weak demand globally led to tonnage falling faster than we could cut capacity,” said Titus Diu, general manager of cargo sales and marketing. “We saw a big decline in goods being carried from the Pearl and Yangtze River deltas last month, causing a further slump in the Hong Kong market. We expect the market to remain weak in the first quarter of 2009 and we have revised our capacity to Europe and North America downwards in line with expected demand.”

   In January, Cathay announced heavy losses from fuel hedging as the price of jet fuel dropped. In the latest issue of the company’s internal magazine, CX World, Chief Executive Officer Tony Tyler emphasized that the $980 million in estimated losses aren’t cash losses, but will be determined by what the market rate for fuel is in 2009.

   Worse than those losses, Tyler said, “is the falloff in our revenue streams -- already quite pronounced and which we expect may get worse. The situation for our cargo business is even worse, with a sharp fall in demand. The only glimmer of good news right now is the fact that fuel prices have fallen so much, but the reason for that is the weak world economy -- which is also the cause of our revenue problems.”

Source: American Shipper