The Cathay Pacific group has announced an attributable profit of HK$24 million (US$3.1 million) from the first six months of 2013, which, although modest, is a welcome improvement from the HK$929 million (US$119.7 million) loss posted in the same period of 2012. The company's chairman Christopher Pratt said "the level of profitability” was still falling short of expectation.
The group’s core airline businesses, Cathay Pacific and Dragonair, have performed well, with the profit before tax rising from a loss of HK$1.05 billion (US$135.4 million) in the same period last year to a net gain of HK$452 million (US$58.2 million). But overall performance of the group has been held back by other subsidiaries and associates, especially Air China Cargo, which has suffered continued losses, and the start-up costs of the new cargo terminal.
In the face of continued volatility of fuel prices, CX is consolidating its service capacity and flight routes to increase passenger loads and yield. CX expects a 1.5 per cent drop in its overall capacity for 2013 as compared to 2012.
Chief operating officer Ivan Chu attributed the reduction in service, particularly among long haul routes, to the airline’s plans to accelerate the retirement of its Boeing 747-400 fleet, which is to be replaced by more fuel-efficient Boeing 777-300s. This has already been reflected by the lower net fuel costs that account for 38.8 per cent of the total operational budget, down from 41.6 per cent last year.
“We are taking delivery of our new B777 aircraft, and by the last quarter of this year, there will be a positive expansion of capacity,” said Chu.
Long-haul passenger routes that were cut as part of 2012 cost reduction measure will be restored by September. CX will also be adding a new four-time weekly service to Male, the Maldives in October, along with a new daily service to Newark in March 2014 (see story).
The airline has seen a healthy growth in profits from its North American services, which saw a yield increase of 13.6 per cent. On whether the recent merger between American Airlines (AA) and US Airways would threaten CX's growth in the region, chief executive John Slosar said that as the new AA would be an Oneworld member (see here) he believed the merger would represent an interesting development for his airline, a founding member of the alliance.
“The merger would make America Airlines even stronger, so it would be a good thing for Oneworld, and a good thing for Cathay. We are interested to see how that turns out, but [the America market] is already good for us.”
North Asia was the only region that posted a negative yield for CX in the six months. Chu explained although the overall load factor for Japan has up by 7.5 per cent, thanks to the weakened yen, it was countered by a 13 per cent reduction of Japanese travellers visiting Hong Kong. CX operates 113 flights per week to Japan. Furthermore, demand for travel to other North Asian countries such as Korea has weakened.
For more information, visit www.cathaypacific.com
Clement Huang
