Cathay Pacific revenues rise despite challenges
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Cathay Pacific Group has announced positive financial results through the first half of 2013, with revenues and profits rising despite a challenging operating environment.
Cathay Pacific Chairman John Slosar said: “The operating environment for the Cathay Pacific Group – and the aviation industry as a whole – remains challenging. We face significant competition in our passenger business. This makes it difficult to maintain yields.”
The Group’s passenger revenue in the first six months of 2014 increased by 4.4% to HK$36,520 million compared to the same period in 2013. This is partly due to an increase in capacity, which increased by 5.3% as a result of the introduction of new routes (to Doha and Newark) and increased frequencies on existing long-haul routes. The load factor increased by 2.3 percentage points to 83.6%, but the increase in passenger numbers was at the expense of yield, which fell by 3.5% to HK66.6 cents.
In addition to reduced passenger yield, principal adverse factors were continued weakness and over-capacity in the air cargo market, the continued high fuel price, and a weak performance from an associated company, Air China.
The group (which accounts for its share of Air China’s results three months in arrear) recorded a loss from Air China in the first half of 2014. Air China’s results were adversely affected by a difficult operating environment and substantial foreign exchange losses caused by the depreciation of the Renminbi.
Fuel remains the gmost significant cost. In the first half of 2014 fuel costs increased by 5.2% compared to the same period in 2013.
Subsequently, Air China has signed a contract with SITA to deploy new technologies to reduce overall fuel costs by an estimated US$8 million per year.
The airline has deployed SITA’s FMS Wind Uplink service on all international and domestic routes to constantly update key weather information for Flight Management System (FMS) calculations while en route. This enables the crew to adjust its flight path in-flight according to changing wind and weather conditions, so the aircraft uses fuel as cost effectively as possible.
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