Cathay Pacific soars again

Courtesy Getty Images

Courtesy Getty Images

ALTHOUGH analysts were expecting better than reported results and that the profits rising more than 200 per cent from HK$862 million (US$111 million) in 2012 to HK$2.6 billion (US$335 million) was far from the record HK$5.5 billion in 2011, Cathay Pacific has done extremely well at a time when some of the major airlines are still struggling to get back on their feet.

OneWorld partner Qantas, which posted a half-year loss, might want to ask why and how? (See Qantas’ dismal performance: The singer or the song? Mar 3, 2014)

Analysts will point out the fortuitous location of Cathay’s home base at the gate of the huge mainland market. The strong demand for leisure travel out of Hong Kong had boosted the number of passengers carried in 2013 to 30 million, an increase of 3.3 per cent. But it is not an environment free of competition. Regional carriers, particularly budget operators, are piling up the pressure, and Cathay has expressed its concern about the launch of Jetstar Hong Kong by Qantas and China Eastern Airlines. .

However it was the much higher yields on North American and European routes that boosted Cathay’s performance. Yields for those two routes grew by 8.3 per cent and 3.6 per cent respectively, compared to the average of 1.8 per cent. Cathay has been particularly successful for the long haul apparently with the introduction of the premium economy and on account of its ability to leverage on Hong Kong as a gateway to Asia, carrying passengers beyond not only to mainland China but also countries such as India and the Philippines. Rival Singapore Airlines (SIA) might show some interest on both scores, since it has said it does not think the premium economy is a viable concept and since home base airport Changi is facing increased competition as the region’s main hub.

Like all airlines, Cathay too is concerned about the high cost of fuel, which made up 30 to 40 per cent of its operating costs. To combat this, it reshuffled schedules and replaced older planes with the more fuel-efficient Boeing B777-300ER aircraft. According to the airline, fuel costs came down consequently by 4.6 per cent year-on-year.

Now that Cathay is back up soaring, all eyes will be on rival SIA’s performance when it closes its financial year on Mar 31.

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About Dingzi
Writer by passion, with professional expertise in aviation, customer service and creative writing. Aviation veteran, author, editor and management consultant. Besides commentary on business issues and life-interest topics, travel stories and book reviews, genres include fiction, poetry and plays. Nature lover who abhors cruelty of any form to animals, and a tireless traveler. Above all, a dreamer.

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