Money Matters, Simplified.
Cathay Pacific returns to profit in FY09
by Ishita Sood - March 10, 2010 - comments
Cathay’s sales dropped by 23 percent to HK$67 billion while cargo volumes declined by 7.1 percent. Also, its gross fuel cost fell by 49 percent in 2009. The company saw a rise in its share price on Wednesday.
Cathay Pacific Airways Ltd., Hong Kong’s flagship airline, reported a profit of $4.7 billion Hong Kong dollars on Wednesday. The company swung back to profit after facing a loss of HK$8.6 billion in 2008.
However, revenue declined by 23 percent to $HK70 billion ($9 billion).
“While we welcomed the improvement in business in the latter part of 2009, we remain cautious about the prospects for 2010. Revenues and yields remain below levels experienced prior to the recent downturn and there hasn't yet been a sustained improvement in premium passenger demand which accounts for a high proportion of total revenues,” said Cathay's Chairman Christopher Pratt in a statement.
In 2009, Cathay offered its staff unpaid leaves due to slow traffic. However, the company now sees an improvement in passenger and cargo traffic.
Cathay’s 2009 results
Cathay’s sales dropped by 23 percent to HK $67 billion while cargo volumes declined by 7.1 percent. Also, its gross fuel cost fell by 49 percent in 2009.
Cathay, having a fleet of 163 planes as on Dec. 31 2009, reported a fall in capacity by 3.7 percent. Its passenger revenue also fell by 20.8 percent.
“Profit may rebound this year on a recovery in premium traffic and cargo -- not just one-time gains,” said Kelvin Lau, an analyst at Daiwa Institute of Research. “Cathay is also benefiting from the effects of cost-cutting measures from last year and industrywide capacity cuts.”
Cathay’s agreement with Air China
Cathay faced significant change in its shareholding structure in 2009 with Air China and Swire Pacific agreeing to augment their shareholdings.
In February 2010, Cathay Pacific entered into an agreement with Air China to form a jointly owned cargo airline. The operations of the same are expected to begin in the summer this year.
“We have a united team that is the hallmark of Cathay Pacific. We have a superb international network and an unrivalled network into Mainland China through Dragonair.
“Our relationship with Air China will bring many benefits in the years to come and we operate out of one of the world's premier aviation hubs, Hong Kong. We are deeply committed to our home city and remain highly confident about the future of Cathay Pacific,” said Pratt.
“Cathay’s yield will be improving this year. But fuel costs are a concern as oil prices are definitely getting higher this year,” said Allen Wong, an analyst at Quam Ltd.
Cathay, controlled by Swire Pacific Ltd, saw a rise in its share price on Wednesday.