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News
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Cathay Pacific Announces 2009 Interim Results
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5 August 2009
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1H2009 |
1H2008 (restated) |
Change |
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Turnover
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HK$ million |
30,921 |
42.390 |
-27.1% |
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Profit/(loss) attributable to owners of Cathay Pacific |
HK$ million |
812 |
(760) |
+1,572 |
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Earnings/(loss) per share
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HK cents
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20.6 |
(19.3) |
+39.9 |
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Dividend per share |
HK cents
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- |
3.0 |
-100.0% |
The Cathay Pacific Group reported a profit of HK$812 million for the first six months of 2009.
This compares to a loss of HK$760 million in the first half of 2008. Earnings per share rose
by HK39.9 cents to HK20.6 cents. The profit declared is primarily a result of a HK$2.1 billion
unrealised mark-to-market fuel hedging gain.
Overall Cathay Pacific has been hit by a deep and sustained downturn in its key markets,
with sharply reduced passenger and cargo revenues resulting in a 27.1% drop in turnover to
HK$30,921 million for the first six months. The airlines actually made an operating loss of
HK$765 million in the first half of the year before fuel hedging and tax. The Company had a
HK$1.2 billion net outflow of cash from operating activities in the first six months of 2009
leading to rise in its net debt/equity ratio from 0.69 to 0.81.
On the passenger side Cathay Pacific saw a fall in premium business as many major
corporate clients, particularly in the financial sector, either reduced or downgraded travel.
Load factors in the Economy Class cabin were maintained at high levels but a combination
of low fares, due to strong competition in the market, and the impact of the stronger dollar
reduced revenue. As a result passenger yield fell by 19.7% to HK49.7 cents. The number of
passengers carried by Cathay Pacific and Dragonair fell by 4.2% to 11.9 million against a
capacity reduction of 2.1%. The overall passenger load factor fell by 1.5 percentage points
to 78.5%.
Cargo demand was very weak. The amount of freight carried by both airlines decreased by
15.3% compared with the first half of 2008 to 700,693 tonnes. The cargo load factor fell by
0.2 percentage point to 66.2%. Capacity was reduced by 14.1% in response to the sustained
fall in demand. Yield was under constant pressure for the whole six-month period and fell by
32.8% to HK$1.66.
Fuel prices fell significantly compared to the first half of 2008 but were still higher than in
previous years. Prices moved up rapidly in the second quarter with May recording the largest
monthly rise in 10 years. This increase in fuel cost was not matched by the fuel surcharges
approved by the Hong Kong Civil Aviation Department. Cathay Pacific’s and Dragonair’s
surcharges remain below those charged by most of the airlines’ international competitors.
There were gains on fuel hedging contracts in the first six months of 2009, with unrealised
mark-to-market gains of HK$2.1 billion compared to losses of HK$7.6 billion for the whole of
2008. These gains reflect increases in the forward prices for fuel during the periods in which
the relevant fuel hedging contracts will mature.
Cathay Pacific continues to take delivery of new, more efficient aircraft, with two more
Boeing 777-300ER “Extended Range” aircraft entering the fleet in the first half of 2009 and
the last of six Boeing 747-400ERF “Extended Range Freighters” arriving in April. At the
same time the airline accelerated the retirement of the older, fuel-inefficient Boeing 747-
200/300 “Classic” freighters. They have all now left the fleet. In response to the substantial
reduction in cargo demand the Company has taken six of its Boeing 747-400BCF “Boeing
Converted Freighters” out of service – five from Cathay Pacific and one from Dragonair. One
of these has been wet-leased to Air Hong Kong. A total of six passenger aircraft will also be
parked.
Cathay Pacific continues to work with aircraft manufacturers with a view to deferring some of
the deliveries of aircraft on firm order and has deferred other capital expenditure. Staff were
asked to join an unpaid leave scheme, which received strong support from employees
around the world and will play an important role in reducing overheads. In response to the
downturn, Cathay Pacific reduced passenger capacity by 8% and cargo capacity (including
freight carried in passenger aircraft bellies) by 11% starting from May, while Dragonair
reduced passenger capacity by 13%. The capacity adjustment was a measured response to
the circumstances the airlines face and the capacity and network of both carriers will be kept
under constant review as the demand and cost picture changes.
Cathay Pacific Chairman Christopher Pratt said: “The global aviation industry, hit hard by
soaring fuel prices in 2008, is now having to confront one of the most severe demand
downturns in living memory. There are cautious signs that the fall in demand has bottomed
but there is, as yet, no indication when a sustained pick-up will begin. The recent
strengthening of fuel prices is a cause for concern. Cathay Pacific has taken appropriate
measures to get through the current slump and will take further measures as necessary
should the cost and demand picture not improve. However, the Company will ensure that
quality and brand are not compromised and that the service proposition to the customer
remains intact and strong. Despite today’s difficult economic conditions Cathay Pacific
remains confident in its future and will be in a strong position when the business rebound
comes.”
Ref: Cathay Pacific 2009 Interim Results |
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