Cathay Pacific and Cathay Dragon, reported an attributable loss of HKD 904 million for the first six months of 2018, compared to an attributable loss of HKD 2.8 billion in the first half of 2017.
As a group Cathay Pacific posted an attributable loss of HKD 263 million for the first six months of 2018 compared to a loss of HKD 2.1 billion in the first half of 2017.
“Revenue generation was satisfactory during the first half of 2018, with passenger yield improving,” said Cathay Pacific chairman John Slosar. “Our cargo business was strong, with growth in both volume and yield. We benefited from a weak US dollar during the early part of the period, but were adversely affected by significantly increased fuel prices.”
He added that the contribution from the group’s subsidiaries and associated companies was reduced, principally because of weaker results from Air China Cargo in which Cathay Pacific holds a 49 per cent stake.
Cargo revenue improved, reflecting strong demand, Solar said, noting that tonnage carried grew faster than capacity and yield strengthened, reflecting increasing demand for specialist cargo shipments and the movement of higher value goods to and from Asia.
The Group’s cargo revenue in the first half of 2018 was HKD 12,971 million, an increase of 23.4 per cent compared to the same period in 2017.
The cargo capacity of Cathay Pacific and Cathay Dragon increased by 4.1 per cent with the load factor increasing by 2.1 percentage points, to 68.3 per cent. Tonnage carried increased by 7.5 per cent to 1.0 million tonnes while yield increased by 16.3 per cent to HKD 1.93.
The Group’s passenger revenue increased by 10.4 per cent to HKD 35.5 billion in the first half of 2018, while capacity increased by 3.2 per cent reflecting the introduction of five new routes, increased frequencies on existing routes and the use of larger aircraft on popular routes.
Cathay Dragon introduced services to China’s Nanning in January and to Jinan in March. Cathay Pacific introduced services to Brussels in March, to Dublin in June and a seasonal service to Copenhagen in May. Cathay Pacific’s seasonal service to Barcelona became a year-round service in April. Cathay Dragon reintroduced a service to Tokyo Haneda in March and the carrier stopped flying to Kota Kinabalu in January and to Dusseldorf in March.
Total fuel costs for Cathay Pacific and Cathay Dragon (before the effect of fuel hedging) increased by HKD 3,621 million (or 31.6 per cent) compared with the first half of 2017, reflecting a 27.9 per cent increase in average into aircraft fuel prices and a 2.1 per cent increase in consumption.
Fuel is the Group’s most significant cost, accounting for 30.1 per cent of total operating costs in the first half of 2018 (compared to 30.4 per cent in the same period in 2017). Fuel hedging losses were reduced and after taking fuel hedging into account, fuel costs increased by HK$1,037 million (or 7.1 per cent) compared with the first half of 2017.
Fuel consumption per revenue tonne kilometre fell by 2.5 per cent, as a result of the introduction of more fuel efficient aircraft.
In June, we received the first of 20 new Airbus A350-1000 aircraft, a larger version of the A350-900 aircraft already in the fleet. The new aircraft will be used on the new service which the carrier is introducing to Washington D.C. in September and on other long-haul routes.
At 30 June 2018, Cathay Pacific had 78 new aircraft on order for delivery over the next five years. “These new aircraft will improve our fuel and operating efficiency and reduce our emissions,” Slosar said.
Looking ahead, Slosar said: “Our airlines usually perform better in the second half of the year than in the first half of the year. We expect this to be the case in 2018.
“The strength of the US dollar and economic uncertainty arising from global trade concerns remain challenges. But we still expect passenger yields to continue to improve and the cargo business to remain strong.
“Fuel prices are expected to be higher. Hedging losses will reduce but net fuel costs will increase. Our new aircraft will improve fuel efficiency and we expect to generate more ancillary revenue.
“Our transformation programme will continue. We believe that we are on track to achieve our objective of achieving sustainable long-term performance for our airline businesses. There is still much to do, but I am confident in our future,” he said.