Cathay Pacific reverts on cargo restructuring as sector shrinks

July 26th 2019

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Cargo will once again be spun off from the passenger business. Read More »

Cathay Pacific Airways is restructuring management oversight of its cargo division, a change expected to help the sector as it rapidly loses its gains of recent times. Cathay’s high exposure to cargo means it needs strong cargo performance to have company-wide success.

Cathay’s cargo division now will report directly to chief customer and commercial officer, Paul Loo. The division previously reported to director commercial and cargo, Ronald Lam, now CEO of HK Express. 

Although Loo did not previously hold direct leadership positions in cargo, his outgoing personality is expected to build camaraderie among the agents and forwarders that dominate the sector.

Cathay’s restructuring removed the cargo director position in favour of a director commercial and cargo position. The job combined oversight of its passenger and cargo divisions, in line with Cathay’s objective of reducing management and reporting lines. “Underpinning this change is a need to create a head office structure that is leaner, faster and more responsive to our cargo customers’ needs,” Cathay said at the time.

Momentum in Cathay’s cargo business has been decreasing since last December. Some drop was considered acceptable since cargo in 2018 exceeded 2017’s strong performance.  June 2019 was the first month that the carrier’s cargo tonnage dropped below 2017 levels, excluding a small decline in February 2019 that could be attributed to the Chinese lunar year holiday. Tonnage is still above 2015 and 2016 levels.

Load factor had slowed in September 2018 and started year-on-year decreases in November. This year, load factor quickly fell below 2017 and 2018 levels. This June was the second month cargo load factors had dipped below 2016 levels. They are only slightly higher than 2015 levels.

Load factors are more difficult to judge since a growing passenger business creates more belly space that may not be as efficiently utilised. First half cargo yields will be disclosed at Cathay’s interim results in August.