Business Round-Up
Cathay Pacific triples profits
April 1st 2014
Conservative fuel hedging and strengthening passenger traffic were the keys to a triple plus profit improvement for Cathay Pacific Airways in 2013. “We are definitely back in profit,” said chief executive, John Slosar, at his last Cathay Pacific results announcement before he moved to parent, Swire Pacific, as chairman this month. Read More » The Hong Kong-based carrier reported a net profit of US$337.5 million for the 12 months to December 31, 2013, compared with a profit of $111 million in the previous year.
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Cathay said fuel was “a significant cost”, at 39% for the year, yet fuel savings were a large contributor to its improved results. The carrier said its kerosene bill declined by 3% for the 12 months because fuel hedges were favourable and a capacity cut reduced the airline’s demand for fuel.
“The business outlook for 2014 looks to be improved when compared with 2013,” said the airline’s chairman, Christopher Pratt, who retired as chairman of Swire Pacific on March 31 after 35 years with the company. Cathay’s passenger yields improved by 1.8% due to an increase in premium cabin passengers and business class travelers, especially on long-haul routes.
Cargo dragged down earnings. Slosar told media “cargo was a drag” on the bottom line, but that the opening of the $760 million Cathay Pacific cargo terminal and the disposal of four cargo aircraft would begin to pay off this year. He said the company would not have chosen to open the cargo terminal when it did if it had known the airfreight business would contract as it has. However, he added the cargo business might improve and that it would be interesting to see if how things change “now we have more efficient aircraft”. Cargo revenue declined by 3.6% for the year and yields 4.1%.
The airline reduced capacity by 1.8% last year, but will increase it by 7% this year, largely on its European and American networks. Cathay will add 16 aircraft to its fleet – largely A330s and B777-300ERs – in 2014.
