Cathay Pacific Announces 2007 Annual Results
March 6, 2008
Cathay Pacific Announces 2007 Annual Results
Results 2007 2006 Change
Turnover HK$ million 75,358 60,783 +24.0%
Profit attributable to Cathay Pacific shareholders HK$ million 7,023 4,088 +71.8%
Earnings per share HK cents 178.3 115.9 +53.8%
Dividend per share HK cents 84.0 84.0 -
Cathay Pacific Airways has announced a profit attributable to shareholders of HK$7,023 million (NZ$1,132 million) in its 2007 annual results, compared to a profit of HK$4,088 million (NZ$659 million) the previous year. The 2007 result, the first to include a full year’s contribution from wholly owned subsidiary Dragonair, is a record annual profit for the Cathay Pacific Group.
Group turnover increased by 24.0% to a record HK$75,358 million (NZ$12,154 million) in 2007. High fuel prices continued to have a significant impact on the airline, particularly in the second half of the year, and the fuel bill rose by 21.8% to HK$24,624 million (NZ$3,971 million). This was only partially offset by fuel surcharges. The unit cost excluding fuel fell slightly as a result of the airline’s efforts to increase productivity and reduce controllable overheads.
Passenger demand was high throughout the year, and Cathay Pacific carried a record 17.8 million passengers in 2007 – an increase of 6.2% on the previous year. Strong demand from premium passengers helped to push yield up 11.1% to HK¢52.2 (NZ¢8.41), helping total passenger revenue to a new high of HK$39,299 million (NZ$6,338 million) – an increase of 17.0% over 2006. Capacity, measured in terms of available seat kilometres, rose by 3.9% as new aircraft arrived and services on key routes were strengthened in the second half of the year.
Cathay Pacific and Dragonair added 12 new aircraft to their fleet last year, including the first five of 30 Boeing 777-300ERs the airline has on firm order. The new aircraft, which will become the mainstay of Cathay Pacific’s long-haul fleet, were used to add a second daily non-stop flight to New York. New daily services were also added to Melbourne and San Francisco, with flights also added to Adelaide, Frankfurt, Paris, Perth, Tokyo, Toronto and Vancouver. In addition, there were seven new destinations to the network in 2007 through code-share arrangements with Dragonair.
There was a further expansion to the freighter fleet in 2007 and the increased capacity helped Cathay Pacific carry a record 1,353,000 tonnes of freight, despite a soft market throughout the year. Cargo revenue rose by 10.0% to HK$13,183 million (NZ$2,126 million), while the cargo load factor fell by 0.8% point to 67.5%. A combination of factors - including weak demand out of Europe and North Asia, increased competition and a modal shift to marine freight due to high fuel prices – led to a 7.7% decline in cargo yield to HK$1.56 (NZ¢25).
Work was ongoing throughout 2007 to fully realise the synergies resulting from Dragonair becoming part of the Cathay Pacific Group in September 2006. In the first full year since the integration, the two airlines worked to enhance connectivity by strengthening and aligning both carriers’ networks. Dragonair saw a total of six new destinations – Busan, Fukuoka, Kathmandu, Phuket, Sendai and Taichung – added to its network while frequencies to a number of secondary Mainland destinations were strengthened. Connection times at Hong Kong International Airport were also improved, giving a boost to Hong Kong’s position as a leading international aviation hub.
On the product side, Cathay Pacific began rolling out its innovative new three-class long-haul inflight product, which features First Class suites, full-flat beds with enhanced privacy in Business Class and unique Economy Class seats that recline within their own shell. All three cabins feature a brand new state-of-the-art inflight entertainment system with audio and video on demand. The new cabins have now been retrofitted into 10 aircraft while all new Boeing 777-300ERs and three new Airbus A330-300s arrived with the product in place. The entire long-haul fleet will feature the product by mid-2009.
Cathay Pacific Chairman Christopher Pratt said: “We are very pleased with our 2007 result, which was driven largely by consistently strong passenger demand. The synergies between Cathay Pacific and Dragonair really began to show through and helped to further develop Hong Kong’s role as Asia’s leading international aviation hub for both passenger and cargo traffic. In the coming year we expect competition to intensify, while high and volatile fuel prices will continue to have an impact on our business – as will any slowdown in economic activity. That said, the Cathay Pacific Group is in good shape and we will continue to work to realise the full potential of our acquisition of Dragonair, our strategic partnership with Air China and the strength of our main hub in Hong Kong.”
David Figgins, Country Manager for New Zealand and Pacific Islands, said that the New Zealand service had benefited from the growing trade and tourism links with China. The airline operated a double daily service to Hong Kong over the peak summer season this year. During the 2008 winter period, Cathay Pacific will operate 10 flights a week, up from seven flights a week last winter, with the morning departures from Auckland providing same day connections into China.
Said Mr Figgins: “The performance of our local route has grown outbound through our links with Dragonair, and we have also captured a large percentage of inbound Chinese tourism. Our links with Dragonair give Cathay Pacific the best network coverage of any airline in the region into China and the rest of Asia.
“New Zealand is now firmly part of the Asian trading region. Our multiple entry points into China will benefit New Zealand exporters with the forthcoming Free Trade agreement between New Zealand and China.”
Note: HK$ were converted to NZ$ using a conversion rate of 6.2
The Cathay Pacific website can be found at www.cathaypacific.co.nz