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Cathay Pacific announces 2018 annual results

Results FY2018FY2017 Change
RevenueHK$ million111,06097,284 +14.2%
Profit/(Loss) attributable to the shareholders of Cathay Pacific
HK$ million



Earnings/(loss) per shareHK cents59.6(32.0) +91.6
Dividend per shareHK$0.300.05 +0.25
Profit/(loss) Margin%2.1(1.3) +3.4%pt

The Cathay Pacific Group reported an attributable profit of HK $2,345 million (NZ $435.75 million) in 2018, compared to an attributable loss of HK $1,259 million (NZ $234 million) in 2017 and an attributable loss of HK $575 million (NZ $107million) in 2016.

Profit per share was HK 59.6 cents in 2018 compared to a loss per share of HK 32 cents in 2017 with a dividend per share of HK 30 cents, compared with HK 5 cents in 2017.

Broadly benign economic conditions continue to create a challenging business environment in which Cathay Pacific’s airlines operate, with intense competition in the market, fuel prices increasing and the US dollar strengthening.

However, the implementation of Cathay Pacific’s Transformation programme has had a positive impact on the business and Cathay Pacific remains focused on finding new revenue sources, building its network, strengthening its hub in Hong Kong and delivering more value to its customers while continually improving productivity and efficiency.

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There were key market challenges faced by the business in 2018. Overcapacity in the market continues to create intense competition, particularly with other airlines from mainland China. This competition created pressure on market yields on key Cathay Pacific routes, particularly in the second half of the year. Fuel prices increased for 10 months, before falling in the final months of 2018 and the strength of the US Dollar adversely affected net income in the latter half of the year.

Despite the current business environment, which is expected to remain challenging into 2019 with the US dollar forecast to remain strong, geopolitical discord and global trade tensions dampening passenger and cargo demand and competition remaining intense, Cathay Pacific remains confident its transformation programme will deliver sustainable long- term performance as the company becomes leaner and more agile.

In 2019, Cathay Pacific will continue to reorganise its business to build efficiencies and compete by extending its route network to destinations not currently served from Hong Kong, increasing frequencies on its most popular routes and by operating more fuel-efficient aircraft.

At the end of 2018, Cathay Pacific acquired from DHL International the 40% shareholding in Air Hong Kong that it did not already own, with the result that Air Hong Kong became a wholly owned subsidiary.

But for the adverse effect of a weaker Renminbi, the contribution from subsidiary and associated companies was satisfactory.

“Our teams of professionals have shown great determination and commitment during this past year. I would like to thank them for their professionalism and hard work. Together, we are taking the required action to make Cathay Pacific and Cathay Dragon better airlines and stronger businesses.

As a Group, our commitment to Hong Kong and its people remains unwavering, which has been the case for more than seven decades. We will continue to invest significantly to develop and strengthen Hong Kong’s position as Asia’s largest and most popular international aviation hub.”
John Slosar, Chairman. 13 March, 2019

Passenger Services
Passenger revenue in 2018 was HK$73,119 million (NZ $13,587million), an increase of 10.1% compared to 2017. Capacity increased by 3.5%, reflecting the introduction of new routes and increased frequencies on existing routes. The load factor decreased by 0.3 percentage point, to 84.1%. Yield increased by 6.7% to HK55.8 cents, reflecting improved premium class passenger demand, fuel surcharges and revenue management initiatives.

Competition on Southwest Pacific routes was strong, reflecting increases in other airlines’ capacity while less reliance on transit passengers improved yield. In New Zealand, Cathay Pacific’s three flights per week seasonal route to Christchurch, first introduced in 2017, was successfully reintroduced in November 2018.

Cathay Pacific introduced passenger services to 10 destinations in 2018 - Nanning, Jinan, Brussels, Copenhagen (seasonal), Dublin, Washington D.C., Davao City, Medan, Cape Town (seasonal) and Tokushima (seasonal). In March 2019 Cathay introduced a passenger service to Seattle and will introduce a service to Komatsu in April 2019 with increased frequencies to other destinations in response to demand.

Cargo Business
The cargo business benefited from robust demand in 2018. Group revenue increased by 18.5% to HK$28,316 million (NZ$ 5,261.67 million). The Capacity of Cathay Pacific and Cathay Dragon increased by 2.6%. The load factor increased by 1.0 percentage point to 68.8%. Tonnage carried increased by 4.7%. Yield rose by 14.7% to HK$2.03, reflecting an increase in high-value specialist cargo shipments and higher fuel surcharges.

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