Hong Kong flag carrier Cathay Pacific Airways said it is currently conducting a “critical review” of its business as it revised its earlier forecast of improved performance in the second half of 2016.
In a release, the airline company said that in its interim report for 2016 issued earlier, it had predicted that results for the second half of the year would be better than in the first six months, despite business conditions being seen to remain difficult.
The interim report further noted that the operating environment in the second half of the year was expected to continue to be affected by the same adverse factors as in the first half and that the overall business outlook remained challenging.
“When the interim report was issued, it was expected that, as is normal for seasonal reasons (and notwithstanding the adverse factors referred to in the report), the Cathay Pacific group’s results for the second half of 2016 would be better than those of the first half, when the consolidated profit attributable to shareholders was HK$353 million,” it said.
But since then, “the outlook for our airlines’ business has deteriorated,” it added. “Overcapacity and strong competition is putting particular pressure on our passenger business, with continued shortfalls in revenue compared with forecasts and heavy pressure on yield.”
“Against this difficult revenue picture, we are engaged in a critical review of our business, the goal of which is to improve revenues and to reduce costs so as to maintain a strong financial position and to deliver acceptable financial returns.”
The review will consider all options for improving efficiency and productivity, it further stated. “At the same time, we understand the need to continue to invest in our businesses and to improve continuously the products and services which we provide to our customers.
“Against this background, it is no longer expected that the Cathay Pacific group’s results for the second half of 2016 will be better than those of the first half.”
Cargo gets strong boost in Sep
Meanwhile, combined Cathay Pacific and Dragonair traffic figures for September 2016 showed a spike in the amount of cargo and mail uplifted compared to the same month last year with the impending arrival of the peak season.
The two airlines together carried 162,116 tonnes of cargo and mail in September, an increase of 7.1% year-over-year. The cargo and mail load factor rose by 2.6 percentage points to 65.0%. Capacity, measured in available cargo/mail tonne kilometers, increased by 2.2%, while cargo and mail revenue tonne kilometers (RTKs) rose by 6.3%.
In the first nine months of 2016, the tonnage carried rose by 1.9% against a 0.5% increase in capacity and it was flat in RTKs.
“Overall cargo demand in September was fairly strong and tonnage continued to grow,” said Mark Sutch, Cathay Pacific cargo sales general manager.
He noted good growth for exports from Europe and Asia, including China, while demand for freight on the North America routes was robust.
In the last week of the month, prior to the long national holiday in China, the company’s weekly uplift tonnage record was broken.
“Although yield is down from the same period in 2015, we plan to maximise our freighter schedule over the last quarter as we expect demand to strengthen during the traditional peak season,” said Sutch.
Photo: Nxn 0405 chl
