Cathay Pacific announces 2001 Interim Results

Cathay Pacific Airways made a profit attributable to shareholders of HK$1,319 million during the six months ended 30 June 2001. This compares with a profit of HK$2,176 million recorded in the first half of 2000. Turnover fell by 1.9% to HK$15,843 million. The directors have recommended an interim dividend of HK¢12.5 a share, compared with HK¢20.0 last year.

The results reflect the difficult operating conditions that have faced the company in the first half of the year, in particular the slowing growth in the United States, Japan and the other Asian economies. This economic weakness has had an impact on both passenger and cargo operations.

During the period, passenger numbers rose a modest 2.3% to 5.9 million but this was well below the 8.6% growth in seat capacity. As a result, the passenger load factor fell by 3.8 percentage points to 71.9%. The amount of cargo carried fell by 5.2% to 340,000 tonnes. Cargo load factors and yields also declined sharply.

Cathay Pacific Chairman James Hughes-Hallett said: "When announcing our results for the year 2000, we suggested that 2001 would be a challenging year. It has certainly turned out that way. The slowdown in the United States, Japan and other major economies has been more severe than originally foreseen, affecting markets throughout the rest of Asia."

Fortunately, although revenue has fallen, unit costs have also continued to decline due to capacity growth and efficiency improvements. Excluding the impact of fuel, the company's unit costs per available tonne kilometre fell by 1.6%. Fuel represented 18.8% of the airline's operating expenses, up from 17.7% a year earlier.

Cathay Pacific's attributable profit for the first half was boosted by HK$452 million due to the gain from a disposal of shares in Equant, a network communication services company which has been acquired by France Telecom.

Despite the challenging conditions, Cathay Pacific has continued to develop and invest in its product. In the first half of the year, the airline took delivery of five new aircraft, launched a new service to Delhi and added more flights to Southeast Asia and North America. The company also launched a new inflight entertainment system and a new inflight food promotion, along with a range of new e-Business customer service enhancements.

The industrial action announced by the pilots' union in late June had no material impact on the results for the first half. The union's action did however result in significant disruption in July, when it was compounded by the impact of Typhoon Utor. The cost of the disruption will be taken into account in the company's results for the second half of the year.

While recognising the concerns over the slowdown of the world economy, Cathay Pacific remains confident about the long-term future of the airline and Hong Kong's role as Asia's leading aviation centre.

Mr Hughes-Hallett said: "Despite the current weak trading conditions, we remain confident about the long-term future of Cathay Pacific and our home base Hong Kong, which continues to strengthen its reputation as Asia's leading aviation centre."