Low fuel prices allow Cathay Pacific to drive up profit in tough environment

16th Mar 2016
Low fuel prices allow Cathay Pacific to drive up profit in tough environment

Cathay Pacific Group has reported an attributable profit of HK$6,000 million for 2015, rising from a profit of HK$3,150 million in 2014.

Earnings per share were HK152.5 cents, compared to HK80.1 cents in the previous year.

The group’s performance in 2015 was better than in 2014, with the business benefiting from low fuel prices.

The high passenger load factors experienced in the first half of the year continued in the second half, reflecting strong economy class demand.

Premium class demand was not as strong as expected on some long-haul routes.

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Air cargo demand, which came under pressure during the second quarter of the year, remained weak in the second half.

There was an improved contribution from the Group’s subsidiary and associated companies.

The group’s passenger revenue in 2015 was HK$73,047 million, a decrease of 3.5 per cent compared to 2014.

Capacity increased by 5.9 per cent, reflecting the introduction of new routes (to Boston, Düsseldorf, Hiroshima and Zurich) and increased frequencies on some other routes.

Load factors at the carrier increased by 2.4 percentage points, to 85.7 per cent.

Strong competition, a significant reduction in fuel surcharges, unfavourable foreign currency movements and the fact that a higher proportion of passengers were connecting through Hong Kong put downward pressure on yield, which decreased by 11.4 per cent to HK59.6 cents.

Cathay Pacific chairman John Slosar said: “The operating environment was better in 2015 than in 2014, but we faced some significant challenges, which we expect to continue in 2016.

“Strong competition from other airlines in the region, foreign currency movements and weak premium class passenger demand will put pressure on passenger yield.

“Cargo demand will be adversely affected by industry overcapacity.

“Overall passenger demand remains strong and we expect to continue to benefit from low fuel prices. Our subsidiaries and associates are expected to continue to perform well.”

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