We saw that with Air Canada a few years ago, and even though it has come back a long way, its woes are not necessarily over.
Japan Airlines took a similar dive along with a number of others.
And prognositications of increased fuel prices do not make the future all that rosy. in a previous blog I wrote that the surest way to see your money shrink at least by half is to invest in an airline.<
But there are success stories out there and Cathay Pacific is one of them.
I have travelled with this airline a number of times and if service leads to profit, they will continue making more and more money.
They are a tremendous carrier, and although it has been a few years since I’ve flown them, I suspect they are still doing a great job in that category.
In a press release that seems to be being picked up by media everywher the Cathay Pacific Group today announced a profit of HK$6,840 million for the first six months of 2010. This compares to a profit of HK$812 million in the first half of 2009.
In times of trouble media tend to look for a silver lining somwhere and this is this weeks golden story in the avaition industry.
To demonstrate its confidence, the airline has just signed a Letter of Intent with Airbus to buy 30 A350-900s and also intends to exercise purchase rights with Boeing to buy another six 777-300ERs. The total catalogue price of these aircraft will be about HK$75 billion. The new A350s will be delivered between 2016 and 2019 and will be used partly to replace some of the airline’s older aircraft and partly to accommodate future growth.
The following is quoted directly from their release and spells out the road to their recovery over the months.
In the first half of the year the Cathay Pacific Group experienced a continuing and significant recovery in its core business following the extremely challenging conditions experienced for much of the previous year.
The turnround in business that began in the last quarter of 2009 continued into 2010 and gained momentum. Both the passenger and cargo businesses of Cathay Pacific and Dragonair performed well with revenues continuing to increase despite uncertainty over the stability of the global economy.In recognition of the positive interim result and the great effort made by its staff, the airline will pay an advance profit share in the form of an ex-gratia payment of 14 days salary to all eligible members of the Cathay Pacific team. This is a down payment on the final share of profit that will be calculated on the basis of the full-year results for 2010.
The Group’s passenger business experienced a marked improvement from the lows of 2009 with revenues returning to almost pre-financial crisis levels. (Ron’s Note…Not many can say that.)
In economy class, load factors were generally high, as they were during much of the previous year, and yields increased. In the premium classes there was a sharp increase in demand for business travel originating in Hong Kong although this was not matched by a comparable increase in demand for travel originating in other major cities. The two airlines carried a total of 13.0 million passengers in the first six months of 2010 – an increase of 8.5% year on year.<
Following a lot of other reasons for their success, the Cathay release concluded with “After the extremely challenging conditions of much of 2009 the Cathay Pacific Group welcomed the subsequent turnround in business. In 2010 the airline has been able to restore capacity and reinstate services, and the turnround has enabled the Group to rebuild its balance sheet and strengthen its financial position, putting it in a better position to proceed with its core objectives of growing its airlines and further strengthening the position of Hong Kong as one of the world’s leading international aviation hubs.”
“We remain confident in the long-term future of the Cathay Pacific Group and Hong Kong. We are in a challenging and unpredictable industry and we have to be mindful of the many things – economic fluctuations, rising fuel prices, even volcanic eruptions – that can quickly have an impact on our business. Nevertheless, we have a number of things working in our favour, including our capable, supportive and committed team, a superb international network, effective management of costs, our quality service and product offering, a strong relationship with Air China, and our position in Hong Kong – one of the world’s great cities and a premier international aviation hub. These core strengths will, I believe, ensure the continued success of the Company.”