Profit rise in 2015 for Cathay Pacific but cargo revenue falls

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The Cathay Pacific Group recorded a profit of $6 billion Hong Kong dollars ($772 million) in 2015 – up on the profit of $3.1 billion in 2014.

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

Cathay Pacific says air cargo demand, which came under pressure during the second quarter of the year, remained weak in the second half.

Cargo revenue in 2015 was $23,122 million, a decrease of nine per cent compared to the previous year. This mainly reflected a reduction in fuel surcharges due to lower fuel prices.

Capacity for Cathay Pacific and Dragonair increased by 5.4 per cent. The load factor decreased by 0.1 percentage points to 64.2 per cent. Strong competition, overcapacity, unfavourable foreign currency movements and the reduction in fuel surcharges put pressure on yield, which decreased by 13.2 per cent, to $1.90.

Cathay says demand was strong in the first quarter of 2015, assisted by industrial action at ports on the west coast of the USA, but overall demand was weak for the rest of the year, particularly on European routes.

Cathay Pacific chairman, John Slosar says: “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.

“We are confident of longer-term success, and we will continue to help our passengers to travel well. In January 2016, we announced that Dragonair is to be rebranded as Cathay Dragon, as part of an effort to create a more consistent travel experience between the two airlines.

“We will continue to invest in aircraft, in our products and in the development of our network. Our financial position is strong. Supported by our world-class team, we remain deeply committed to strengthening the aviation hub in Hong Kong, our home city for the past 70 years.”