The Hong Kong airline’s cargo revenue in 2013 fell to HK$23.66 billion (US$3.04 billion), a decline of 3.6 percent compared to the previous year, due to weak demand and strong competition.
The group said it will continue to lower its freighter capacity and raise efficiency this year as weak demand since April 2011 continues to adversely affect its airfreight business.
Yield for its twin carriers Cathay Pacific and Dragonair decreased by 4.1 percent to HK$2.32. Capacity increased by 1.7 percent but the load factor fell by 2.4 percentage points to 61.8 percent.
“Capacity was adjusted in line with demand throughout 2013 and more cargo was carried in the bellies of passenger aircraft in order to reduce costs,” said a company release. “The airline’s new cargo terminal at Hong Kong International Airport became fully operational in October 2013 and will allow us to improve efficiency and to reduce costs in the long term.”
Aggregate group profit for 2013 rose to HK$2.62 billion for 2013 from HK$862 million in the previous year. Turnover increased by 1.1 percent to HK$100.4 billion.
The improved performance was largely due to the strengthening of its passenger business and measures introduced in 2012 to cope with the high price of jet fuel.
The group lowered fuel costs by changing schedules, reducing capacity, withdrawing older, less fuel-efficient aircraft from service, and taking delivery of new, more fuel-efficient aircraft.
In 2013 Cathay Pacific continued to upgrade its fleet, taking delivery of 19 new aircraft: five Airbus A330-300 aircraft, nine Boeing 777-300ER aircraft, and five Boeing 747-8F freighters.
In March 2013, the airline entered into agreements to purchase three Boeing 747-8F freighters, which were delivered in December 2013, cancel orders for eight Boeing 777-200F freighters, acquire options to purchase five Boeing 777-200F freighters, and sell four Boeing 747-400BCF converted freighters.
In December 2013, the airline announced an order for 21 new Boeing 777-9X aircraft for delivery after 2020, three new Boeing 777-300ER aircraft, and one new Boeing 747-8F freighter, and to sell six existing Boeing 747-400F freighters.
As at December 31, 2013 the group had a total of 95 aircraft on order for delivery by 2024. Cathay Pacific and Dragonair are to take delivery of 16 new aircraft in 2014, one of which was delivered in January 2014.
Last year, the airline introduced freighter services to Guadalajara, Mexico, in October 2013 and extended this service to Mexico City in March 2014 and will add a freighter service to Columbus in the United States in late March 2014.
“The operating environment remained challenging throughout 2013, for the group and the aviation industry as a whole,” said Cathay Pacific chairman Christopher Pratt. “The cargo business continues to be problematic. There is still no sign of any sustained improvement in the market and some changes in the business appear now to be structural rather than cyclical. We thus have reduced the size of our freighter fleet and at the same time increased its efficiency.
“We remain confident in Hong Kong’s future as an air cargo center and believe that our reshaped freighter fleet and our new cargo terminal will allow us to compete successfully in the long term. The business outlook for 2014 looks to be improved when compared to 2013.”
Meanwhile, the company’s combined traffic figures for February 2014 show a drop in cargo and mail tonnage compared to the same month in 2013.
The two airlines carried 101,295 tonnes of cargo and mail in February, a drop of 2.4 percent compared to February 2013. The cargo and mail load factor fell by 1.8 percentage points to 59.3 percent. Capacity fell by 1.5 percent while cargo and mail revenue tonne kilometers flown were down by 4.4 percent. In the first two months of the year, tonnage dropped by 1.8 percent against a capacity increase of 3.9 percent.
“Demand in the key Hong Kong and mainland China markets plummeted following the beginning of Chinese New Year and the pick-up after the holiday was slow,” Cathay Pacific general manager of cargo sales and marketing Mark Sutch said. “However, by the middle of the month we began to see an increase in demand on the North America and Europe lanes and also for intra-Asia traffic, and by the end of February we were operating close to a full schedule.”
Photo: Aero Icarus