AVIATION

Cathay Pacific announces 2010 annual results:

Support from China works like magic

The Cathay Pacific Group recorded an attributable profit of HK $14,048 million for 2010. This result, a record for the Group, compares to an attributable profit of HK$4,694 million for 2009. Turnover for the year rose by 33.7 percent to HK$89,524 million. Earnings per share rose by 199.3 percent to HK357.1 cents.

The Group’s business began to recover from the global economic downturn in the latter part of 2009. The momentum was sustained throughout 2010. Our passenger and cargo businesses both performed well with consistently strong loads and significant increases in revenues. We also benefited from the strong profits earned by our associated company, Air China (which contributed HK$2,482 million to the 2010 result), from the aggregate profit of HK$2,165 million from the disposal of our interests in Hong Kong Air Cargo Terminals Limited (“Hactl”) and Hong Kong Aircraft Engineering Company Limited (“HAECO”) and from the profit of HK$868 million from the deemed disposal of part of our interest in Air China.

Under this formula, more than 60 percent of staff will in effect get a profit share of more than six weeks of salary, two weeks of which was already paid to all eligible staff in August. This profit share is on top of the 13th month discretionary bonus they received last December.

Cathay Pacific and Dragonair between them carried a total of 26.8 million passengers in 2010, representing an increase of 9.1 percent over 2009’s figure. The load factor increased by 2.9 percentage points as a result of consistently strong demand for economy class seats and a steady increase in demand for premium class seats. Passenger revenue for the year increased by 29.3 percent to HK$59,354 million. Yield increased by 19.8 percent to HK61.2 cents. Demand was strong in most markets, there was a marked pick-up in premium travel and seat revenue was managed astutely. Passenger capacity increased by 4.1 percent as we restored services which had been reduced or suspended during the downturn and added new destinations.

The Group’s cargo revenue increased by 50.1 percent to HK$25,901 million. Freight carried by Cathay Pacific and Dragonair increased by 18.1 percent to 1.8 million tonnes. Cargo capacity increased by 15.2 percent, as we brought back into service freighters which had been parked in the desert during the downturn. Despite this substantial increase in capacity, the strength of demand was such that our load factor increased by 4.9 percentage points to 75.7 percent. Demand in all key markets was strong, and especially so in the peak season of October and November. This was reflected in yield increasing by 25.3 percent to HK$2.33.

Fuel remains our largest single cost, representing 35.6 percent of the Group’s total operating costs. The fuel price increased during the year and was 28.0 percent higher on average than in 2009. Our total fuel costs for 2010 (disregarding the effect of fuel hedging), reflecting both the higher price and increased operations, increased by 40.4 percent. Managing the risk associated with fuel price changes is a key challenge. The Group’s fuel hedging activities resulted in a reported loss of HK$41 million in 2010, while unrealised mark-to-market gains of approximately HK$1 billion have been recognised in reserves. These gains, depending on intervening movements in the price of oil, will be released to the profit and loss account in 2011 and 2012 as the underlying contracts mature.

The improved business conditions helped us to rebuild our balance sheet. Our financial position is strong. The authorities in Mainland China have given formal approval for our cargo joint venture with Air China, and the two airlines are now in the process of completing the necessary paperwork to enable operations to commence. An existing Air China subsidiary, Air China Cargo, will be used as the platform for the joint venture. Air China Cargo is based in Shanghai and is in a good position to exploit the attractive air cargo opportunities in the Yangtze River Delta region. The Group is selling four Boeing 747-400BCF freighters and two spare engines to the joint venture. One of these aircraft has already been sold to Air China Cargo.

Emirates strengthens service to Seychelles:

Emirates forecasts yield increase

Two daily flights scheduled:

In a major move to support the Seychelles tourism industry and to provide passengers with more flexible travel options, Emirates Airline (www.emirates.com) has announced a 100 percent increase in frequency between Dubai and the Seychelles. This route will be serviced by 14 flights every week, by the end of the year.

Emirates’ Senior Vice President, West Asia and Indian Ocean Majid Al Mualla, awarding a gift to the President of the Republic of the Seychelles, James Michel, flanked by Emirates’ for Seychelles and the Indian Ocean Islands Manager Oomar Ramtoola (left) and, Arabian Adventures and Congress Solutions Senior Vice President Peter Payet (right).

As from March 28, the service will increase to 12 weekly flights. Two further frequencies will be added to the winter schedule, making it a double daily service.

To give a boost to inbound travel, Emirates Holidays, the tour operating arm of Emirates, is currently promoting special packages in various markets including Saudi Arabia, Oman, Bahrain, Qatar and Kuwait.

In a meeting with the President of the Republic of the Seychelles, James Michel, Al Mualla said that Emirates regarded itself as partners of the Seychelles tourism industry and would continue to support it actively. “We thank the Government of the Seychelles for their trust and will work hand in hand with the Seychelles Tourism Board to continue the marketing efforts which have been undertaken,” he added.

“We are overjoyed by Emirates’ announcement regarding the double daily flights. This is in line with our new vision of Seychelles operating with an open skies, thus ensuring our yield increases. The problem of demand and supply in terms of seat capacity is the past,” said Chief Executive Officer of the Seychelles Tourism Board Alain St. Ange.

Future campaigns will comprise familiarisation trips for tour operators and media groups as well as special promotions, such as the recent Valentine’s Day offer targeting couples in Dubai.

Emirates also participated in ‘Carnaval International de Victoria’ in the Seychelles this past weekend with its own colourful float carrying a giant globe and 12 Emirates cabin crew. Additionally, it supported the event by creating awareness around it in new markets such as Czech Republic, Spain, Brazil, Russia, the Middle East, India, Korea, China and Japan.

Emirates cabin crew pose at the beginning of the parade of the ‘Carnaval International de Victoria’ after the airline announced major increase in frequencies between Dubai and Seychelles. The announcement was made by Emirates’ Senior Vice President, West Asia & Indian Ocean Majid Al Mualla, who visited the archipelago during the carnival and paid a courtesy visit for the President of the Republic of the Seychelles, James Michel.