Cathay Pacific has recorded a 52% rise in first-half operating profit to HK$1.57 billion ($202 million), despite falls in passenger and cargo yields.
Relative to the previous corresponding period, revenue over the six month period increased by 4.4% to HK$50.8 billion. Operating expenses grew at a slower rate of 3.6% to HK$49.3 billion.
The airline’s attributable net profit amounted to HK$347 million, a significant improvement on the HK$24 million recorded during the same period in 2013.
“When we announced our 2013 annual results in March this year, we stated that the business outlook for 2014 looked to be improved when compared to the previous year,” says Cathay’s chairman John Slosar. “However, a number of factors had a significant negative impact on our business in the first six months of 2014. The principal adverse factors were reduced passenger yield, continued weakness and over-capacity in the air cargo market, the continued high fuel price and a weak performance from our associated company, Air China.”
Cathay’s passenger revenue increased by 4.4% to HK$36.5 billion, aided by a 5.3% increase in capacity, while load factor was up 2.3 percentage points to 83.6%. The airline notes however that yield fell by 3.5% to 66.6 Hong Kong cents per ASK, in part due to weakness in the Southeast Asian market.
On the cargo front, revenue increased by 3.4% to HK$11.7 billion, while yield was down 6.9%. Cargo capacity was up 10.8%, while load factor rose marginally to 63.2%.
“Over-capacity in the industry remains a major concern and has made it difficult to increase rates,” says Slosar. “We continued to manage capacity in line with demand in the first half of 2014. More of our cargo was carried in the bellies of passenger aircraft, reflecting increased use of Boeing 777-300ER aircraft.”
He adds that while the operating environment for the airline continues to be challenging, Cathay is expecting business to improve in the second half.
“Our financial position remains strong and will enable us, despite the current difficult trading conditions, to maintain the quality of our products and services and to continue with our long-term strategic investment in the business,” says Sloasar.