Swire Group

More passengers,less cargo for Cathay in June

PUBLISHED : Tuesday, 17 July, 2012, 12:00am
UPDATED : Tuesday, 17 July, 2012, 12:00am

Strong passenger demand on Asian and North American routes helped Cathay Pacific and Dragonair post a combined 6.4 per cent increase in passenger numbers last month.

The two carriers flew 2.41 million passengers in June, up from 2.27 million a year earlier.

But cargo and mail volumes fell 5.4 per cent to 127,698 tonnes last month, down from 134,980 tonnes in June last year, as the industry continued to suffer from slowing trade.

Cathay said passenger numbers climbed 8.6 per cent to 14.31 million in the first six months, while cargo and mail volumes dropped 9.8 per cent to 753,901 tonnes.

The growth in passengers outpaced the increase in capacity, which grew 3.5 per cent in June and 6.9 per cent in the first six months.

General manager, revenue management James Tong Wai-pong said: 'Our flights were busy in June in the build-up to the summer peak season. Passenger volumes rose more than the increase in capacity, which shows the demand is there, but we continued to see yield coming under pressure in all cabins last month.'

The airline expected to see high passenger loads - a measure of utilisation of the available capacity - on most routes over the summer peak.

James Woodrow, general manager for cargo sales and marketing, said: 'There was no uptick in demand out of our key markets in June. The fall in cargo was not as sharp as in previous months but that reflects the weakness of the cargo market last year.

'Traffic within the Asia-Pacific region continued to hold up well, while the transpacific routes were spurred by shipping cherries from the US.'

Patrick Xu, a transport analyst at Barclays Bank in Hong Kong, said: 'We see a grim fundamental situation, with revenue per kilometre growth continuing to slow, putting pressure on yields in all cabins.'

Xu expects the carrier to post a net loss in the first half before a rebound in the second half. He has forecast a 90 per cent drop in full-year net profit to just HK$550 million.

Analysts at Citi Investment Research have forecast a full-year net profit of HK$1.76 billion, including a HK$300 million charge associated with an impairment on one of the airline's Boeing 747-400 freighters.

Cathay Pacific is planning a series of cost-cutting measures, including trimming flight schedules, replacing ageing Boeing 747-400s with more fuel-efficient Boeing 777s and instituting a hiring freeze and an unpaid leave scheme.