Cathay Pacific Airways posted a HK$935 million loss in the first half of 2012, a marked contrast from the HK$2.8 billion profit the carrier saw in the first six months of 2011. In a press release, the Hong Kong-based carrier blamed sky-high fuel prices, sluggish freight volumes and global economic woes on this decline.
Cathay Pacific’s cargo revenue tumbled 7.6 percent, year-over-year, in the first half of 2012, falling to HK$11.9 billion. Freight capacity and yield also shrunk during the first six months of 2012, slowing 4.3 percent and 0.4 percent, year-over-year, respectively. Despite measures to match capacity with demand, Cathay’s load factor similarly took a hit during this period, declining 4.1 percent, year-over-year, to 64.3 percent.
According to the press release, cargo demand in Hong Kong and Mainland China was “well below expectations” during the first half of the year, although the introduction of certain electronics in March led to a brief spike in volumes. Even so, Cathay launched twice-weekly freighter service to Zhengzhou, China, in late March, with twice-weekly cargo service to Hyderabad, India, commencing roughly two months later.
But the financial stress Cathay experienced during the first half of the year was extreme, with fuel accounting for 41.6 percent of its total operating costs. In an effort to contain costs, the carrier retired older, less fuel-efficient aircraft from its fleet; three Boeing 747-400BCF freighters were also taken out of service.
Cathay Pacific Chairman Christopher Pratt explained that such actions demonstrate the cyclical nature of the industry. “Aviation will always be a volatile and challenging industry, and our business will always be subject to factors, including economic fluctuations and fuel prices, which are beyond our control,” he said in a statement.
“We will continue to take whatever measures are necessary to protect the business, managing short-term difficulties while remaining committed to our long-term strategy,” Pratt said in a statement. “Our financial position remains strong, and we are in a good position to deal with our current challenges.”
Cathay Pacific will also continue investing in its HK$5.9 billion cargo terminal at Hong Kong International Airport — a project that will benefit operations in the long term, according to the press release.