Cathay-Thailand Turnaround transformation Results

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    Cathay's 2018 financial report released on March 13th shows that the old airline that had lost money for two consecutive years and had a net loss of HK$1.3 billion last year got rid of the decline in its performance and its net profit for the year reached 2.3 billion Hong Kong dollars. (Link) Cathay Pacific achieved a profit of HK$2.345 billion in 2018.

    Cathay Pacific attributed this change to the fact that the growth rate of income and income exceeded the cost increase, and the narrowing of fuel hedging losses that caused huge losses was also one of the important reasons.

     The first loss after more than sixty years of establishment, Cathay started a transformation in 2017 involving many changes in personnel and management structures. At the same time, in the main business, because of the continued competition from local and mainland China airlines, it has gradually begun to change its stable business strategy for many years, and began to try to extend the route network to the core market.

     John Slosar, chairman of Cathay Pacific, said the company has been focused on finding new markets while strengthening the structure of Hong Kong hubs and airline networks while improving efficiency. Shi Leshan believes that the growth of capacity and the improvement of revenue management have promoted the growth of passenger transport business.

   Cathay Financial reported that its passenger revenue in 2018 increased by 10.1% to reach HK$73.1 billion. The annual capacity growth rate also reached 3.5%, and the yield increased by 6.7%.

     Although the competitive environment still exists, as local competitors began to adjust their operating strategies for long-haul routes and began to focus more on the surrounding markets, Cathay Pacific's challenges in intercontinental operations were alleviated. The other major cost fuel cost was further improved as the fleet's new models replaced the old models. The financial report showed that Cathay's fuel consumption fell 1.3% last year, coupled with a reduction in fuel hedging losses. Annual fuel costs have only increased by 8.9%.

     At the end of 2018, Cathay had a fleet of 212 aircraft. The main growth in capacity was from the delivery of the new Airbus A350-1000. A total of eight aircraft were delivered throughout the year, with a planned scale of 20 by the end of 2021. This was followed by the retirement of a group of old aircraft including the A330-300, B777-200, B777-300ER and 747-400BCF.

    The substantial increase in freight revenue also contributed a lot to Cathay's earnings. The annual freight revenue growth reached 18.5%, the capacity increased by 2.6%, and the cargo volume increased by 14.7%.

    Cathay believes that the industry environment is still full of challenges in the new year. It is expected that the appreciation of the US dollar and the uncertainty of the geopolitical and global trade environment will affect passenger and freight demand. In the competition of aviation industry, the competition of long-haul economy class will be extremely fierce. Cathay Pacific will continue to implement its corporate transformation plan, continue to reorganize nine core business processes this year, while continuing to expand the route network to more new destinations while encrypting the frequency of popular routes.

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                                                                                                                                                      Reported by Miss Vicky from Cargofee