UPDATE: Cathay Pacific's 1st-Half Net Soars To HK$6.84 Billion
August 04 2010 - 4:15AM
Dow Jones News
Cathay Pacific Airways Ltd. (0293.HK) on Wednesday reported a
higher-than-expected eight-fold surge in first-half net profit,
boosted by the proceeds of two asset sales and a significant
recovery in passenger and cargo demand.
The Hong Kong-based airline said its capacity and services are
now close to where they were before the global financial crisis
started, and it has placed orders for 30 Airbus A350-900 long-haul
jets to meet future expansion and aircraft-replacement needs.
"If present trends continue, we expect our financial results to
continue to be strong in the second half of 2010," Cathay Pacific
Chairman Christopher Pratt said in a statement.
Cathay Pacific, which is controlled by conglomerate Swire
Pacific Ltd. (0019.HK), said its net profit for the six months
ended June 30 was HK$6.84 billion (US$877 million), a first-half
record for the company and up sharply from HK$812 million a year
earlier when the global aviation industry was hit hard by the
global downturn.
The results included HK$2.17 billion worth of gains from the
sale of stakes in sister company Hong Kong Aircraft Engineering Co.
(0044.HK), and in Hong Kong Air Cargo Terminals Ltd.
Revenue rose 34% to HK$41.34 billion from HK$30.92 billion. The
airline recommended a first-half dividend of HK$0.33. It didn't
recommend a first-half dividend last year.
Cathay Pacific's first-half earnings were much higher than the
average HK$4.24 billion forecast of seven analysts, mainly because
most of the analysts had expected the company to book the proceeds
from its Haeco sale in the second half. Even excluding those
proceeds, however, Cathay Pacific's results were above the average
forecast.
"The robust rebound in earnings shows that a recovery of the
industry is in place, supported not only by strong cargo demand but
a gradual comeback of premium passenger air services," said Kelvin
Lau, an analyst at Daiwa Capital Markets.
The financial crisis that began in late 2008 led to a sharp fall
in global export volumes and air passenger travel demand. Reacting
to the dramatic downturn in the industry, Cathay Pacific reduced
passenger capacity by 3.7% and cargo capacity by 13.1% in 2009.
However, cargo and passenger business has improved markedly
since the last quarter of 2009 and Cathay's cargo traffic is now
back to its pre-crisis levels, while demand for the airline's
first- and business-class services, though not yet back to where
they were in 2008, have rebounded significantly. As such, Cathay
Pacific and its China-focused unit, Hong Kong Dragon Airlines Ltd.,
have been restoring their cut capacity.
During the first half this year, the airline carried 12.95
million passengers, 8.5% more than a year earlier. The total cargo
it carried rose 24.4% to 871,585 metric tons.
Cathay Pacific's passenger yields--a key measure of airline
profitability--rose 17.5% in the first half to 58.4 HK cents from
49.7 HK cents, reflecting higher average prices. Yields for cargo
operations jumped 36% to HK$2.26 from HK$1.66.
In a separate statement Wednesday, Cathay Pacific said it signed
a letter of intent with Airbus to buy 30 A350-900 aircraft as part
of its expansion plans. Though the planes have a list price of
US$7.82 billion, the actual purchase price will be lower, the
airline said.
The airline said it also plans to exercise purchase rights for
six Boeing 777-300 extended range aircraft from Boeing Co. (BA).
Those aircraft have a catalog price of around US$1.61 billion, it
said.
-By Joanne Chiu and Jeffrey Ng, Dow Jones Newswires;
852-2802-7002; joanne.chiu@dowjones.com
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