While cargo volume for the Cathay Pacific Group was up by 8 percent to 868,000 tonnes in the first six months of 2015, compared to first-half 2014, revenues from cargo fell by 2.5 percent, year-over-year, due to increased competition, a rise in cargo capacity and a sharp reduction in fuel surcharges.
These factors combined to push yields down by 11.1 percent for the first half, y-o-y, while the load factor increased by nearly a full percentage point to 64.1 percent, according to Cathay’s six-month interim report for 2015. However, total operating costs for the group also fell by 2.6 percent during the period, including a 12.2 percent reduction in fuel costs, net of hedging.
“The operating environment was generally positive in the first half of 2015,” said Cathay Pacific’s CEO, John Slosar. “We reduced our operating costs due to lower fuel prices, partially offset by fuel hedging losses. We continued to manage non-fuel costs effectively. But we face challenges.” Slosar added that the airline usually performs better in the second half of the year.
The group fared better in the first quarter over the second, the Cathay report said. The increase in demand in the air cargo market, due to labor-related congestion of the U.S. West Coast ports, stretched into the first three months, but tapered off in the second quarter. There was strong demand on some of its principal cargo routes; to and from North America improved for the carrier due to the West Coast port crisis. Intra-Asia shipments also grew but traffic to Europe fell short of expectations.
Overall revenue slid by 0.9 percent in the first half of 2015 to US$6.4 billion for the Cathay Pacific Airway Group. However profit jumped to HK1.97 billion ($254 million) a 468 percent increase y-o-y.
Bloomberg reported that shares in the carrier fell the most they have in six years after the results were made public. Fuel hedging, or betting on the price of fuel, resulted in a loss of HK7.42 billion by the end of June. In the first six months of the year, Cathay Pacific took delivery of seven new 777-300ERs and three A330-300s. As to freighters, Cathay said six of its 747-400Fs will be sold back to Boeing. Two of these have already been returned, and the remaining four will leave the fleet by the end of the year.