Cathay Pacific cautious on 2010 outlook, but in the midst of a solid turnaround

Cathay Pacific staged a very solid turnaround in 2H2009 (six months to 31-Dec-2009), comfortably exceeding the market’s profit expectations, helped by better yields and capacity restraint. But the Hong Kong-based carrier remains “cautious” about the prospects for 2010, following the big hits to its premium travel and cargo businesses over the past two years. Chairman Christopher Pratt stated, “while we welcomed the improvement in business in the latter part of 2009…revenues and yields remain below levels experienced prior to the recent downturn”. He added, “there has not yet been a sustained improvement in the premium passenger demand, which accounts for a significant part of our revenue. That said, we have many things working in our favour which will help to put us in a stronger position if the current recovery in the world economy is sustained”. [1645 words]

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This report contains the following subheadings:

• Revenues smashed, but costs fall further
• Second half improvement
• Fuel prices getting “uncomfortably high” again
• Passenger numbers fall 1.6%, capacity reduced by 3.7% in 2009
• Cargo revenue down nearly one third
• Structural issues with freight. The answer: Air China relationship?
• Outlook: Double-edged sword

This report contains the following charts and tables:

• Cathay Pacific passenger yield (HK cents): 1996 to 2H2009
• Cathay Pacific revenue breakdown: 2009 vs 2008
• Cathay Pacific ASK growth and yield growth by region: 2009
• Cathay Pacific revenue growth and operating costs growth: 2005-2009
• Selected airlines labour cost per ASK and year-on-year labour cost change: Three months ended 31-Dec-2009
• Cathay Pacific operating profit margin and net profit margin: 2000-2009
• Cathay Pacific operating profit margin and net profit margin in 2009
• Cathay Pacific fuel cost proportion and labour cost proportion trend: 2000-2009
• Cathay Pacific passenger numbers growth and cargo volume growth: 2005-2009
• Cathay Pacific passenger yield growth and cargo yield growth: 2005-2009
• Cathay Pacific cargo yield (HK cents): 1996 to 2H2009