Dragonair

Cathay Pacific profit falls, but from a record level as it manages very well in a tough environment

Cathay Pacific’s financials in 2011 were never going to compare well to a fantastic 2010. Headline revenue were up 9.9%, but net profits fell 60.8% and profit margin dived 10.1 ppts to 5.6% from the previous year’s record 15.7%. Cathay cited the the instability of the global economy, the weakness of the air cargo market, the reduction of yields in economy class, the impact of natural disasters in Japan and Thailand, unrest in the Middle East and continued high jet fuel prices for the result – and predicted tougher times in 2012.

But in the circumstances, and relative to its peers, Cathay is performing well and is an extremely well managed airline. Over the past three years, management has reduced unit costs per ATK by 9.2%. Singapore Airlines has seen a 0.5% increase over the same period.

Business models diverge at long-time archrivals Cathay and Singapore Airlines

Cathay Pacific Airways sees enough growth in the top end of the market to stick entirely with the traditional full-service model and will not be persuaded to follow some of its biggest rivals in establishing a low-cost carrier subsidiary.

Cathay Pacific reports ‘firm’ premium demand but ‘slump’ in Japan routes; load factors weak in Mar

Cathay Pacific stated premium demand remained “firm” in most markets in Mar-2011 although the “slump” in demand in the carrier’s Japanese routes was evident. Outgoing CEO Tony Tyler stated that "in general, the company is in very good shape or there are solid plans in place to put it in very good shape".

Mixed outlook for global air freight in 2011. Still awaiting confirmation of growth trend

The spectacular rebound in global air freight demand of 2009/10 has recently slowed to a canter, raising some concerns that 2011 could be marred by excess capacity and yield pressures as demand softens. The recovery has been broad-based, though Asia - especially China - has been the powerhouse performer.