Cathay 2010 profits spike to $1.8 billion

Cathay 2010 profits spike to $1.8 billion    The Cathay Pacific Group, parent company of Cathay Pacific Airways, on Wednesday reported net profits of $1.8 billion for 2010, an increase of nearly 200 percent on its 2009 profits.
   Revenue for the company rose 33.7 percent to $11.5 billion. The figures include earnings from Air China, which Cathay maintains a stake in, as well as from Hong Kong based air cargo terminals and an aircraft engineering company.
   The group's cargo revenue increased 50.1 percent to $3.3 billion. Freight carried by Cathay Pacific and sister airline Dragonair increased 18.1 percent to 1.8 million tons, while cargo capacity increased 15.2 percent, as freighters parked in the desert during the downturn were returned to service.
   'Despite this substantial increase in capacity, the strength of demand was such that our load factor increased by 4.9 percent to 75.7 percent,' the airline said. 'Demand in all key markets was strong, and especially so in the peak season of October and November.'
   The airline said fuel remains its biggest single cost, representing 35.6 percent of the total operating costs.
   'The fuel price increased during the year and was 28 percent higher on average than in 2009,' Cathay said. 'Our total fuel costs for 2010 (disregarding the effect of fuel hedging), reflecting both the higher price and increased operations, increased by 40.4 percent. Managing the risk associated with fuel price changes is a key challenge.'
   'The rapid turnaround in our business from the lows of 2008 and much of 2009 to the record highs of 2010 is very welcome,' said Cathay Pacific Chairman Christopher Pratt. 'It is also indicative of the volatile nature of our business. We cannot afford to be complacent. Our results would be adversely affected, and very quickly so, by a return to recessionary economic conditions. Demand is at present expected to remain strong in 2011, but this expectation could be undermined if the current (or any higher) level of oil prices were to reduce global economic activity.'
   Meanwhile, Cathay also announced it will add 27 aircraft to its fleet by 2015.
   The airline placed an order with Airbus for 15 A330-300s, with Boeing for 10 777-300ERs. It will also lease two Airbus A350-900s from International Lease Finance Corp.
   'The 27 new aircraft have a list price of about $6.5 billion, but will be acquired at a considerable discount, as is the usual practice in such transactions,' the airline said.
   The latest orders come on top of the airline's biggest-ever order, made in September 2010, for 30 Airbus A350-900s to be delivered from 2016 to 2019, and six Boeing 777-300ERs to be delivered between 2013 to 2014.
   'The latest order will enable the airline to replace older, less fuel-efficient aircraft as they are progressively retired from the fleet,' Cathay said.
   The airline now has 91 new aircraft on order for delivery between now and 2019.