Cathay Pacific 1998 Annual Report Download - page 23

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Financial Review
21
CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
Operating costs
Group Cathay Pacific
1998 1997 1998 1997
HK$M HK$M Change HK$M HK$M Change
Staff 7,569 7,712 -1.9% 6,865 7,192 -4.5%
Route 6,429 6,677 -3.7% 6,181 6,406 -3.5%
Fuel 3,612 4,709 -23.3% 3,377 4,420 -23.6%
Aircraft maintenance 2,661 3,100 -14.2% 2,440 2,902 -15.9%
Aircraft depreciation and operating leases 2,743 2,330 +17.7% 2,733 2,325 +17.5%
Other depreciation and operating leases 941 1,017 -7.5% 813 958 -15.1%
Exchange losses 88 451 -80.5% 89 442 -79.9%
Commissions 717 872 -17.8% 673 849 -20.7%
Others 1,538 1,378 +11.6% 980 850 +15.3%
Total operating costs 26,298 28,246 -6.9% 24,151 26,344 -8.3%
•Staff costs decreased by HK$143 million, as a result of reduced headcounts.
•Route costs, which include costs such as meal costs, landing and parking charges, decreased
primarily due to cost efficiencies and the effect of weaker foreign currencies.
•Fuel costs fell by HK$1,097 million as a result of lower fuel prices and the increased use of more
fuel efficient aircraft.
•Aircraft maintenance costs reduced significantly as a result of the retirement of the B747-200
aircraft.
•Aircraft depreciation and operating lease costs increased, reflecting deliveries during the year.
•Exchange losses realised on repayment of borrowings reduced as the Japanese Yen was weaker
than in 1997.
•Commissions paid to agents decreased due to lower turnover.
•The increase in other operating costs was mainly due to higher provision for doubtful debts and
the costs associated with the airport move.
•Cathay Pacific’s cost per ATK fell by 12.5% to HK$2.25 reflecting successful cost management.
Net finance charges
•Decreased by 7.2% to HK$311 million.
•The decrease reflects movements of exchange
and interest rates.
•Interest cover fell from 7.2 times to 1.3 times due
to lower operating profit.
Share of profits of associated companies
•The share of profits after tax of associated
companies decreased significantly by 42.9% to
HK$149 million.
•The reduction of profits is mainly due to the
adverse performance of two major associated
companies, Dragonair and HAECO, as compared
with last year.
Interest cover
HK$ million Times
9897969594
0
1,000
2,000
3,000
4,000
0
3
6
9
12
Operating profit Net finance charges
Interest cover