Cathay Pacific 2005 Annual Report Download - page 16

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14 Cathay Pacific Airways Limited Annual Report 2005
• Taikoo (Xiamen) Aircraft Engineering Company
Limited (“TAECO”), 54.6% owned by HAECO and
9% owned by Cathay Pacific, had a good year as a
result of high utilisation of its facilities. Its fourth
hangar was opened on 19th December and
construction was started on a fifth hangar. This fifth
hangar is expected to open by mid-2007. TAECO
has a contract with Boeing to convert B747-400
passenger aircraft into freighters. The first of these
converted aircraft was redelivered to Cathay Pacific
in December 2005.
• Hong Kong Aero Engine Services Limited, HAECO’s
jointly controlled company with Rolls-Royce plc and
SIA Engineering Pte Limited, experienced high
work volumes and achieved good results.
Hong Kong Dragon Airlines Limited (“Dragonair”)
• Dragonair, in which Cathay Pacific holds an 18%
interest, operates passenger services to 30
destinations in Asia, including 22 in Mainland China.
Dragonair also provides freighter services to ten
destinations covering cities in Asia, Europe, Middle
East and the United States.
• Dragonair recorded an 18.0% increase in passenger
revenue on 2005, due to an increase in passenger
services capacity to Mainland China and the full-
year impact of the new passenger service to Tokyo,
which commenced in April 2004. The company
carried more than 5.0 million revenue passengers in
2005, a 9.9% increase over 2004, and passenger
yield increased by 2.9%.
• The company uplifted 385,000 tonnes of cargo in
2005, 12.5% higher than in 2004. Cargo revenue
increased by 27.9% due to the higher tonnage
carried by new passenger and freighter services.
With the substantial increase in cargo capacity in
the market, cargo load factor decreased by 3.7
percentage points to 72.5%. Cargo yield remained
at the same level as last year.
• Higher fuel prices have affected Dragonair
significantly, with the system-wide fuel price
increasing by 43.4% over 2004. Fuel now accounts
for 26.0% of total operating costs, 6.8 percentage
points higher than in 2004. However, a fuel hedging
programme and fuel surcharges passed on to
customers helped to mitigate part of the adverse
impact of soaring fuel prices.
• Dragonair has suspended scheduled services to
Phuket since January 2005, as the demand for air
traffic to Phuket substantially reduced after the
Indian Ocean tsunami. The Bangkok passenger
service has also been reduced from double-daily to
a daily flight and was downgraded to a narrow body
aircraft. Dragonair increased its Shanghai passenger
service frequency to 16 a day and frequencies
to most other Mainland China destinations
also increased.
• Dragonair started its first trans-Pacific freighter
service to New York in April using a wet-leased
B747-400 freighter.
Review of Operations Review of subsidiaries and associates