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Cathay Pacific Airways Limited
Stock Code: 00293
2013
Interim Report

Table of contents

  • Page 1
    Cathay Pacific Airways Limited Stock Code: 00293 2013 Interim Report

  • Page 2
    ... Financial Statements Information Provided in Accordance with the Listing Rules Tel: (852) 2747 5210 Fax: (852) 2810 6563 Cathay Pacific's main Internet address is www.cathaypacific.com b Cathay Pacific Airways Limited Interim Report 2013 Cathay Pacific Airways Limited is incorporated in Hong Kong...

  • Page 3
    ... catering and ground-handling companies and the corporate headquarters at Hong Kong International Airport. Cathay Pacific continues to invest heavily in its home city and at 30th June 2013 had another 81 new aircraft due for delivery up to 2020. The airline opened its own cargo terminal at Hong Kong...

  • Page 4
    ... - CATHAY PACIFIC AND DRAGONAIR 2013 2012 (restated) Change Six months ended 30th June Available tonne kilometres ("ATK") Available seat kilometres ("ASK") Passengers carried Passenger load factor Passenger yield Cargo and mail carried Cargo and mail load factor Cargo and mail yield Cost per...

  • Page 5
    ... of our service, and we continued to make major investments in new aircraft, new products and our new cargo terminal at Hong Kong International Airport which will benefit the business in the long term. In the first half of 2013 our net fuel costs decreased by 8.5% compared to the same period in 2012...

  • Page 6
    ... is installing new business and economy class seats and a new inflight entertainment system in its aircraft. By 30th June 2013, the new products had been installed on eight Dragonair aircraft. They will have been installed on 20 Dragonair aircraft by March 2014. At Hong Kong International Airport we...

  • Page 7
    ... with passengers. The new class will be available on 85 aircraft by the end of 2013. • All Boeing 777-300ER aircraft to be delivered from now until 2015 will be fitted with premium economy class and the new long-haul economy class seats. Cathay Pacific Airways Limited Interim Report 2013 5

  • Page 8
    ...save costs. • Cargo capacity for Cathay Pacific and Dragonair in the first six months of 2013 was down by 1.8% compared to the same period in 2012. We reduced our freighter schedule and cancelled flights on an ad hoc basis in response to weak air cargo markets. • All of the long-haul passenger...

  • Page 9
    ...last quarter of 2013, with a view to offering cargo services between Mexico and Hong Kong and the rest of Asia. • In March 2013, we entered into agreements in relation to our fleet as part of a package of transactions among The Boeing Company, Cathay Pacific, Air China Cargo and Air China. Under...

  • Page 10
    ...Moscow and Singapore. The codeshare also covers Dragonair flights between Hong Kong and Chiang Mai and Hanoi. • Cathay Pacific, Dragonair and Hunnu Air, formerly Mongolian Airlines, introduced interline arrangements in February 2013. • In March, British Airways added its code on Cathay Pacific...

  • Page 11
    ...homes in time for Chinese New Year. • Teams from Cathay Pacific and Dragonair competed in the annual Pedal Kart Grand Prix in Hong Kong. They won a number of trophies and raised close to HK$500,000 for charity. • Cathay Pacific continued to support UNICEF through its "Change for Good" inflight...

  • Page 12
    ... at Hong Kong International Airport. More than 5,000 visitors from schools and NGOs were welcomed in the first half of 2013. • In April, the Dragonair Youth Aviation Academy organised a two-day aviation career workshop for more than 100 young people, providing them with an opportunity to learn...

  • Page 13
    ... aircraft will expire after 2018. (g) In February, the Group agreed to lease two new Airbus A321-200 aircraft. These aircraft will be delivered in February and October 2014. (h) One aircraft was returned to the lessor in July 2013. (a) (b) (c) (d) Cathay Pacific Airways Limited Interim Report 2013...

  • Page 14
    ... to design, build and operate the new Cathay Pacific cargo terminal at Hong Kong International Airport. The terminal started to operate in February. When fully operational by the last quarter of 2013, it will have an annual capacity of 2.6 million tonnes and will employ more than 1,800 staff. The HK...

  • Page 15
    ...services in Hong Kong. It provides ground services to 29 airlines, including Cathay Pacific and Dragonair. It also holds a 25% interest in Shanghai International Airport Services Co., Limited. • In the first half of 2013, HAS had 50% and 25% market shares in ramp and passenger handling businesses...

  • Page 16
    ...airlines (including three airlines operating private jets) and 20 international airlines. • The financial results of SIAS for the first half of 2013 were not as good as expected, principally because fewer flights were serviced than expected. 14 Cathay Pacific Airways Limited Interim Report 2013

  • Page 17
    ...2012's cost reductions are restored by September 2013. We restored flights to Los Angeles (to three times daily from June) and Toronto (to 10 flights per week from March). We intend to restore flights to New York to four times daily from September. Cathay Pacific Airways Limited Interim Report 2013...

  • Page 18
    ... well to the introduction of the new business class seats and the new premium economy class on these routes. The Kolkata route has performed strongly since its introduction in 2012. The performance of the Hyderabad route is gradually improving. 16 Cathay Pacific Airways Limited Interim Report 2013

  • Page 19
    ... for Cathay Pacific and Dragonair cargo services for the first half of 2013 were as follows: ATK (million) 2013 2012 Change 2013 Load factor (%) 2012 Change Yield Change Cathay Pacific and Dragonair 6,607 6,729 -1.8% 62.4 64.3 -1.9%pt -3.3% Cathay Pacific Airways Limited Interim Report 2013...

  • Page 20
    ... and aircraft engines, in an effort to maintain yield. • High fuel prices continued to affect the financial performance of our cargo operations, particularly on long-haul routes. We continued to improve the efficiency of our freighter fleet. 18 Cathay Pacific Airways Limited Interim Report 2013

  • Page 21
    ... is demonstrated by the opening in February of the HK$5.9 billion Cathay Pacific cargo terminal at Hong Kong International Airport. The terminal began by handling high value cargo, transit civil mail and transshipments for Cathay Pacific and Dragonair. In June the terminal started to handle imports...

  • Page 22
    ...-18.5% +2.3% +15.8% -0.5% -3.2% -4.5% +44.3% -4.2% • The Group's total operating expenses decreased by 3.0% to HK$48,091 million. • The combined cost per ATK (with fuel) of Cathay Pacific and Dragonair decreased from HK$3.72 to HK$3.69. 20 Cathay Pacific Airways Limited Interim Report 2013

  • Page 23
    ... aircraft resulting in reduced requirement for maintenance. - Increased mainly due to additional operating lease rental. - Increased mainly due to increases in headcount and salaries. - Increased mainly due to an increase in net finance charges. Cathay Pacific Airways Limited Interim Report 2013...

  • Page 24
    .../equity ratio decreased to 0.60 times from 0.63 times (restated). • The Group's policies in relation to financial risk management and the management of currency, interest rate and fuel price exposures are set out in the 2012 Annual Report. 22 Cathay Pacific Airways Limited Interim Report 2013

  • Page 25
    ... in Hong Kong with limited liability) INTRODUCTION We have reviewed the interim financial report set out on pages 25 to 46 which comprises the consolidated statement of financial position of Cathay Pacific Airways Limited and its subsidiaries (together "the Group") as of 30th June 2013 and...

  • Page 26
    ... China is an associate of the Group accounted for under the equity method. As this limitation in the scope of our review with respect to the Group's share of the results of Air China for the six months ended 30th June 2012 still exists, our conclusion on the current period's interim financial report...

  • Page 27
    ... 2013 HK$M Note 2012 HK$M (restated) 2013 US$M 2012 US$M (restated) Turnover Passenger services Cargo services Catering, recoveries and other services Total turnover Expenses Staff Inflight service and passenger expenses Landing, parking and route expenses Fuel, net of hedging gains Aircraft...

  • Page 28
    ...) (1,046) (8,045) 7,157 The accounts are prepared and presented in HK$, the functional currency. The US$ figures are shown only as supplementary information and are translated at HK$7.8. The notes on pages 29 to 46 form part of these accounts. 26 Cathay Pacific Airways Limited Interim Report 2013

  • Page 29
    ... 523 11 (35) (25) 474 The accounts are prepared and presented in HK$, the functional currency. The US$ figures are shown only as supplementary information and are translated at HK$7.8. The notes on pages 29 to 46 form part of these accounts. Cathay Pacific Airways Limited Interim Report 2013 27

  • Page 30
    ...Share premium HK$M Total equity HK$M At 1st January 2013 Impact of changes in accounting policies (note 2) Restated balance at 1st January 2013 Changes in equity for the six months ended 30th June 2013: Profit for the period Other comprehensive income Total comprehensive income for the period 2012...

  • Page 31
    ...Financial Statements NOTES TO THE ACCOUNTS 1. Basis of preparation and accounting policies The interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing...

  • Page 32
    ... consolidation was previously applied. This change in accounting policy has been applied retrospectively by restating the balances at 31st December 2012 and the result for the six months ended 30th June 2012 as summarised in the below table. 30 Cathay Pacific Airways Limited Interim Report 2013

  • Page 33
    Condensed Financial Statements Notes to the Accounts 2. Changes in accounting policies (continued) HKAS 19 "Employee Benefits" was amended in 2011. The impact on the Group's defined benefit plans and post employment benefits is as follows: to immediately recognise all past service costs; and to ...

  • Page 34
    ...in the Group's interim accounts. 3. Turnover Turnover comprises revenue and surcharges from transportation services, airline catering, recoveries and other services provided to third parties. 4. Segment information (a) Segment results Six months ended 30th June Airline business 2013 HK$M 2012 HK...

  • Page 35
    ...services are not disclosed as separate business segments. Inter-segment sales are based on prices set on an arm's length basis. (b) Geographical information Six months ended 30th June 2013 HK$M 2012 HK$M Turnover by origin of sale: North Asia - Hong Kong and Mainland China - Japan, Korea and Taiwan...

  • Page 36
    ...of fixed assets, net Cost of stock expensed Exchange differences, net Auditors' remuneration Dividend income from unlisted investments 426 1,471 16 12 - 53 1,026 236 5 (7) 399 1,314 17 37 247 (34) 1,087 (11) 4 (56) 1,231 2,237 73 1,093 2,219 42 34 Cathay Pacific Airways Limited Interim Report 2013

  • Page 37
    ...defeasance arrangements have been netted off in the above figures. Included in fair value change in respect of financial derivatives are net losses from derivatives that are classified as held for trading of HK$67 million (2012: HK$47 million). Cathay Pacific Airways Limited Interim Report 2013 35

  • Page 38
    ... the profit attributable to the owners of Cathay Pacific of HK$24 million (2012: a loss of HK$929 million (restated)) by the daily weighted average number of shares in issue throughout the period of 3,934 million (2012: 3,934 million) shares. 36 Cathay Pacific Airways Limited Interim Report 2013

  • Page 39
    ... with the Company's share registrars, Computershare Hong Kong Investor Services Limited, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong, for registration not later than 4:30 p.m. on Thursday, 5th September 2013. 11. Fixed assets Aircraft and related equipment HK$M Other equipment...

  • Page 40
    ... 258 10,489 13. Investments in associates 30th June 2013 HK$M 31st December 2012 HK$M (restated) Share of net assets - listed in Hong Kong - unlisted Goodwill Loans due from associates 13,739 1,094 4,107 97 19,037 12,790 1,547 4,088 97 18,522 38 Cathay Pacific Airways Limited Interim Report 2013

  • Page 41
    ... 5,467 115 18 5,600 The Group normally grants a credit term of 30 days to customers or follows the relevant local industry standard, with debts in certain circumstances being partially secured by bank guarantees or other monetary collateral. Cathay Pacific Airways Limited Interim Report 2013 39

  • Page 42
    ... (31st December 2012: HK$1,529 million) which are pledged as part of long-term financing arrangements. The arrangements provide that these deposits and debt securities must be maintained at specified levels for the duration of the financing. 40 Cathay Pacific Airways Limited Interim Report 2013

  • Page 43
    ... costs Operating costs Dividend income Sale of fixed assets 99 63 218 243 206 6 1,280 103 - - 123 2 309 400 - 9 1,206 87 - - Other related parties are companies under control of a company which has a significant influence on the Group. Cathay Pacific Airways Limited Interim Report 2013...

  • Page 44
    ... of the disputes to the extent that outcomes are likely and reliable estimates can be made. However, the final outcomes are subject to uncertainties and resulting liabilities may exceed provisions. 42 Cathay Pacific Airways Limited Interim Report 2013

  • Page 45
    ...are subject to uncertainties. Cathay Pacific is not in a position to assess the full potential liabilities but makes provisions based on facts and circumstances in line with the accounting policy 20 set out on page 97 in the 2012 Annual Report. Cathay Pacific Airways Limited Interim Report 2013 43

  • Page 46
    ... designated as at fair value through profit or loss Derivative financial liabilities - - - (3,674) (1,347) (5,021) - - - (3,674) (1,347) (5,021) - - - 166 9,521 1,427 3,930 14,878 - - - 1,151 9,521 1,427 3,930 16,195 166 - - - - 1,151 166 1,151 44 Cathay Pacific Airways Limited Interim Report 2013

  • Page 47
    ... value Possible reasonable change Unlisted investment - Discount rate - Growth rate 8.0% 2.2% The higher the discount rate, the lower the fair value The higher the future growth rate, the higher the fair value +/-0.5% +/-0.1% (62)/73 12/(12) Cathay Pacific Airways Limited Interim Report 2013 45

  • Page 48
    ... 31st December 2012 HK$M Investments at fair value - unlisted At 1st January Additions Net unrealised gains or losses recognised in other comprehensive income during the period/year At 30th June/31st December 1,151 - - 1,151 1,062 47 42 1,151 46 Cathay Pacific Airways Limited Interim Report 2013

  • Page 49
    ... Non-Executive Director of Sing Tao News Corporation Limited, Wing Hang Bank, Limited and BOC Hong Kong (Holdings) Limited with effect from the conclusion of their Annual General Meetings held on 8th, 9th and 28th May 2013 respectively. Cathay Pacific Airways Limited Interim Report 2013 47

  • Page 50
    ...deemed to be interested in a total of 2,949,997,987 shares of the Company by virtue of the Swire group's interests in shares of Swire Pacific representing approximately 45.80% of the issued capital and approximately 59.74% of the voting rights. 48 Cathay Pacific Airways Limited Interim Report 2013

  • Page 51
    DESIGN: FORMAT LIMITED www.format.com.hk Printed in Hong Kong Cathay Pacific Airways Limited Interim Report 2013 49

  • Page 52
    www.cathaypacific.com