Cathay Pacific 2014 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 2014 Cathay Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

Cathay Pacific Airways Limited
20 Review of Operations Cargo Services Loyalty and Reward Programme
• Over-capacity in the air cargo market put downward
pressure on rates in the first half of the year. But rates
increased in the second half in response to improved
demand for shipments from Hong Kong and Mainland
China. Demand for cargo shipments to North America
was particularly strong, reflecting exports of consumer
electronic products.
• When demand was weak in the first half of the year
(particularly in the first two months), we managed
freighter capacity in line with demand accordingly. We
reduced schedules and made ad hoc cancellations as
necessary. However, the subsequent increase in demand
enabled us to operate an almost full freighter schedule
for most of the second half. During the peak period (from
October to mid-December), we put on extra scheduled
and charter flights.
• The tonnage carried in 2014 increased by 12.0%
compared to 2013. This was more than the capacity
increase of 10.4%.
• High fuel prices affected the profitability of our cargo
services until the fourth quarter of the year, when a lower
fuel prices benefited the business, but this was partially
offset by fuel hedging losses. We also benefited from
operating more fuel-efficient freighter aircraft.
• Demand for cargo shipments from our main market,
Hong Kong, was very weak in January and February
2014, but began to improve in March 2014. Demand
increased further in July and August 2014 and became
strong from September 2014. Demand for shipments to
Europe was weaker than expected for most of the year.
Demand for shipments to North America was strong,
especially in the second half of the year.
• Our cargo business in Mainland China grew in volume
and we increased our market share. Exports from the
Yangtze River Delta area were strong, particularly in the
second half of the year. Demand for shipments from new
manufacturing centres (Chengdu, Chongqing and
Zhengzhou) fluctuated in the early part of 2014. Later in
the year, exports of new consumer electronic products
were strong. Our cargo business in Mainland China
benefited from an increase in mail shipments.
• Freight movements within Asia have become more
important to us. Demand for shipments of manufactured
goods from Hanoi was strong for most of the year. We
introduced a twice-weekly service to Phnom Penh in
November 2014 in response to Cambodia’s growth as a
manufacturing centre.
• There was relatively strong demand for cargo shipments
to and from India in 2014, though the depreciation of the
Indian rupee affected profitability. Demand for shipments
from Dhaka was affected by political unrest and exports
were weak for most of the year. Our business to and from
the Middle East was affected by strong competition from
Middle Eastern carriers. We introduced a twice-weekly
service to Kolkata in March 2015.
• Demand for shipments to and from the Southwest
Pacific region was steady. There was strong demand for
shipments of fresh produce to Asian markets and milk
powder to Mainland China. Chilled meat shipments to the
Middle East were also strong.
• We reduced the number of scheduled cargo flights to
Europe from 11 to nine per week because of weak
demand for shipments to Europe and over-capacity
in the market. We concentrated on shipping
pharmaceutical and other special products from Europe,
in an effort to improve yield. In November 2014 we
shipped approaching 2,000 tonnes of Beaujolais wine
from Paris and other European airports, most of which
went to Japan.
• We stopped operating cargo services to Manchester in
June 2014. Cargo is carried in the bellies of the
passenger aircraft which started flying to Manchester in
December 2014 (and in the bellies of the passenger
aircraft which fly to London).
• Demand for shipments from Asia to North America was
strong from March 2014, and was particularly strong in
the fourth quarter, when we frequently operated more
than 40 transpacific services per week. There was high
demand for shipments of perishables (fruit and seafood)
and pharmaceuticals from North America to Asia.
Our business was helped by severe congestion in the
major shipping ports on the west coast of the United
States, which resulted in more freights needing to be
moved by air.