Cathay Pacific 1998 Annual Report Download - page 17

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15
CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
Review of Operations
Cargo Services
Cargo and mail
ATK (million) Load Factor (%) Yield
1998 1997 Change 1998 1997 Change Change
Cathay Pacific 5,119 4,965 +3.1% 65.2 72.9 -7.7%pt -5.6%
AHK Air Hong Kong 1,114 978 +13.9% 74.9 78.7 -3.8%pt -5.8%
Cathay Pacific Airways Limited (“CPA”)
•Cathay Pacific Cargo operates a fleet of two B747-400 freighters and four B747-200 freighters, and
serves 16 destinations.
•Worldwide cargo markets were weaker than expected in 1998, resulting in a disappointing
performance for Cathay Pacific Cargo services with turnover declining by 12.8% over 1997.
•Approximately 61.3% of cargo was carried in the holds of our passenger aircraft.
•ATKs declined 2.9% for freighter aircraft and grew 9.1% for passenger aircraft cargo.
•Load factors on the freighters averaged 76.9% during 1998. Cargo load factors on passenger
aircraft averaged 54.8%. Market conditions are not expected to improve during 1999.
•Problems associated with Hong Kong Air Cargo Terminals Limited following the opening of the
new airport had a significant negative impact on Cathay Pacific Cargo revenue. However the
enhanced facilities should strengthen Hong Kong’s position as an international transhipment hub.
•Cargo shipments from Hong Kong to all major markets were weak, putting pressure on yields as
supply outpaced demand.
•Most outports saw substantial negative growth with only Korea, Southeast Asia and Taiwan
showing encouraging results. Loads out of Europe and North America were particularly weak.
•Cathay Pacific Cargo entered its seventeenth year of cooperation with Lufthansa on the Hong
Kong-Frankfurt route. This relationship has not been impacted by the launch of the oneworld
alliance which does not extend to cargo services.
•Cathay Pacific Cargo again targeted unit costs as an essential factor in its overall competitiveness.
Significant unit cost reductions in both handling and trucking were achieved in 1998 and further
savings in these areas will be aggressively pursued in 1999.
Turnover
HK$ million
9897969594
0
2,000
4,000
6,000
8,000
Capacity and load factor
Million tonne kilometres %
Cargo and mail ATK
Cargo and mail load factor
9897969594
1,000
2,000
3,000
4,000
5,000
6,000
0
20
40
60
80
100