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5CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1999
Chairman’s Letter
The Cathay Pacific Group made an attributable profit of HK$2,191 million in 1999, compared
with a loss of HK$542 million in 1998. Turnover was HK$28,702 million, up by 7.9 percent
compared to the previous year.
The results for the year reflect a strong second half due to both seasonal factors and a return to growth in the
Asian economies. Load factors improved across most routes. The United States market was particularly strong,
whilst a number of Asian markets rebounded from previous declines. Passenger yields remained under pressure
due to continued competition across the region.
The cargo business, which generates 29 percent of our overall revenues, was the star performer of the year,
achieving record levels for both tonnage and revenue.
Continued cost controls also contributed to the final result. Challenging cost targets have been met in most
areas. Thanks to the efforts of our staff, productivity and efficiency targets were met in many areas of the airline’s
operations, although higher net finance charges and increasing fuel prices during the year have offset some of
these gains.
The year 1999 also brought many challenges. In June, the salary negotiations with our pilots resulted in two
weeks of flight disruptions. From July to September Hong Kong experienced a number of severe typhoons, one
of which resulted in the effective closure of the airport for 24 hours.
In May we introduced our innovative First Class cabin; in October we introduced new uniforms for our cabin
crew and airport staff; and in November we celebrated the grand opening of our new corporate headquarters,
Cathay Pacific City. We made solid progress in the development of our oneworld global airline alliance, and
successfully launched our new frequent-flyer programme, Asia Miles.
The announcement of a 15 percent reduction in landing and parking charges at Hong Kong International Airport
will help to maintain the competitiveness of our home base, Hong Kong, as Asia’s premier aviation transport hub.
Development of our e-business strategy is a very high priority. We are determined to be an industry leader in
this field.
As market conditions continue to improve, steps are being taken to meet anticipated future demand. Towards
the end of the year we committed to the purchase of three new A330s from Airbus Industrie and the lease of three
A340s from Air China; we also signed an agreement to purchase two new Boeing 747-400 freighter aircraft which
will substantially increase our cargo capacity over the next two years. More recently we agreed to lease a new
A340. We are currently reviewing our passenger fleet to see how best to meet further expected growth in demand
in the years ahead.
Cathay Pacific is emerging from the recent downturn in better shape than that in which we entered it; with a
more competitive cost structure, we are now well positioned to take advantage of new opportunities. We have
every confidence in the future of the airline.
James Hughes-Hallett
Chairman
8th March 2000