Cathay Pacific 2001 Annual Report Download - page 5

Cathay Pacific Airways Limited Annual Report 2001 3
CHAIRMAN’S LETTER
The year 2001 presented many challenges, even
before the tragic events of September plunged
the aviation industry into one of the most difficult
periods in its history. The Group recorded a loss
of HK$662 million during the second half of the
year, as compared to a profit of HK$1,319 million
in the first six months. For the year as a whole,
Cathay Pacific reported an attributable profit of
HK$657 million, compared to a record profit of
HK$5,005 million a year earlier. Turnover fell by
11.8 percent to HK$30,436 million.
Passenger and cargo traffic both suffered major
declines. The effects of the global economic
slowdown were already evident at the beginning
of the year as demand for business travel
weakened. Following the terrorist attacks in the
United States public confidence was badly shaken,
and passenger demand fell even further still. The
loss of confidence amongst travellers was most
clearly felt on our trans-Pacific routes whilst other
routes, including those to Taiwan and South East
Asia, were affected by the economic slowdown.
Passenger yield declined from HK48.2 cents to
HK45.7 cents.
Our cargo business also experienced difficult
market conditions. Hong Kong was partly
cushioned by the relatively strong performance of
exports from Mainland China, but competition in
the overall air cargo market remained intense.
Cargo yield fell by 10.6 percent to HK$1.85.
In the fourth quarter, we temporarily cut back
scheduled capacity by some 8 percent and
implemented a stringent review of our costs. Our
aim is to maintain the integrity of our network and,
to the greatest extent possible, to preserve the
jobs of our staff.
During the summer the industrial dispute with our
pilots’ union had an adverse impact on our
operations. However, in the wake of rapidly
changing industry circumstances the industrial
action dissipated and our schedule integrity and
on-time performance returned to their usual high
levels. We remain committed to resolving the
dispute in a constructive manner with the aim of
reaching a long-term durable settlement which
takes into account the interests of the Hong Kong
community and of the airline, our staff and customers.
Our operating fleet increased by 11 aircraft, and at
year end totalled 75 aircraft, including 9 freighters.
Whilst we remain optimistic about growth
prospects, we have taken a cautious view towards
future aircraft deliveries, and have only 3 aircraft
on order. We will continue to review further aircraft
orders to ensure that we can meet any expected
recovery in demand.
Our affiliates and associates, despite a decline in
profitability, continued to perform satisfactorily.
Notwithstanding difficult market conditions,
Cathay Pacific remains committed to focusing on
our strengths in terms of superior product and
customer service. During the year we pressed
ahead with various product and service
enhancements including the introduction of a new
Business Class product and various e-Business
initiatives including the world’s first inflight email
service; we upgraded passenger lounges around
the world and opened a new lounge, The Pier, at
Hong Kong International Airport.
Over the years Cathay Pacific has met and
overcome many challenges. We have a team of
extremely dedicated and talented staff and
committed shareholders. We are ideally located
in Hong Kong and at the heart of Asia. We are
steady in our resolve and intend to come through
the current industry crisis in better shape than ever,
poised to resume the successful growth of the
airline once economic conditions show signs of
improvement.
James Hughes-Hallett
Chairman
6th March 2002