Cathay Pacific 2004 Annual Report Download - page 16

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Review of subsidiary and associated companiesReview of Operations
AHK AIR HONG KONG LIMITED
– AHK, in which Cathay Pacific holds a 60%
interest, is an all cargo carrier with a major focus
on express cargo services for DHL Express.
– During the year, AHK expanded its express
cargo network to Osaka, Penang and Taipei.
It commenced operations to Seoul in February
2005. Together with Bangkok, Singapore
and Tokyo, the company is now serving
seven cities in Asia.
– The company took delivery of four A300-600
freighters in the second half of the year, replacing
previously wet-leased aircraft. Another four
A300-600 freighters will be delivered, two in
2005 and two in 2006. A B747-200 freighter was
returned to Cathay Pacific in mid October.
– Capacity, due to the network expansion,
increased by 47.4% over 2003 whilst the load
factor increased by 2.0 percentage points.
– Yield increased by 12.0% due to the expansion
of the high yield express cargo business.
– AHK recorded a higher profit in 2004 as
compared to 2003.
CATHAY PACIFIC CATERING SERVICES (H.K.)
LIMITED (“CPCS”)
– CPCS, a wholly owned subsidiary of Cathay
Pacific, is the principal flight kitchen in Hong Kong.
– The company produced 17.7 million meals and
accounts for 70% of the airline catering market
in Hong Kong. Business volume increased by
35% over 2003.
– The company recorded a satisfactory profit
in 2004 despite reducing meal prices and
experiencing increased costs arising from the
higher crude oil price and strong currencies.
– The performance of other inflight catering
kitchens in Asia and Canada also recorded
a healthy recovery from 2003 when the industry
was badly affected by SARS.
HONG KONG AIRPORT SERVICES LIMITED (“HAS”)
– HAS, in which Cathay Pacific holds a 70%
interest, is the largest franchised ramp handling
company at Hong Kong International Airport.
– The company handled a record number
of flights.
– As a result of the improving business environment
and the continuation of stringent cost controls,
HAS achieved a record profit in 2004 despite
operating in a very competitive market.
HONG KONG AIRCRAFT ENGINEERING COMPANY
LIMITED (“HAECO”)
– HAECO, in which Cathay Pacific holds a
27% interest, provides aircraft maintenance,
modification and overhaul services at Hong
Kong International Airport.
– The company achieved a consolidated profit
after tax of HK$438 million, 27% above last year.
– HAECO has signed an agreement with the
Airport Authority Hong Kong to build a second
hangar at Hong Kong International Airport (HKIA).
The new hangar, which is scheduled to open in
early 2007, will strengthen HKIA’s status as an
aircraft maintenance hub.
– Taikoo (Xiamen) Aircraft Engineering Company
Limited, 54% owned by HAECO and 9% owned
by Cathay Pacific, had a profitable year. A fourth
hangar is scheduled to open in early 2006.
– Hong Kong Aero Engine Services Limited,
HAECO’s joint venture with Rolls-Royce plc
and SIA Engineering Pte Limited, continued
to achieve good results through high workloads.
HONG KONG DRAGON AIRLINES LIMITED
(“DRAGONAIR”)
– Dragonair, in which Cathay Pacific holds a 22%
interest, operates passenger services to 30
destinations in Asia, including 21 in Mainland
China. Dragonair also provides freighter services
to ten destinations in Europe, Middle East, Japan,
Taiwan and Mainland China.
12 Cathay Pacific Airways Limited 2004 Annual Report