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Chairman’s Letter
In 2004 the Group achieved its second best ever result with an attributable
profit for the year of HK$4,417 million, compared to a profit of HK$1,303
million in 2003. The result would have been even more impressive had it
not been for the sharp rise in the price of fuel. Turnover increased by 32.1%
to HK$39,065 million.
Our passenger capacity increased by 24.9%.
This increase, combined with higher load factors
and yields which rose 5.8% to HK45.8 cents,
contributed to a passenger revenue record
of HK$26,407 million.
The launch of a new non-stop service to New York,
new codeshare services to Barcelona, Madrid and
Moscow and more frequent services to Bahrain,
Brisbane, Colombo, Dubai, Manila, Osaka, Riyadh,
Surabaya, Sydney and Taipei further strengthened
Hong Kong as a global aviation hub.
We also commenced a daily passenger service
to Beijing and in early 2005 launched a thrice weekly
service to Xiamen. A second daily service to Beijing
will be introduced later this year.
Cathay Pacific Airways achieved a new annual
cargo record of 972,416 tonnes and a cargo revenue
record of HK$10,549 million. This resulted from
the continued growth in demand from Europe,
Japan and the United States for goods manu-
factured in Mainland China. A new thrice weekly
freighter service to Munich strengthened
our European operations. Daily freighter services
to Shanghai commenced in January 2005.
The full effect of higher fuel prices was tempered
by hedging gains and surcharges on both passenger
and cargo services. In 2004 fuel accounted for
23.9% of our total operating cost, up from 19.8%
in 2003. The high price of fuel remains a cause for
concern, not least because most of our hedging
gains have now been realised.
In December, we acquired a 10% equity stake
in Air China at its initial public offering.
Our strategic partnership with this key Mainland
carrier establishes a platform for co-operation
on a number of commercial and operational fronts
and creates the opportunity to strengthen network
connections in Hong Kong and Beijing.
Cathay Pacific Airways took delivery of a sixth
Boeing 747-400 freighter in February 2005.
Our fleet expansion continues with the acquisition
of eight used B747-400 aircraft, which will be
reconfigured to join our passenger and cargo fleets,
and by the introduction of two new Boeing and
six new Airbus passenger aircraft. Air Hong Kong
now operates its own fleet of five Airbus 300-600
freighters. Within two years, Cathay Pacific Airways
and Air Hong Kong will together operate more than
110 wide-bodied aircraft.
Volatile fuel prices and the steady emergence
of low cost carriers within the region will place
further pressure on us to improve productivity and
reduce unit costs. However, we remain optimistic
over our future and we will continue to expand
the airline, strengthen Hong Kong’s position as a
premier global aviation hub, and continue to deliver
superior service and value to our customers.
David Turnbull
Chairman
9th March 2005
Cathay Pacific Airways Limited 2004 Annual Report 3