Cathay Pacific 2006 Annual Report Download - page 24

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Review of other subsidiaries and associates
The results recorded by our other subsidiaries and
associates were satisfactory. The share of profits from
associates increased by 11.9% to HK$301 million.
Hong Kong Aircraft Engineering Company Limited
reported a higher profit than 2005.
A review of their performance and operations is
outlined below:
Air China Limited (“Air China”)
• Air China is the national flag carrier and a leading
provider of passenger, cargo and other airline
related services in Mainland China.
• The airline serves 78 domestic and 43 international
destinations in the world.
• Following the completion of the shareholding
realignment involving Air China, Cathay Pacific,
CNAC, CITIC Pacific and Swire Pacific, Cathay
Pacific now owns a 17.3% interest in Air China.
• The Group has two representatives on the Board of
Directors of Air China and will equity account for its
share of Air China’s profit.
• The Group’s share of Air China’s profit is based on
accounts drawn up three months in arrears and
consequently the 2006 results do not include our
equity interest in the company for the period 28th
September to 31st December 2006.
AHK Air Hong Kong Limited (“AHK”)
• This all-cargo carrier, of which 60% is owned by
Cathay Pacific, continued to operate express cargo
services for DHL Express as its core business.
• During the year AHK took delivery of two new
Airbus A300-600F freighters and further expanded
its overnight express cargo network to Nagoya.
• With its network expansion capacity increased by
6.3%. Load factor increased by 3.1 percentage
points and yield increased by 3.6%.
• AHK recorded a higher profit in 2006 despite the
adverse impact of higher fuel prices.
Cathay Pacific Catering Services (H.K.) Limited
(“CPCS”)
• CPCS, a wholly owned subsidiary, is the principal
flight kitchen in Hong Kong.
• The company produced a record 20.7 million meals
in 2006 and accounts for 67% of the airline catering
market in Hong Kong. Business volume increased
by 13% over 2005.
• Helped by effective cost controls and productivity
improvement initiatives the company recorded a
satisfactory result in 2006.
• The performance of other inflight catering kitchens
in Asia and Canada were also encouraging with
higher profits being recorded in 2006.
Hong Kong Airport Services Limited (“HAS”)
• HAS, a wholly owned subsidiary, is the largest
franchised ramp handling company at Hong Kong
International Airport (“HKIA”).
• The number of flights handled grew by 2.7% to a
new record.
• Margins came under pressure as customer airlines
attempted to reduce costs while operating costs in
Hong Kong increased.
Cathay Pacific Airways Limited Annual Report 2006
22
Financial Review