Cathay Pacific 2006 Annual Report Download - page 5

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Record passenger numbers and freight volumes
contributed to the increase in turnover in 2006, which
in turn helped us to a 24.0% increase in profit over
the previous year. However continuing high fuel prices
served to dampen the final result. Prices eased a
little in the latter part of the year but our total fuel bill
was HK$20,214 million – up 29.7% on 2005. Fuel
surcharges only partially offset the additional cost.
A continuing improvement in productivity coupled
with a reduction in controllable costs helped the airline
reduce its unit cost excluding fuel by 1.3%.
On the passenger side, the airline’s revenue increased
by 10.9% to a record HK$33,585 million as the number
of passengers carried rose to 16.7 million for the year.
Demand from first and business class passengers was
high throughout the year, helping yield to increase by
1.5% to HK¢47.0. Additional services on a number of
routes contributed to a 7.7% rise in passenger capacity.
The airline set new records for its cargo operation,
with the tonnage carried rising by 7.2% to 1,199,000
tonnes and revenue reaching a high of HK$11,980
million. Capacity rose by 5.2% with four new freighter
destinations added during the year – Beijing, Chennai,
Stockholm and Toronto – and extra flights to Dallas/
Atlanta and Shanghai being mounted. Demand
remained high out of Hong Kong and Mainland China
throughout the year but weakening demand in a
number of key markets contributed to a 3.4% fall
in yield.
2006 was a landmark year for Cathay Pacific in many
ways. The airline received another “Airline of the Year
2006” award – from leading industry journal Air Transport
World – in February, and then in August took delivery
of its 100th aircraft, an Airbus A330-300. Throughout
the year we ran a number of events and activities to
celebrate our 60th anniversary as Hong Kong’s airline.
However, the most significant development took place
on 28th September when formal approval of a historic
shareholding realignment was received and Dragonair
joined the Cathay Pacific Group as a wholly owned
subsidiary. The integration of the two carriers will bring
significant benefits for passengers and the Hong Kong
aviation hub. As part of the realignment, Cathay Pacific
and Air China increased their cross-shareholdings and
began work on further enhancing their partnership in
a number of areas.
We continued to grow the three fleets in the Group
in 2006, adding six aircraft at Cathay Pacific and four
at Dragonair, while AHK took delivery of two more
freighters. In June we confirmed an order for six new
Boeing 747-400ERFs, Extended Range Freighters, for
the Cathay Pacific fleet which, with their longer range
and higher payload, will be key to our success on
long haul trunk routes once deliveries commence in
May 2008. We also took up two more options on the
new Boeing 777-300ER, Extended Range passenger
aircraft, taking the total order to 18. These aircraft will
begin arriving in September 2007.
Our commitment to product and service excellence
remains as high as ever and in September we unveiled
Cathay Pacific’s new long haul product that will be
rolled out across all three classes of travel over the
next two years. The new product will help us retain
our leadership in comfort and service.
We expect competition to remain keen in 2007 and the
high, volatile fuel price will continue to have a major
impact on our business. Our focus in the coming year
is to continue our efforts to deliver superior service
and to grow our operations profitably and thus further
strengthen Hong Kong’s position as a global aviation
hub. We will work to optimize the significant commercial
opportunity provided by our purchase of Dragonair.
Christopher Pratt
Chairman
Hong Kong, 7th March 2007
The Cathay Pacific Group recorded a
profit attributable to shareholders of
HK$4,088 million for 2006, compared
with a profit of HK$3,298 million the
previous year. Turnover increased by
19.4% to a new record of HK$60,783
million.
3
Cathay Pacific Airways Limited Annual Report 2006
Chairman’s Letter