Cathay Pacific 2007 Annual Report Download - page 35

(d) Pursuant to an agreement dated 31st May 2005
(“PCCW Services Agreement”) between Cathay
Pacific Loyalty Programmes Limited (“CPLP”) with
PCCW Teleservices (Hong Kong) Limited
(“Teleservices”), Teleservices provides services to
CPLP. The services comprise the provision of a
service centre and handling of customer calls and
related administration for the Company’s frequent
flyer and customer loyalty programmes. In return
for the services, CPLP pays to Teleservices a
monthly charge based on cost plus a margin.
Teleservices is paid an additional margin upon the
achievement of certain performance criteria and
efficiency targets, and deductions are imposed for
underachievement. Payment is made in cash by
CPLP within 45 days from the date of receipt of
Teleservices’ invoice. The term of the PCCW
Services Agreement is from 1st June 2005 to 31st
May 2008.
Teleservices is an indirect wholly owned subsidiary
of PCCW Limited which indirectly holds a 37%
equity interest in the Company’s subsidiary Abacus
Distribution Systems (Hong Kong) Limited.
Teleservices is therefore a connected person of the
Company under the Listing Rules. The transactions
under the PCCW Services Agreement are continuing
connected transactions in respect of which an
announcement dated 31st May 2005 was published.
The fees payable by CPLP to Teleservices under the
PCCW Services Agreement totalled HK$75 million
for the year ended 31st December 2007.
(e) Pursuant to an agreement dated 26th February
2007 (“LHT Aircraft Maintenance Agreement”) with
Lufthansa Technik AG (“LHT”), a subsidiary of
Deutsche Lufthansa AG (“Lufthansa”), LHT
provides aircraft component overhaul services to
the Group. Payment is made in cash by the
Company to LHT within 30 days upon receipt of the
invoice. The term of the LHT Aircraft Maintenance
Agreement is for five years ending on 31st
December 2011. The LHT Aircraft Maintenance
Agreement could be extended by further
agreements for members of the Lufthansa group to
provide aircraft line maintenance, aircraft base
maintenance services and/or other related services
to the Group.
LHT is a subsidiary of Lufthansa which indirectly
holds a 40% equity interest in the Company’s
subsidiary CLS Catering Services Limited (“CLS”).
LHT is therefore a connected person of the
Company under the Listing Rules. The transactions
under the LHT Aircraft Maintenance Agreement and
further agreements are continuing connected
transactions in respect of which an announcement
dated 26th February 2007 was published.
The fees payable by the Group to the Lufthansa
group under the LHT Aircraft Maintenance
Agreement and further agreements totalled HK$90
million for the year ended 31st December 2007.
(f) Pursuant to an agreement dated 29th March 2007
(“LHT Engine Maintenance Agreement”) with LHT,
LHT provides aircraft engine maintenance services
to the Group. Payment is made in cash by the
Group to LHT within 30 days upon receipt of the
invoice. The term of the LHT Engine Maintenance
Agreement is for 10 years ending on 31st
December 2016.
LHT is a subsidiary of Lufthansa which indirectly
holds a 40% equity interest in the Company’s
subsidiary CLS. LHT is therefore a connected
person of the Company under the Listing Rules.
The transactions under the LHT Engine
Maintenance Agreement are continuing connected
transactions in respect of which an announcement
dated 29th March 2007 was published.
The fees payable by the Group to LHT under
the LHT Engine Maintenance Agreement
totalled HK$136 million for the year ended
31st December 2007.
Directors’ Report
Cathay Pacific Airways Limited Annual Report 2007 33