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Cathay Pacific Airways Limited
Stock code: 00293
Annual Report
2008

Table of contents

  • Page 1
    Annual Report Cathay Pacific Airways Limited Stock code: 00293 2008

  • Page 2
    Hong Kong Cathay Pacific Airways is an international airline registered and based in Hong Kong, offering scheduled passenger and cargo services to 116 destinations in 35 countries and territories. The Company was founded in Hong Kong in 1946 and remains deeply committed to its home base, making ...

  • Page 3
    ... all-cargo carrier offering scheduled services in the Asian region. Cathay Pacific and its subsidiaries employ some 20,300 people in Hong Kong. The airline is listed on The Stock Exchange of Hong Kong Limited as are its substantial shareholders Swire Pacific Limited ("Swire Pacific"), Air China and...

  • Page 4
    ... Airways Limited Annual Report 2008 Financial and Operating Highlights Group Financial Statistics 2008 Results Turnover (Loss)/profit attributable to owners of Cathay Pacific (Loss)/earnings per share Dividend per share (Loss)/profit margin HK$ million HK$ million HK cents HK cents % 2007 Change...

  • Page 5
    ....4% to HK$2.54. Although 2008 was a difficult year for the Cathay Pacific Group, there were many positive developments. These include the arrival of efficient new aircraft, an expansion of our passenger services and the continued rollout of innovative three-class cabins on our medium- and long-haul...

  • Page 6
    ... forward prices payable for fuel during the periods in which the relevant fuel hedging contracts will mature. As a commercial airline with no financial support or subsidies from the government, we will manage resources in a responsible and prudent manner. Despite current difficulties, Cathay Pacific...

  • Page 7
    ... opened a new Cathay Pacific Ticketing Office in Mumbai in September. • The service skills of our staff were acknowledged at the Customer Service Excellence Awards run by the Hong Kong Association for Customer Service Excellence. The airline won three gold awards including one for counter service...

  • Page 8
    ...in the summer. This involved trimming back ultra-long-haul flights to North America and switching capacity to routes with more profit-earning potential. We increased the number of services to Auckland, Brisbane, Dubai, Perth and Sydney as a result. • We added a seventh daily flight to Singapore in...

  • Page 9
    ...in our unique "Asia's World City" livery to highlight our home city, Hong Kong. • We took delivery of three more Airbus A330-300 regional aircraft, each fitted with our new two-class cabin design. • Our first Boeing 747-400ERF freighter, entered service in late May and a second arrived in August...

  • Page 10
    ... Cathay Pacific staff not on an increment scale were given pay rises averaging 2% for 2009. The Company also made an ex-gratia payment of half a month's salary to all eligible staff in Hong Kong in recognition of their hard work. • We introduced voluntary unpaid leave schemes for operating crew...

  • Page 11
    ...with a total of 160 students benefiting from the programme in 2008. We also took more than 100 students on a special "English on Air" community flight in March. • Cathay Pacific remains committed to bringing topquality sporting events to Hong Kong, and we put our name to the Hong Kong Sevens rugby...

  • Page 12
    10 Cathay Pacific Airways Limited Annual Report 2008 2008 in Review • Dragonair staff participated in the Walk for Millions held in January 2008 and a team from the airline joined the Olympic Day Run in June which was organised by the Sports Federation and Olympic Committee of Hong Kong as ...

  • Page 13
    ...fic Airways Limited Annual Report 2008 11 2008 in Review Fleet profile Number as at 31st December 2008 Leased Firm orders '11 and beyond Expiry of operating leases '14 and beyond Purchase rights Aircraft type Owned Finance Operating Total '09 '10 Total '09 '10 '11 '12 '13 Aircraft...

  • Page 14
    12 Cathay Pacific Airways Limited Annual Report 2008

  • Page 15
    ... Airways Limited Annual Report 2008 13 Innovate Cathay Pacific significantly boosted the online experience for passengers in 2008, with innovations including an enhanced booking facility, a new Mobile Check-In service, and an option to print boarding passes at home or in the office. The airline...

  • Page 16
    ... Pacific Airways Limited Annual Report 2008 Review of Operations PASSENGER SERVICES Cathay Pacific and Dragonair carried a total of 25.0 million passengers in 2008 - up 7.3% on the previous year but below a capacity increase of 12.7% for the same period. Passenger revenue rose by 17.2% to HK$58...

  • Page 17
    ... went from seven to 10 flights a week. Another three flights were added to Sydney each week to make it a four-times-daily service. • Business to and from Australia held up well throughout the year, helped by an increase in Mainland China passengers connecting on Dragonair through the Hong Kong hub...

  • Page 18
    ...-daily service and a new destination, Chennai, was added. The latter has performed reasonably well, though demand to and from India as a whole lagged behind the capacity growth. • Services to the Middle East were expanded in October as a result of the fuel-price-led redeployment of capacity. Dubai...

  • Page 19
    Cathay Pacific Airways Limited Annual Report 2008 17 Review of Operations PASSENGER SERVICES Dragonair • Traffic to and from Mainland China was affected by a number of factors in 2008, including the January snowstorms, the Sichuan earthquake in May and the Olympic Games in August. • Demand ...

  • Page 20
    ...fic and Dragonair cargo services: ATK (million) 2008 Cathay Pacific and Dragonair 13,425 2007 13,335 Change +0.7% 2008 65.9 Load factor (%) 2007 66.7 Change -0.8%pt Yield Change +12.4% Cathay Pacific • High fuel prices made it difficult to operate profitable long-haul freighter flights in the...

  • Page 21
    ...route in 2008. For greater operating efficiency, this route will be transferred to Cathay Pacific in the coming summer schedule. ASIA MILES • Asia Miles, our travel reward programme, continued to grow and at the end of 2008 had more than three million members. • The number of partners increased...

  • Page 22
    ... for Cathay Pacific at every stage of the journey. In 2008 the airline, together with Dragonair, opened new lounges in Shanghai and Beijing, taking the airport experience to a new level. Another welcome development was the opening of The Arrival, a new lounge for passengers arriving at Hong Kong...

  • Page 23
    Cathay Pacific Airways Limited Annual Report 2008 21

  • Page 24
    ... of our total operating expenses. Fuel surcharges, insurance surcharges and cargo security charges have been reclassified as traffic turnover under passenger services and cargo services instead of being classified as recoveries. Turnover Group 2008 HK$M Passenger services Cargo services Catering...

  • Page 25
    ...rose by 11.4% to HK$22,424 million with a 0.7% increase in capacity. Export demand from Mainland China through Hong Kong remained strong. • Cargo load factor decreased by 0.8 percentage point while higher fuel surcharges helped improve cargo yield by 12.4% to HK$2.54. Cathay Pacific and Dragonair...

  • Page 26
    24 Cathay Pacific Airways Limited Annual Report 2008 Financial Review Operating expenses Group 2008 HK$M Staff Inflight service and passenger expenses Landing, parking and route expenses Fuel Aircraft maintenance Aircraft depreciation and operating leases Other depreciation and operating leases ...

  • Page 27
    ... (loss)/profit. 2008 HK$M (Loss)/profit attributable to owners of Cathay Pacific Adjustment to reverse the impact of Hong Kong Accounting Standards 39* - Fuel derivatives - Currency and interest rate derivatives Adjustment to reverse our share of Air China's mark to market fuel hedging losses in...

  • Page 28
    ...-plane fuel price to US$132 per barrel and a 7.0% increase in consumption to 38.3 million barrels. (813) - Higher spending with fleet expansion and a provision for return condition on planned return of operating lease aircraft. (904) - Increased due to the new aircraft deliveries. (364) - Increased...

  • Page 29
    Cathay Pacific Airways Limited Annual Report 2008 27 Financial Review Fuel expenditure and hedging A breakdown of the Group's fuel cost is shown below: 2008 HK$M Gross fuel cost Realised hedging losses/(gains) Unrealised mark to market losses/(gains) Net fuel cost 39,347 309 7,661 47,317 2007 HK...

  • Page 30
    ... mark to market losses recognised in 2008 would then be released in subsequent periods. In addition to the estimated impact of changes of fuel prices on fuel hedging contracts shown above, the Group's operating profit would be affected by costs of fuel uplift and the level of fuel surcharges. * This...

  • Page 31
    ...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 21.9 million meals in 2008 and this accounts for 62.1% of the airline catering market in Hong Kong. Business volume increased...

  • Page 32
    ...operations in early 2010. • The group's headcount increased by 1,040 to approximately 12,740 during 2008 to support business growth, and the group will continue to recruit and train additional staff to cope with business demands. Hong Kong Aircraft Engineering Company Limited ("HAECO") • Cathay...

  • Page 33
    ... 2007 . 7% Intangible assets 11% Long-term investments 25% Current assets Net debt and equity HK$ million Times • Borrowings are mainly denominated in US dollars, Hong Kong dollars, Singapore dollars, Japanese yen and Euros, and are fully repayable by 2023 with 35% at fixed rates of interest net...

  • Page 34
    ... Swire group in 1994. SHIU, Ian Sai Cheung, aged 54, has been a Director of the Company since October 2008. He is also a Director of Hong Kong Dragon Airlines Limited. He joined the Company in 1978 and has worked for the Company in Hong Kong, the Netherlands, Singapore and the United Kingdom. SLOSAR...

  • Page 35
    ... Management since January 2003. He joined the Swire group in 1975. RHODES, Nicholas Peter#, aged 50, has been Director Flight Operations since January 2003. He joined the Swire group in 1980. Independent Non-Executive Directors LEE, Ting Chang Peter+*, aged 55, has been a Director of the Company...

  • Page 36
    ... on airline travel. Activities Cathay Pacific Airways Limited (the "Company") is managed and controlled in Hong Kong. As well as operating scheduled airline services, the Company and its subsidiaries (the "Group") are engaged in other related areas including airline catering, aircraft handling and...

  • Page 37
    ... DHL Services Agreement totalled HK$2,122 million for the year ended 31st December 2008. Significant contracts Contracts between the Group and HAECO and its subsidiary TAECO for the maintenance and overhaul of aircraft and related equipment accounted for approximately 2% of the Group's operating...

  • Page 38
    ... 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...

  • Page 39
    ... the Group to HAECO group under the HAECO Framework Agreement totalled HK$2,069 million for the year ended 31st December 2008. (g) Pursuant to an agreement dated 13th June 2008 ("Catering Agreement") between Hong Kong Dragon Airlines Limited ("Dragonair") and LSG Lufthansa Service Hong Kong Limited...

  • Page 40
    ... Limited Annual Report 2008 Directors' Report one hand and Air China and its subsidiaries ("Air China Group") on the other hand arising from joint venture arrangements for the operation of passenger air transportation, code sharing arrangements, interline arrangements, aircraft leasing, frequent...

  • Page 41
    ... Cathay Pacific Airways Limited and Hong Kong Aircraft Engineering Company Limited, its associated corporation (within the meaning of Part XV of the SFO): No. of shares Cathay Pacific Airways Limited Philip Chen Ian Shiu Tony Tyler Hong Kong Aircraft Engineering Company Limited Ian Shiu John Slosar...

  • Page 42
    ... 2008: (a) Under Section 317 of the SFO, each of Air China, China National Aviation Company Limited ("CNAC"), CITIC Pacific and Swire Pacific, being a party to the Shareholders' Agreement in relation to the Company dated 8th June 2006, was deemed to be interested in a total of 2,948,122,554 shares...

  • Page 43
    ... management of the Company's business is delegated to the CE. Matters reserved for the Board are those affecting the Company's overall strategic policies, finances and shareholders. These include: financial statements, dividend policy, significant changes in accounting policy, the annual operating...

  • Page 44
    ...Cathay Pacific Airways Limited Annual Report 2008 Corporate Governance A copy of the Securities Code is sent to each Director of the Company first on his appointment and thereafter twice annually, one month before the date of the board meeting to approve the Company's half-year result and annual...

  • Page 45
    ... Annual Report 2008 43 Corporate Governance with the needs of the business and as part of the training process whereby managers gain practical experience in various businesses within the Swire group, and payment of bonuses on a group-wide basis enables postings to be made to group companies...

  • Page 46
    .... In addition to its agreed annual schedule of work, the Department conducts other special reviews as required. The Internal Audit Manager has direct access to the Audit Committee. Audit reports are sent to the Chief Operating Officer, the Finance Director, external auditors and the relevant...

  • Page 47
    ...fic Airways Limited (Incorporated in Hong Kong with limited liability) We have audited the consolidated accounts of Cathay Pacific Airways Limited (the "Company") set out on pages 46 to 93, which comprise the consolidated and company statements of financial position as at 31st December 2008, and...

  • Page 48
    ... Governing the Listing of Securities (the "Listing Rules") of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The measurement basis used is historical cost modified by the use of fair value for certain financial assets and liabilities as explained in accounting policies 8, 9, 10 and...

  • Page 49
    ... cost and are depreciated over periods of up to 10 years. The depreciation policy and the carrying amount of fixed assets are reviewed annually taking into consideration factors such as changes in fleet composition, current and forecast market values and technical factors which affect the life...

  • Page 50
    ... at amortised cost less impairment loss. Where long-term investments held by the Group are designated as available-for-sale financial assets, these investments are stated at fair value. Any change in fair value is recognised in the investment revaluation reserve. On disposal or if there is evidence...

  • Page 51
    ... aircraft are charged to the profit and loss on consumption and as incurred respectively. 17. Frequent-ï¬,yer programme The Company operates a frequent-flyer programme called Asia Miles (the "programme"). The incremental cost of providing awards in exchange for redemption of miles earned by members...

  • Page 52
    ...Cathay Pacific Airways Limited Annual Report 2008 Consolidated Statement of Comprehensive Income for the year ended 31st December 2008 Note 2008 HK$M 2007 HK$M 2008 US$M 2007 US$M Turnover Passenger services Cargo services Catering, recoveries and other services Total turnover Expenses Staff...

  • Page 53
    Cathay Pacific Airways Limited Annual Report 2008 51 Consolidated Statement of Financial Position at 31st December 2008 Note 2008 HK$M 2007 HK$M 2008 US$M 2007 US$M ASSETS AND LIABILITIES Non-current assets and liabilities Fixed assets Intangible assets Investments in associates Other long-...

  • Page 54
    ... Limited Annual Report 2008 Company Statement of Financial Position at 31st December 2008 Note 2008 HK$M 2007 HK$M 2008 US$M 2007 US$M ASSETS AND LIABILITIES Non-current assets and liabilities Fixed assets Intangible assets Investments in subsidiaries Investments in associates Other long...

  • Page 55
    ... Financing activities New financing Net cash benefit from financing arrangements Shares repurchased and issued Loan and finance lease repayments Security deposits placed Dividends paid - to owners of Cathay Pacific - to minority interests Net cash inï¬,ow from financing activities Increase...

  • Page 56
    ...Cathay Pacific Airways Limited Annual Report 2008 Consolidated Statement of Changes in Equity for the year ended 31st December 2008 Attributable to owners of Cathay Pacific Non-distributable Investment revaluation reserve HK$M Cash flow hedge reserve HK$M Capital redemption reserve and others HK...

  • Page 57
    Cathay Pacific Airways Limited Annual Report 2008 55 Company Statement of Changes in Equity for the year ended 31st December 2008 Non-distributable Investment revaluation reserve HK$M Cash flow hedge reserve HK$M Capital redemption reserve and others HK$M Share capital HK$M Retained profit HK...

  • Page 58
    .... Fuel surcharges, insurance surcharges and cargo security charges collected upon sales of transportation services are treated as traffic turnover and a total amount of HK$9,936 million have been reclassified in the 2007 comparatives. 2. Segment information (a) Primary reporting by business segment...

  • Page 59
    ... INCOME 2. Segment information (continued) (b) Secondary reporting by geographical segment 2008 HK$M 2007 HK$M Turnover by origin of sale: North Asia - Hong Kong and Mainland China - Japan, Korea and Taiwan South West Pacific and South Africa South East Asia and Middle East Europe North America 35...

  • Page 60
    58 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF COMPREHENSIVE INCOME 4. Operating (loss)/profit 2008 HK$M 2007 HK$M Operating (loss)/profit has been arrived at after charging/(crediting): Depreciation of fixed assets - Leased - Owned Amortisation of ...

  • Page 61
    Cathay Pacific Airways Limited Annual Report 2008 59 Notes to the Accounts STATEMENT OF COMPREHENSIVE INCOME 5. Net finance charges 2008 HK$M 2007 HK$M Net interest charges comprise: - Obligations under finance leases stated at amortised cost - Interest income on related security deposits, ...

  • Page 62
    60 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF COMPREHENSIVE INCOME 6. Taxation 2008 HK$M 2007 HK$M Current tax expenses - Hong Kong profits tax - Overseas tax - (Over)/under provisions for prior years Deferred tax - Origination and reversal of ...

  • Page 63
    ... HK$M Cash flow hedges - recognised during the year - transferred to profit and loss - deferred tax recognised Revaluation (deficit)/surplus arising from available-for-sale financial assets Share of other comprehensive income of associates Exchange differences on translation of foreign operations...

  • Page 64
    62 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 11. Fixed assets Aircraft and related equipment Owned HK$M Leased HK$M Other equipment Owned HK$M Leased HK$M Buildings Owned HK$M Under construction HK$M Total HK$M Group Cost At 1st ...

  • Page 65
    Cathay Pacific Airways Limited Annual Report 2008 63 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 11. Fixed assets (continued) Aircraft and related equipment Owned HK$M Leased HK$M Other equipment Owned HK$M Leased HK$M Buildings Owned HK$M Total HK$M Company Cost At 1st January 2008 ...

  • Page 66
    64 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 11. Fixed assets (continued) (a) Finance leased assets Certain aircraft are subject to leases with purchase options to be exercised at the end of the respective leases. The remaining lease...

  • Page 67
    Cathay Pacific Airways Limited Annual Report 2008 65 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 12. Intangible assets Group Goodwill HK$M Computer systems HK$M Total HK$M Company Computer systems HK$M Cost At 1st January 2008 Additions Disposals At 31st December 2008 At 1st January ...

  • Page 68
    ... accounts - Current accounts 239 4,973 218 12,982 6,690 9,263 21,165 3,727 7,982 24,909 Principal subsidiaries are listed on page 92. 14. Associates Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Hong Kong listed shares at cost (Market value: HK$8,230 million, 2007: HK$34,798 million...

  • Page 69
    ... accounts drawn up to a non-coterminous period end where the difference must be no greater than three months. Principal associates are listed on page 93. 15. Other long-term receivables and investments Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Investments at fair value - listed in Hong...

  • Page 70
    68 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 16. Long-term liabilities 2008 2007 Non-current HK$M Current HK$M Non-current HK$M Current HK$M Note Group Long-term loans Obligations under finance leases (a) (b) 1,964 2,291 4,255 16...

  • Page 71
    ... under these finance leases is as follows: Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Future payments Interest charges relating to future periods Present value of future payments Security deposits, notes and zero coupon bonds Amounts due within one year included under current liabilities...

  • Page 72
    ... benefit retirement schemes The Swire Group Retirement Benefit Scheme ("SGRBS") in Hong Kong, in which the Company and Cathay Pacific Catering Services (H.K.) Limited ("CPCS") are participating employers, provides resignation and retirement benefits to its members, which include the Company's cabin...

  • Page 73
    Cathay Pacific Airways Limited Annual Report 2008 71 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 17. Retirement benefits (continued) Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Net liability recognised in the statement of financial position: Present value of funded ...

  • Page 74
    72 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 17. Retirement benefits (continued) Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Fair value of plan assets comprises: Equities Debt instruments Deposits and cash Others 3,717 1,...

  • Page 75
    Cathay Pacific Airways Limited Annual Report 2008 73 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 18. Deferred taxation Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Deferred tax assets: - retirement benefits - provisions - tax losses - cash flow hedges Deferred tax ...

  • Page 76
    74 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 19. Trade and other receivables Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Trade debtors Derivative financial assets Other receivables and prepayments Due from associates 4,...

  • Page 77
    ... the Accounts STATEMENT OF FINANCIAL POSITION 20. Liquid funds Group 2008 HK$M 2007 HK$M 2008 HK$M Company 2007 HK$M Short-term deposits and bank balances Short-term deposits maturing beyond three months when placed Funds with investment managers - debt securities listed outside Hong Kong - bank...

  • Page 78
    76 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 21. Trade and other payables Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Trade creditors Derivative financial liabilities Other payables Due to associates Due to other related ...

  • Page 79
    ...fic Airways Limited Annual Report 2008 77 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 22. Share capital 2008 Number of shares HK$M 2007 Number of shares HK$M Authorised (HK$0.20 each) Issued and fully paid (HK$0.20 each) At 1st January Shares repurchased during the year Share options...

  • Page 80
    78 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF FINANCIAL POSITION 23. Reserves Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Retained profit Share premium Investment revaluation reserve Cash flow hedge reserve Capital redemption reserve and ...

  • Page 81
    ...fic Airways Limited Annual Report 2008 79 Notes to the Accounts STATEMENT OF CASH FLOWS 24. Reconciliation of operating (loss)/profit to cash generated from operations 2008 HK$M 2007 HK$M Operating (loss)/profit Depreciation Amortisation of intangible assets Loss on disposal of fixed assets...

  • Page 82
    80 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts STATEMENT OF CASH FLOWS 25. Disposal of a subsidiary 2008 HK$M 2007 HK$M Net assets disposed of: Fixed assets Trade and other receivables Trade and other payables Others Total net assets Transfer to investment in ...

  • Page 83
    ...Annual Report 2008 81 Notes to the Accounts DIRECTORS AND EMPLOYEES 27. Directors' and executive officers' remuneration (a) Directors' remuneration disclosed pursuant to the Listing Rules is as follows: Cash Basic salary/ Directors' fee* Bonus HK$'000 HK$'000 Contributions to retirement schemes...

  • Page 84
    ...fic Airways Limited Annual Report 2008 Notes to the Accounts DIRECTORS AND EMPLOYEES 27. Directors' and executive officers' remuneration (continued) (b) Executive Officers' remuneration disclosed as recommended by the Listing Rules is as follows: Cash Contributions to retirement schemes HK$'000...

  • Page 85
    ... of airline catering, ground support and engineering services and other services agreed to be provided and other transactions agreed to be undertaken under the Air China Framework Agreement. The amounts payable to Air China group for the year ended 31st December 2008 totalled HK$388 million. The...

  • Page 86
    84 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts SUPPLEMENTARY INFORMATION 30. Commitments and contingencies (a) Outstanding commitments for capital expenditure authorised at the year end but not provided for in the accounts: Group 2008 HK$M 2007 HK$M Company 2008 HK$M...

  • Page 87
    ... business, the Group is exposed to fluctuations in foreign exchange rates, interest rates and jet fuel prices. These exposures are managed, sometimes with the use of derivative financial instruments, by the Treasury Department of Cathay Pacific in accordance with the policies approved by the Finance...

  • Page 88
    ...fic Airways Limited Annual Report 2008 Notes to the Accounts SUPPLEMENTARY INFORMATION 31. Financial risk management (continued) (b) Liquidity risk The Group's policy is to monitor liquidity and compliance with lending covenants, so as to ensure sufficient liquid funds and adequate funding lines...

  • Page 89
    ... analysis, taking into account current and anticipated exposures. To manage this exposure assets are, where possible, financed in those foreign currencies in which net operating surpluses are anticipated, thus establishing a natural hedge. In addition, the Group uses currency derivatives to reduce...

  • Page 90
    88 Cathay Pacific Airways Limited Annual Report 2008 Notes to the Accounts SUPPLEMENTARY INFORMATION 31. Financial risk management (continued) 2007 USD HK$M EUR HK$M TWD HK$M SGD HK$M RMB HK$M JPY HK$M Group Trade and other receivables Liquid funds Long-term loans Obligations under finance ...

  • Page 91
    ... rate instruments. At the reporting date the interest rate profile of the interest-bearing financial instruments was as below: Group 2008 HK$M 2007 HK$M Company 2008 HK$M 2007 HK$M Fixed rate instruments Liquid funds Long-term loans Obligations under finance leases Interest rate and currency...

  • Page 92
    ...(d) Hedge accounting The Group has designated the following as cash flow hedges as at 31st December 2008: 2008 HK$M 2007 HK$M Foreign currency risk - Natural hedge on long-term liabilities - Cross currency swaps - Foreign currency forward contract Interest rate risk - Interest rate swaps Fuel price...

  • Page 93
    ... new accounting standards are relevant to the Group: (a) Hong Kong (IFRIC) Interpretation 13 "Customer Loyalty Programmes" is relevant to the Group and becomes effective for accounting periods beginning on or after 1st July 2008. The interpretation requires that revenue from the initial sales...

  • Page 94
    ... 100 shares of HK$10 Airline Training Property Limited Hong Kong Cathay Holidays Limited Cathay Pacific Aero Limited Cathay Pacific Aircraft Acquisition Limited Cathay Pacific Aircraft Services Limited Cathay Pacific Catering Services (H.K.) Limited Cathay Pacific Loyalty Programmes Limited Cathay...

  • Page 95
    ...activities Air China Limited Cathay Kansai Terminal Services Company Limited Cebu Pacific Catering Services Inc. CLS Catering Services Limited Ground Support Engineering Limited People's Republic of China Japan Philippines Canada Hong Kong Airline Ground handling Airline catering Airline catering...

  • Page 96
    ... current liabilities (excluding liquid funds and bank overdrafts) Retirement benefit obligations Deferred taxation Net assets Financed by: Funds attributable to owners of Cathay Pacific Minority interests Total equity Per share Shareholders' funds EBITDA (Loss)/earnings Dividend Ratios (Loss)/profit...

  • Page 97
    Cathay Pacific Airways Limited Annual Report 2008 95 Statistics 2006 2005 2004 2003 2002 2001 2000 1999 38,755 18,385 3,643 60,783 (55,565) 5,218 - (465) - 301 5,054 (782) 4,272 (184) 4,088 (2,...

  • Page 98
    ... factor Excess baggage carried Kilometres flown Block hours Aircraft departures Length of scheduled routes network Destinations at year end Staff number at year end ATK per staff On-time performance* Departure (within 15 minutes) Average aircraft utilisation* A320 A321 A330-300 A340-300 A340-600 747...

  • Page 99
    Cathay Pacific Airways Limited Annual Report 2008 97 Statistics 2006 2005 2004 2003 2002 2001 2000 1999 19,684 14,452 91,769 18,097 72,939 76.2 79.5 1,334 7,514 68.6 2,218 357 ...

  • Page 100
    ... 2001 2000 1999 Productivity* Cost per ATK ATK per HK$'000 staff cost Aircraft utilisation Share prices High Low Year-end Price ratios (Note) Price/earnings Market capitalisation/ funds attributable to owners of Cathay Pacific Price/cash flows Times HK$ Unit Hours per day HK$ 3.79 2,160 11.5 20...

  • Page 101
    ... end of the year Operating profit and share of profits of associates less taxation Average of total equity and net borrowings Profit/(loss) attributable to owners of Cathay Pacific Dividends Operating profit/(loss) Net finance charges Borrowings Funds attributable to owners of Cathay Pacific Return...

  • Page 102
    ...Cathay Pacific Airways Limited is incorporated in Hong Kong with limited liability. Investor relations For further information about Cathay Pacific Airways Limited, please contact: Corporate Communication Department Cathay Pacific Airways Limited 7th Floor, North Tower Cathay Pacific City Hong Kong...

  • Page 103
    DESIGN: FORMAT LIMITED www.format.com.hk Printed in Hong Kong Cert no. BV-COC-936401

  • Page 104
    www.cathaypacific.com