Cathay Pacific 2009 Annual Report Download - page 15

2009 in Review
Review of other subsidiaries
and associates
The results recorded by our other subsidiaries and our
associates were satisfactory. The share of profits from
associates increased by HK$1,025 million to a profit of
HK$261 million mainly as a result of Air China’s return
to profitability.
A review of their performance and operations is
outlined below:
AHK Air Hong Kong Limited (“Air Hong Kong”)
This 60% owned subsidiary of Cathay Pacific, and
Hong Kong’s only all-cargo airline, continued its core
business operating express cargo services for
DHL Express.
The airline’s freighter fleet is composed of eight
owned Airbus A300-600Fs and three wet-leased
aircraft. With effect from March 2009, one of the
leased aircraft was upgraded to a Boeing 747-
400BCF freighter, acquired under wet-lease from
Cathay Pacific.
The flight frequency of services to Bangkok and
Shanghai increased from five to six per week with
effect from September and October respectively.
With an enhanced network, Air Hong Kong’s
capacity increased by 16%. Load factor improved
marginally by 0.3 percentage points, yet yield
suffered a reduction of 24%.
Air Hong Kong recorded a lower profit in 2009
compared with last year due to a substantial
reduction in yield.
Cathay Pacific Catering Services (H.K.)
Limited (“CPCS”) and overseas kitchens
CPCS, a wholly owned subsidiary, is the principal
flight kitchen in Hong Kong.
CPCS produced 20.9 million meals in 2009 and this
accounts for 63.4% of the airline catering market in
Hong Kong. Business volume decreased by 4%
from 2008.
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The decline in business volume and cost saving by
airlines reduced the profit margin from that achieved
in 2008 despite effective efforts to reduce
operating costs.
The performance of flight kitchens in Asia (outside
Hong Kong) was disappointing, with lower profits
than in 2008. The Canadian operations showed an
improvement in 2009.
Hong Kong Airport Services Limited (“HAS”)
HAS, a wholly owned subsidiary, is an integrated
ground handling operator offering both ramp and
passenger handling services in Hong Kong. It is now
providing a variety of ground services to 44 airlines
including Cathay Pacific and Dragonair.
HAS has a 53.6% market share in ramp handling
business at HKIA.
The number of customers for passenger handling
increased from 13 to 17 during 2009. Service
delivery has improved since HAS expanded its
business to include passenger handling in 2008.
With customers cutting flights and deploying smaller
aircraft in response to the economic downturn, the
results for the year were unsatisfactory.
Air China Limited (“Air China”)
Air China, in which Cathay Pacific owns 18.1%, is
the national flag carrier and leading provider of
passenger, cargo and other airline related services
in Mainland China.
The airline serves 88 domestic and 56 international
(regional) destinations, connecting 30 countries and
regions in the world.
The Group has two representatives on the Board of
Directors of Air China and equity accounts for its
share of Air China’s profit.
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Cathay Pacific Airways Limited Annual Report 2009 13