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Cathay Pacific Airways Limited
Annual Report 2011
Stock Code: 00293

Table of contents

  • Page 1
    Cathay Pacific Airways Limited Annual Report 2011 Stock Code: 00293

  • Page 2
    ... 2011 in Review Review of Operations Financial Review Directors and Officers Directors' Report 53 54 55 42 46 48 52 Corporate Governance Independent Auditor's Report Principal Accounting Policies Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Company...

  • Page 3
    Cathay Pacific is an international airline registered and based in Hong Kong, offering scheduled passenger and cargo services to 162 destinations in 42 countries and territories around the world. The Company was founded in Hong Kong in 1946 and remains deeply committed to its home base, making ...

  • Page 4
    ... - Cathay Pacific and Dragonair 2011 2010 Change Available tonne kilometres ("ATK") Passengers carried Passenger load factor Passenger yield Cargo and mail carried Cargo and mail load factor Cargo and mail yield Cost per ATK (with fuel) Cost per ATK (without fuel) Aircraft utilisation On-time...

  • Page 5
    ...million. In 2011 the core business of the Cathay Pacific Group was materially affected by instability and uncertainty in the world's major economies. The passenger business of Cathay Pacific and Dragonair held up relatively well mainly as a result of strong demand for premium class travel. The cargo...

  • Page 6
    ...by 2013. The seats and service in the new cabins will be significantly better than those in economy class cabins. We began to install new economy class seats on medium- and long-haul aircraft in March 2012. The Level 6 Business Class Lounge in The Wing, Cathay Pacific's signature lounge at Hong Kong...

  • Page 7
    ... Pacific opened a new first and business class lounge at San Francisco International Airport. • In July 2011, Cathay Pacific introduced a new uniform, designed by Hong Kong's Eddie Lau, for almost 9,000 cabin crew and over 4,000 airport, cargo and reservations staff. While preserving the best...

  • Page 8
    ... and Best Airline First Class in the Business Traveller China Awards. • In 2011, Cathay Pacific and Dragonair were again awarded the Caring Company Logo by the Hong Kong Council of Social Service in recognition of their good corporate citizenship. • Dragonair won a number of other awards in 2011...

  • Page 9
    ...We are developing new reservations, inventory and check-in systems for Cathay Pacific and Dragonair. We implemented the first phase of the programme, covering reservations and inventory, in February 2012, following extensive testing and training. Cathay Pacific Airways Limited Annual Report 2011 7

  • Page 10
    2011 in Review • Cathay Pacific was the first Asian airline to introduce an on-line ticket change function. The service was made available on North American routes in 2010 and on most other major routes in 2011. • A mobile boarding pass service, which is available to passengers who check in on-...

  • Page 11
    ... a one-day Association of Asia Pacific Airlines Environmental Working Group conference. • For the purpose of compiling our 2011 Sustainable Development Report we have had discussions with our ground staff and cabin crew in three overseas offices and with suppliers, investors, corporate clients and...

  • Page 12
    ...2010 to help improve the lives of disadvantaged children around the world. Since the programme's launch in 1991, more than HK$110 million has been raised through "Change for Good". • Cathay Pacific was awarded the "Five Years Plus" Caring Company Logo by the Hong Kong Council of Social Service, in...

  • Page 13
    ...assist passengers in need. Our complete Sustainable Development Report is available online at www.cathaypacific.com. Commitment to staff • At the end of 2011, the Cathay Pacific Group employed some 29,000 people worldwide. More than 22,000 of these staff are based in Hong Kong. • Cathay Pacific...

  • Page 14
    ...result of a poor performance from the Air China Cargo joint venture and year end provisions made by Air China. Below is a review of the performance and operations of our other subsidiaries and associates. 12 AHK Air Hong Kong Limited ("Air Hong Kong") • Air Hong Kong is the only all-cargo airline...

  • Page 15
    ... 2011, with improvements in profitability in Asia and a return to profitability in Canada. Hong Kong Airport Services Limited ("HAS") • HAS, a wholly owned subsidiary, provides ramp and passenger handling services in Hong Kong. It provides ground services to 33 airlines, including Cathay Pacific...

  • Page 16
    ... make each journey more enjoyable in every class of travel. A suite of mobile services makes travelling more convenient for our passengers. Special service Our cabin crew always have the interests of every passenger in mind, delivering Cathay Pacific's signature service straight from the heart. 14

  • Page 17
    ... the world every year from its Hong Kong hub. The airline is committed to high levels of customer service and the best products, on the ground and in the air. Premium products The rollout of our acclaimed new business class continues and in 2012 we are launching a new premium economy class product...

  • Page 18
    ... first quarter, but then weakened. Economy class yields on long-haul routes declined, particularly in the second half. Load factor by region % Passenger load factor and yield % HK cents 90 100 70 80 80 60 70 60 50 60 40 40 50 20 30 40 India, Middle East, Southeast Pakistan and Asia...

  • Page 19
    ...and Sri Lanka • In India, strong competition on the Delhi and Mumbai routes adversely affected our economy class business. Premium class business on these routes was generally robust. Business on the Chennai and Bengaluru routes remained firm. Cathay Pacific Airways Limited Annual Report 2011 17

  • Page 20
    ... for economy class travel. The performance of Dragonair's service to Manila continued to improve. Southeast Asia • Business on most Southeast Asian routes was strong in all classes in 2011. We added capacity on the Singapore and Indonesia routes in the summer. • In the first half of the year...

  • Page 21
    ... two new services have increased the number of premium class passengers carried. Economy class loads on the Chicago route are below expectations. • We announced a number of new codeshare agreements in North American. Our code was placed on Alaska Airlines' flights operating between Los Angeles and...

  • Page 22
    Review of Operations CARGO SERVICES ASIA MILES Cathay Pacific and Dragonair's cargo revenue decreased by 1.7% to HK$23,335 million. 2010's strong growth in the world's air cargo markets continued in the first quarter of 2011. Our business in that quarter was solid. However, from April onwards ...

  • Page 23
    Review of Operations CARGO SERVICES ASIA MILES Available tonne kilometres ("ATK"), load factor and yield for Cathay Pacific and Dragonair cargo services for 2011 were as follows: ATK (million) 2011 2010 Change 2011 Load factor (%) 2010 Change Yield Change Cathay Pacific and Dragonair 14,367 13...

  • Page 24
    ...Miles • Asia Miles is the award-winning travel reward programme for Cathay Pacific and Dragonair that now has more than four million members worldwide, 46% of whom reside in Mainland China. • In 2011 for the seventh consecutive year, Asia Miles was named Best Frequent Flyer Programme by Business...

  • Page 25
    ... major financial institutions. There are 20 airline partners covering over 1,000 destinations. • There was a 19% growth in air redemptions by Asia Miles members in 2011. More than 90% of Cathay Pacific flights carry passengers who have redeemed frequent flyer miles through the Asia Miles programme...

  • Page 26
    OUR INVESTMENT Freight development Our new HK$5.7b cargo terminal will open in early 2013. Catering expertise Cathay Pacific Catering Services is a world-renowned inflight caterer. 24

  • Page 27
    ...companies, a new cargo terminal and a growing fleet of modern aircraft. Fleet enhancement We have 96 new wide-body aircraft due for delivery by 2019. Ground-handling Hong Kong Airport Services Limited is one of Asia's largest ground-handling companies. Cathay Pacific Airways Limited Annual Report...

  • Page 28
    ...shipments of cargo from Hong Kong and Mainland China, and high fuel prices. Global economic uncertainty and high fuel prices are major challenges for the Group. Turnover Group 2011 HK$M 2010 HK$M Cathay Pacific and Dragonair 2011 HK$M 2010 HK$M Passenger services Cargo services Catering, recoveries...

  • Page 29
    ... arising from changes in yield and load factor is set out below: HK$M + 1 percentage point in passenger load factor + 1 percentage point in cargo and mail load factor + HK¢1 in passenger yield + HK¢1 in cargo and mail yield 840 347 1,015 96 Cathay Pacific Airways Limited Annual Report 2011 27

  • Page 30
    ...Review Operating expenses Group 2011 HK$M 2010 HK$M Cathay Pacific and Dragonair 2011 HK$M 2010 HK$M Change Change Staff Inflight service and passenger expenses Landing, parking and route expenses Fuel, net of hedging gains/(losses) Aircraft maintenance Aircraft depreciation and operating leases...

  • Page 31
    ...- Fuel costs increased due to a 37.7% increase in the average into-plane fuel price to US$129 per barrel and a 4.4% increase in consumption to 39.5 million barrels. (3,075) Others 2011 airlines' operating profit before non-recurring items and tax 4,025 Cathay Pacific Airways Limited Annual Report...

  • Page 32
    ... HK$16,972 million, comprising HK$14,019 million for aircraft and related equipment, HK$2,628 million for buildings and HK$325 million for other equipment. 0% $60 $70 2012 $80 $90 2013 $100 $110 $120 $130 Brent (US$/barrel) Total assets The Group's policy is to reduce exposure to fuel price risk...

  • Page 33
    Financial Review Borrowings and capital • Borrowings increased by 9.4% to HK$43,335 million in 2011 from HK$39,629 million in 2010. • Borrowings are mainly denominated in US dollars, Hong Kong dollars, Japanese yen and Euros, and are fully repayable by 2023 with 69% currently at fixed rates of ...

  • Page 34
    OUR PARTNERS Cargo carrier A cargo joint venture between Cathay Pacific and Air China, operating under the Air China Cargo name, was launched in May 2011. 32

  • Page 35
    ... flights between Hong Kong and key Mainland cities, and cooperation in a cargo joint venture operating out of Shanghai. Strategic partner Cathay Pacific and Air China are both committed to strengthening air services between Hong Kong and Mainland China. Cathay Pacific Airways Limited Annual Report...

  • Page 36
    ...since November 2011. He is also a Director of Hong Kong Dragon Airlines Limited. He was previously Deputy Finance Director of Swire Pacific Limited. He joined the Swire group in 1995 and has worked with the group in Hong Kong, the United States, Singapore and Australia. SLOSAR, John Robert#, aged 55...

  • Page 37
    ... Chief Executive Officer of Orient Overseas (International) Limited. He is also an Independent Non-Executive Director of a number of listed companies, including Zhejiang Expressway Company Limited, BOC Hong Kong (Holdings) Limited, U-Ming Marine Transport Corp., Sing Tao News Corporation Limited and...

  • Page 38
    ... May 2012. 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 aircraft...

  • Page 39
    ...3,933,844,572 shares). Details of the movement of share capital can be found in note 25 to the accounts. Major transactions Cathay Pacific Aircraft Services Limited ("CPAS"), a wholly owned subsidiary of the Company, entered into an agreement with Airbus S.A.S. on 9th March 2011 for the acquisition...

  • Page 40
    ... ("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 flyer programmes, the provision of airline catering, ground support and engineering services...

  • Page 41
    ...the Group's largest supplier. In respect of the Company's purchases from PetroChina International (Hong Kong) Corporation Limited, which was among the Group's five largest suppliers in 2011, Tung Chee Chen was interested as a director of its holding Cathay Pacific Airways Limited Annual Report 2011...

  • Page 42
    ... options) and debentures of Cathay Pacific Airways Limited or any of its associated corporations (within the meaning of Part XV of the SFO). Directors' interests in competing business Pursuant to Rule 8.10 of the Listing Rules, Christopher Pratt, Cai Jianjiang, Fan Cheng, Kong Dong and Ian Shiu had...

  • Page 43
    ... themselves for re-appointment. A resolution for the re-appointment of KPMG as Auditors to the Company is to be proposed at the forthcoming annual general meeting. By order of the Board Christopher Pratt Chairman Hong Kong, 14th March 2012 Cathay Pacific Airways Limited Annual Report 2011 41

  • Page 44
    .... Day-to-day 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...

  • Page 45
    ...de Gentile-Williams, Christopher Gibbs and Captain Richard Hall, the General Manager Flying, Captain Henry Craig and the General Manager Corporate Safety, Richard Howell. It was chaired in 2011 by a former Director Flight Operations, Ken Barley. Cathay Pacific Airways Limited Annual Report 2011 43

  • Page 46
    ... three years' service, a bonus related to the profit of the overall Swire group. The provision of housing affords ease of relocation either within Hong Kong or elsewhere in accordance with the needs of the business and as part of the training process whereby managers gain practical experience in...

  • Page 47
    ... year with the Audit Committee. 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...

  • Page 48
    ... in Hong Kong with limited liability) We have audited the consolidated financial statements of Cathay Pacific Airways Limited ("the Company") and its subsidiaries (together "the Group") set out on pages 48 to 97, which comprise the consolidated and company statements of financial position as...

  • Page 49
    ... Company as at 31st December 2011 and of the Group's profit and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance. Cathay Pacific Airways Limited Annual Report 2011 47

  • Page 50
    ... Public Accountants ("HKICPA"). These accounts also comply with the requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities (the "Listing Rules") of The Stock Exchange of Hong Kong Limited (the "Stock Exchange...

  • Page 51
    ... long-term investments held by the Group are designated as available-for-sale financial assets, these investments are stated at fair value. Fair value is based on quoted market prices at the end of the reporting period without any deduction for transaction costs. Fair values for the unquoted equity...

  • Page 52
    ... position. Where derivative financial instruments are designated as effective hedging instruments under HKAS 39 "Financial Instruments: Recognition and Measurement" and hedge exposure to fluctuations in foreign exchange rates, interest rates or jet fuel prices, any fair value change is accounted...

  • Page 53
    ... overhaul of aircraft are charged to profit and loss on consumption and as incurred respectively. 17. Frequent-flyer programme The Company operates a frequent-flyer programme called Asia Miles (the "programme"). As members accumulate miles by travelling on Cathay Pacific or Dragonair flights, part...

  • Page 54
    ...for the year ended 31st December 2011 2011 HK$M 2010 HK$M 2011 US$M 2010 US$M Note Turnover Passenger services Cargo services Catering, recoveries and other services Total turnover Expenses Staff Inflight service and passenger expenses Landing, parking and route expenses Fuel, net of hedging gains...

  • Page 55
    ...as supplementary information and are translated at HK$7 .8. The notes on pages 58 to 97 and the principal accounting policies on pages 48 to 51 form part of these accounts. Christopher Pratt Director Hong Kong, 14th March 2012 Jack So Director Cathay Pacific Airways Limited Annual Report 2011 53

  • Page 56
    Company Statement of Financial Position at 31st December 2011 2011 HK$M 2010 HK$M 2011 US$M 2010 US$M Note ASSETS AND LIABILITIES Non-current assets and liabilities Fixed assets Intangible assets Investments in subsidiaries Investments in associates Other long-term receivables and investments Long...

  • Page 57
    ... assets Payments to acquire additional shareholding in associate Net cash outflow from investing activities Financing activities New financing Net cash benefit from financing arrangements Loan and finance lease repayments Security deposits placed Dividends paid - to owners of Cathay Pacific...

  • Page 58
    ...Cathay Pacific Non-distributable Investment Cash flow Share revaluation hedge premium reserve reserve HK$M HK$M HK$M Capital redemption reserve and others HK$M Total equity Share capital HK$M Retained profit HK$M Total HK$M HK$M HK$M At 1st January 2011 Total comprehensive income for the year...

  • Page 59
    Company Statement of Changes in Equity for the year ended 31st December 2011 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$M Share capital HK$M Retained profit HK$M Share premium...

  • Page 60
    ...-airline business segment includes mainly catering, ground handling and aircraft ramp handling services. The unallocated results represent the Group's share of profits of associates. The major revenue earning asset is the aircraft fleet which is used both for passenger and cargo services. Management...

  • Page 61
    ... the year end takes the current holding to 18.7%). A gain on this deemed disposal of HK$868 million was recorded, principally reflecting the change in the Group's share of net assets in Air China immediately before and after the share issuance. Cathay Pacific Airways Limited Annual Report 2011 59

  • Page 62
    ...159 (68) (3) 6. Net finance charges 2011 HK$M 2010 HK$M Net interest charges comprise: - obligations under finance leases stated at amortised cost - interest income on related security deposits, notes and bonds - bank loans and overdrafts - wholly repayable within five years - not wholly repayable...

  • Page 63
    ...into account changes in legislation, practice and status of negotiations (see note 32(d) to the accounts). A reconciliation between tax charge and accounting profit at applicable tax rates is as follows: 2011 HK$M 2010 HK$M Consolidated profit before tax Notional tax calculated at Hong Kong profits...

  • Page 64
    ...$4,687 million (2010: HK$12,875 million) has been dealt with in the accounts of the Company. 9. Other comprehensive income 2011 HK$M 2010 HK$M Cash flow hedges - recognised during the year - transferred to profit and loss - deferred tax recognised Revaluation of available-for-sale financial assets...

  • Page 65
    ... OF FINANCIAL POSITION Aircraft and related equipment Owned HK$M Leased HK$M Other equipment Owned HK$M Leased HK$M Buildings Under Owned construction HK$M HK$M Total HK$M Group Cost At 1st January 2011 Exchange differences Additions Disposals Reclassification to assets held for sale Transfers...

  • Page 66
    ... STATEMENT OF FINANCIAL POSITION 12. 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 2011 Additions Disposals Reclassification to assets held for sale Transfers At...

  • Page 67
    ... amount which is the higher of the value in use and the fair value less cost to sell. An impairment loss amounting to HK$250 million was recognised for the year ended 31st December 2011 (2010: net impairment loss of HK$98 million written back). Cathay Pacific Airways Limited Annual Report 2011 65

  • Page 68
    ... FINANCIAL POSITION 13. Intangible assets Group Goodwill HK$M Computer systems HK$M Total HK$M Company Computer systems HK$M Cost At 1st January 2011 Additions At 31st December 2011 At 1st January 2010 Additions At 31st December 2010 Accumulated amortisation At 1st January 2011 Charge for the year...

  • Page 69
    ... 2011 HK$M 8,695 20 - - - 8,715 (12) 8,703 2010 HK$M Summarised financial information of associates (100 percent): Assets Liabilities Equity Turnover Net profit for the year 224,749 (159,950) 64,799 100,451 8,942 177,273 (137,394) 39,879 88,285 11,649 Cathay Pacific Airways Limited Annual Report...

  • Page 70
    ...' results based on accounts drawn up to a non-coterminous period end where the difference must be no greater than three months. The Group's share of the profits and net assets of Air China for the year ended 30th September 2011 and as at that date included in the Group's consolidated financial...

  • Page 71
    Notes to the Accounts STATEMENT OF FINANCIAL POSITION 17. Long-term liabilities (continued) (a) Long-term loans Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK$M Bank loans - secured - unsecured Other loans - unsecured Amount due within one year included under current liabilities Repayable as...

  • Page 72
    ...Group has commitments under finance lease agreements in respect of aircraft and related equipment expiring during the years 2012 to 2023. The reconciliation of future lease payments and their carrying value under these finance leases is as follows: Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK...

  • Page 73
    ... in the Group profit and loss: Current service cost Interest on obligations Expected return on plan assets Actuarial loss recognised Total included in staff costs Actual return on plan assets 349 302 (550) - 101 (412) 324 311 (518) 1 118 820 Cathay Pacific Airways Limited Annual Report 2011 71

  • Page 74
    ... Movements for the year - current service cost - interest cost - employee contributions - benefits paid - actuarial losses At 31st December 349 302 9 (525) 612 8,362 Group 2011 HK$M 2010 HK$M 7,615 7,460 324 311 12 (524) 32 7,615 6,991 316 276 9 (481) 547 7,658 Company 2011 HK$M 6,870 293 285...

  • Page 75
    ...schemes will be able to meet liabilities as they become due. The contributions are calculated based upon funding recommendations arising from actuarial valuations. The Group expects to make contributions of HK$180 million to the schemes in 2012. Cathay Pacific Airways Limited Annual Report 2011 73

  • Page 76
    ... to the Group profit and loss are HK$864 million (2010: HK$756 million). 20. Deferred taxation Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK$M Deferred tax assets: - provisions - tax losses - cash flow hedges - customer loyalty programmes Deferred tax liabilities: - retirement benefits...

  • Page 77
    ... 2011 HK$M 2010 HK$M Trade debtors Derivative financial assets - current portion Other receivables and prepayments Due from associates 5,908 1,044 2,844 63 9,859 5,904 2,349 2,766 46 11,065 5,142 1,044 1,674 14 7,874 5,165 2,349 1,625 25 9,164 Cathay Pacific Airways Limited Annual Report 2011...

  • Page 78
    ... for sale 746 746 368 368 746 746 - - 23. Liquid funds Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK$M Short-term deposits and bank balances (note 28) Short-term deposits maturing beyond three months when placed Funds with investment managers - debt securities listed outside Hong Kong...

  • Page 79
    ... and fully paid (HK$0.20 each) At 1st January and at 31st December 5,000,000,000 3,933,844,572 1,000 787 5,000,000,000 3,933,844,572 1,000 787 During the year, the Company did not purchase, sell or redeem any of its shares (2010: nil). Cathay Pacific Airways Limited Annual Report 2011 77

  • Page 80
    Notes to the Accounts STATEMENT OF FINANCIAL POSITION 26. Reserves Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK$M Retained profit Share premium Investment revaluation reserve Cash flow hedge reserve Capital redemption reserve and others 38,785 16,295 885 (2,417) 1,474 55,022 37,061 16,...

  • Page 81
    ...6,316 35 107 - (2,165) (868) 238 (74) (2,091) 87 3,552 1,091 (1,470) 18,844 28. Analysis of cash and cash equivalents 2011 HK$M 2010 HK$M Short-term deposits and bank balances (note 23) Bank overdrafts (note 24) 9,612 - 9,612 8,276 (4) 8,272 Cathay Pacific Airways Limited Annual Report 2011 79

  • Page 82
    ... HK$'000 Housing benefits HK$'000 2011 Total HK$'000 2010 Total HK$'000 Executive Directors Christopher Pratt W.E. James Barrington (from July 2010) Ivan Chu (from March 2011) James E. Hughes-Hallett (up to November 2011) Martin Murray (from November 2011) Ian Shiu (up to June 2010) John Slosar...

  • Page 83
    ... 7,094 - 4,117 3,923 715 1,706 4,914 6,214 8,326 - 7,900 3,846 41,661 3,443 4,027 3,828 3,960 - 4,783 2,202 6,565 5,424 6,762 1,201 42,195 Bonus related to services for 2010 was paid in 2011. Cathay Pacific Airways Limited Annual Report 2011 81

  • Page 84
    ... those who have retired or resigned during the year, in each employment category whose total remuneration for the year fell into the following ranges: 2011 HK$'000 Director Flight staff Other staff Director 2010 Flight staff Other staff 0 - 1,000 1,001 - 1,500 1,501 - 2,000 2,001 - 2,500 2,501...

  • Page 85
    ... and 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 flyer programmes, the provision of airline catering, ground support and engineering services...

  • Page 86
    ... ("KFTC") announced it will fine several airlines, including Cathay Pacific, for their air cargo pricing practices. In November 2010, KFTC issued a written decision and Cathay Pacific's fine was KRW 5.35 billion (equivalent to HK$36 million at the exchange rate current as of the date of the...

  • Page 87
    ... by a compensating change in the market value of the hedged items. Exposure to foreign exchange rates, interest rates and jet fuel price movements are regularly reviewed and positions are amended in compliance with internal guidelines and limits. (a) Credit risk Management has a credit policy in...

  • Page 88
    ...undiscounted payment profile of financial liabilities is outlined as follows: 2011 After one year but within two years HK$M After two years but within five years HK$M Within one year HK$M After five years HK$M Total HK$M Group Bank and other loans Obligations under finance leases Other long-term...

  • Page 89
    ...to the Accounts SUPPLEMENTARY INFORMATION 33. Financial risk management (continued) 2011 After one year but within two years HK$M After two years but within five years HK$M Within one year HK$M After five years HK$M Total HK$M Company Bank and other loans Obligations under finance leases Other...

  • Page 90
    ...management (continued) (c) Market risk (i) Foreign currency risk The Group's revenue streams are denominated in a number of foreign currencies resulting in exposure to foreign exchange rate fluctuations. In this respect, it is assumed that the pegged rate between the Hong Kong dollars and the United...

  • Page 91
    ...of financial assets and liabilities and the change in fair value of currency derivatives at the reporting date. It assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010. Cathay Pacific Airways Limited Annual Report 2011...

  • Page 92
    ...analysis on variable rate instruments. At the reporting date the interest rate profile of the interest-bearing financial instruments was as below: Group 2011 HK$M 2010 HK$M Company 2011 HK$M 2010 HK$M Fixed rate instruments Long-term loans Obligations under finance leases Interest rate and currency...

  • Page 93
    ... at the reporting date. 2011 Profit and loss HK$M Other equity components HK$M 2010 Profit and loss HK$M Other equity components HK$M Net increase in jet fuel price Net decrease in jet fuel price 97 (74) 119 (118) 13 (14) 453 (444) Cathay Pacific Airways Limited Annual Report 2011 91

  • Page 94
    ... of financial position: Carrying amount 2011 HK$M Fair value 2011 HK$M Carrying amount 2010 HK$M Fair value 2010 HK$M (2,303) (1,062) (231) (695) 749 (168) (2,595) 110 (1,211) (176) 1,301 (45) Group Loan receivable Long-term loans Obligations under finance leases Pledged security deposits...

  • Page 95
    ... not based on observable market data. Group 2011 Level 1 HK$M 2011 Level 2 HK$M 2011 Level 3 HK$M 2011 Total HK$M 2011 Level 1 HK$M Company 2011 Level 2 HK$M 2011 Level 3 HK$M 2011 Total HK$M Assets Investments at fair value - listed - unlisted Liquid funds - funds with investment managers - other...

  • Page 96
    ...to the Accounts SUPPLEMENTARY INFORMATION 33. Financial risk management (continued) Group 2010 Level 1 HK$M 2010 Level 2 HK$M 2010 Level 3 HK$M 2010 Total HK$M 2010 Level 1 HK$M Company 2010 Level 2 HK$M 2010 Level 3 HK$M 2010 Total HK$M Assets Investments at fair value - listed - unlisted Liquid...

  • Page 97
    ... this new accounting standard on both the results and the financial position of the Group. 36. Event after the reporting period In January 2012, an agreement was entered into under which a wholly owned subsidiary of the Company agreed to purchase six Airbus A350-900 aircraft. The catalogue price of...

  • Page 98
    ... shares of HK$10 Hong Kong 60* Airline Property Limited Airline Stores Property Limited Cathay Holidays Limited Cathay Pacific Aero Limited Cathay Pacific Aircraft Acquisition Limited Cathay Pacific Aircraft Lease Finance Limited Cathay Pacific Aircraft Services Limited Hong Kong Hong Kong Hong...

  • Page 99
    ...Limited Air China Cargo Co., Ltd. CKTS Company Limited Cebu Pacific Catering Services Inc. CLS Catering Services Limited Ground Support Engineering Limited People's Airline Republic of China People's Cargo carriage service Republic of China Japan Philippines Canada Hong Kong Ground handling Airline...

  • Page 100
    ...) Other long-term payables Deferred taxation Net assets Financed by: Funds attributable to owners of Cathay Pacific Non-controlling interests Total equity Per share Shareholders' funds EBITDA Earnings/(loss) Dividend Ratios Profit/(loss) margin Return on capital employed Dividend cover Cash interest...

  • Page 101
    ....8) (73.7) 3.7 1.10 0.69 9.3 12.6 2.1 14.2 0.74 0.30 6.7 8.9 1.2 15.1 0.70 0.36 6.5 8.8 2.0 17.1 0.64 0.26 10.3 11.8 2.0 14.6 0.69 0.34 4.0 4.7 0.8 7.2 0.85 0.36 11.2 10.8 2.7 10.1 0.71 0.30 Cathay Pacific Airways Limited Annual Report 2011 99

  • Page 102
    ... factor Passenger load factor Cargo and mail carried Cargo and mail revenue tonne kilometres Cargo and mail load 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...

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    ... 3 22 7 6 1 - - 5 11 - 96 11 6 13 1 3 - 34 23 15 3 21 7 5 - - - 5 10 - 89 10 6 10 1 3 - 30 23 15 3 19 6 5 - - - 5 9 - 85 8 6 9 - 3 - 26 20 15 2 19 6 5 - - - 5 7 - 79 8 4 9 - 3 - 24 101 Cathay Pacific Airways Limited Annual Report 2011

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    ...2003 2002 Productivity* Cost per ATK (with fuel) 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$ 3.45 1,964 12...

  • Page 105
    ...and Cargo and mail turnover = mail yield Revenue passenger kilometres/ Cargo and mail revenue tonne kilometres Total operating expenses of Cathay Pacific and Dragonair ATK of Cathay Pacific and Dragonair Gross debt/ equity ratio = Cost per ATK = Cathay Pacific Airways Limited Annual Report 2011...

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    ... Email: [email protected] Website: www.bnymellon.com/shareowner Stock codes Hong Kong Stock Exchange ADR 00293 CPCAY Financial calendar Year ended 31st December 2011 Annual report available to shareholders Annual General Meeting Six months ending 30th June 2012 Interim results announcement...

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    DESIGN: FORMAT LIMITED www.format.com.hk Printed in Hong Kong

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    www.cathaypacific.com