Cathay Pacific 2014 Annual Report Download - page 6

Cathay Pacific Airways Limited
4Chairman’s Letter
from June 2014. The San Francisco service will be
increased to 17-times-weekly in June 2015. Dragonair
started flying to Denpasar-Bali and Penang (replacing
Cathay Pacific on the latter route), increased frequencies on
a number of other routes and will introduce a daily service to
Haneda in Tokyo in March 2015. Dragonair will stop
operating to Manila in March 2015. Cathay Pacific tagged
Mexico City onto its Guadalajara cargo service in March
2014 and increased this service to five flights per week in
October 2014. We introduced cargo services to Columbus
in March 2014, to Calgary in October 2014, to Phnom Penh
in November 2014 and to Kolkata in March 2015.
We continue to invest heavily in our product and brand. We
have completed the installation of new or refreshed seats in
all Cathay Pacific’s aircraft which started in 2011. We will
install new cabins in our Airbus A350 aircraft, which are
expected to start being delivered in February 2016. At 31st
December 2014, new business and economy class seats
had been installed in all Dragonair Airbus A330-300 and six
A321-200 aircraft and new first class seats had been
installed in six Dragonair Airbus A330-300 aircraft. In
November 2014 we started to install new business and
economy class seats in Dragonair’s Airbus A320-200
aircraft and expect the installation to be completed in 2018.
In October 2014 we introduced a refreshed logo for Cathay
Pacific. This is part of a new approach to design, to be seen
for example on our website, in our new lounge at Haneda in
Tokyo and in our refurbished first class lounge in The Pier
at Hong Kong International Airport, which will open in
June 2015.
The contribution from Air China (the results of which are
included in the Group’s results three months in arrear) was
below expectations in 2014. Air China’s results were
adversely affected by a difficult operating environment and
substantial exchange losses caused by the depreciation of
the Renminbi in the early part of the year. As the year
progressed, Air China’s results improved as a result of lower
fuel prices. In 2014 we and Air China made a substantial
injection of capital and loans into Air China Cargo (our cargo
joint venture with Air China). This capital injection provided
funds to enable the carrier to buy new aircraft and improve
the performance of its cargo business. Operational
efficiency at Air China Cargo has been improved by the
replacement of three Boeing 747-400BCF converted
freighters with four Boeing 777-200F freighters in 2014. Air
China Cargo also benefited from the general improvement
in the air cargo market which began in the summer of 2014.
Prospects
It was encouraging to see an overall improvement in our
business in 2014. That improvement has continued in the
first quarter of this year and we are positive about the
overall prospects for 2015.Demand in our cargo business
continues to improve and is currently being helped by the
congestion in sea ports on the West Coast of the United
States. We continue to benefit from the lower net fuel
prices. Our associates are also benefiting from these
positive factors.While we face growing competition in our
passenger business, which makes it harder to maintain
yield, overall demand remains strong and the outlook
is positive.
In 2014 we continued our efforts to make Cathay Pacific
and Dragonair better airlines for our customers. The fact
that we won the World’s Best Airline award for the fourth
time is clear recognition from air travellers worldwide of the
work we have put into providing superior products and
services. The Group’s financial position remains strong,
which will enable us to continue with our long-term strategic
investment in the business and our commitment to
reinforcing Hong Kong’s position as one of the world’s
premier aviation hubs.
John Slosar
Chairman
Hong Kong, 18th March 2015