Interim Report 2019 1 FINANCIAL and OPERATIONAL HIGHLIGHTS
Total Page:16
File Type:pdf, Size:1020Kb
INTERIM REPORT 2 0 1 9 Cathay Pacific Airways Limited Stock Code: 00293 Hong Kong — Cathay Pacific — Cathay Pacific Freighter — Cathay Dragon — Air Hong Kong Contents Corporate Information 2 Financial and Operational Highlights Cathay Pacific Airways Limited is incorporated in Hong Kong with limited liability. 3 Chairman’s Statement 5 Review of Operations Investor relations 13 Financial Review For further information about Cathay Pacific Airways Limited, 16 Review Report please contact: 17 Condensed Financial Statements Corporate Affairs Department Cathay Pacific Airways Limited 39 Information Provided in Accordance 4th Floor, Central Tower with the Listing Rules Cathay Pacific City Disclaimer Hong Kong International Airport Hong Kong Email: [email protected] Tel: (852) 2747 5210 Fax: (852) 2810 6563 Cathay Pacific’s official website is www.cathaypacific.com CATHAY PACIFIC AIRWAYS LIMITED (“Cathay Pacific”), with its subsidiaries Hong Kong Dragon Airlines Limited (“Cathay Dragon”) and AHK Air Hong Kong Limited (“Air Hong Kong”), operated 216 aircraft at 30th June 2019, directly connecting Hong Kong to 111 destinations in 35 countries worldwide (248 and 54 respectively with code share agreements), including 26 destinations in Mainland China. The Cathay Pacific Group is the world’s 9th largest carrier of international passengers, and the 3rd largest carrier of international air cargo. Cathay Pacific was founded in Hong Kong in 1946. It has been deeply committed to its home base over the last seven decades and remains so, making substantial investments to develop Hong Kong as one of the world’s leading international aviation centres. Cathay Pacific itself operated 158 passenger and cargo aircraft at 30th June 2019. The Group’s other investments include catering and ground-handling companies and its corporate headquarters and cargo terminal at Hong Kong International Airport. Cathay Dragon, a regional airline registered and based in Hong Kong, is a wholly owned subsidiary of Cathay Pacific operating 48 aircraft at 30th June 2019. Air Hong Kong, an all-cargo carrier offering scheduled services in Asia, is a wholly-owned subsidiary of Cathay Pacific operating 10 aircraft at 30th June 2019. Hong Kong Express Airways Limited (“Hong Kong Express”), a low cost carrier the acquisition of which was completed in July 2019, operates 24 aircraft. Cathay Pacific owns 18.13% of Air China Limited (“Air China”), the national flag carrier and a leading provider of passenger, cargo and other airline-related services in Mainland China. The Group continues to invest heavily in its home city. At 30th June 2019 it had 67 new aircraft due for delivery up to 2024. At 30th June 2019, Cathay Pacific and its subsidiaries employed more than 32,800 people worldwide, of whom around 26,700 are employed in Hong Kong. Cathay Pacific is listed on The Stock Exchange of Hong Kong Limited, as are its substantial shareholders Swire Pacific Limited (“Swire Pacific”) and Air China. Cathay Pacific is a founding member of the oneworld global alliance, whose combined network serves more than 1,000 destinations worldwide. Cathay Dragon is an affiliate member of oneworld. Cathay Pacific Airways Limited Interim Report 2019 1 FINANCIAL AND OPERATIONAL HIGHLIGHTS Group Financial Statistics 2019 2018 Six months ended 30th June Change Results Revenue HK$ million 53,547 53,078 +0.9% Profit/(loss) attributable to the shareholders of Cathay Pacific HK$ million 1,347 (263) +1,610 Earnings/(loss) per share HK cents 34.2 (6.7) +40.9 Dividend per share HK$ 0.18 0.10 +0.08 Profit/(loss) margin % 2.5 (0.5) +3.0%pt 30th June 31st December Financial position* Funds attributable to the shareholders of Cathay Pacific* HK$ million 62,566 63,936 -2.1% Net borrowings* HK$ million 78,213 58,581 +33.5% Shareholders’ funds per share* HK$ 15.9 16.3 -2.5% Net debt/equity ratio* Times 1.25 0.92 +0.33 times Operating Statistics – Cathay Pacific and Cathay Dragon 2019 2018 Six months ended 30th June Change Available tonne kilometres (“ATK”) Million 16,318 15,747 +3.6% Available seat kilometres (“ASK”) Million 80,814 75,770 +6.7% Available cargo tonne kilometres (“AFTK”)** Million 8,635 8,542 +1.1% Revenue tonne kilometres (“RTK”) Million 11,950 11,899 +0.4% Passenger revenue per ASK HK cents 46.3 46.8 -1.1% Revenue passenger kilometres (“RPK”) Million 68,078 63,810 +6.7% Revenue passengers carried ‘000 18,261 17,485 +4.4% Passenger load factor % 84.2 84.2 – Passenger yield HK cents 54.9 55.4 -0.9% Cargo revenue per AFTK** HK$ 1.19 1.32 -9.8% Cargo revenue tonne kilometres (“RFTK”)** Million 5,477 5,831 -6.1% Cargo carried** ‘000 tonnes 979 1,038 -5.7% Cargo load factor** % 63.4 68.3 -4.9%pt Cargo yield** HK$ 1.88 1.93 -2.6% Cost per ATK (with fuel) HK$ 3.12 3.29 -5.2% Fuel consumption per million RTK Barrels 1,870 1,840 +1.6% Fuel consumption per million ATK Barrels 1,369 1,390 -1.5% Cost per ATK (without fuel) HK$ 2.23 2.29 -2.6% Underlying*** cost per ATK (without fuel) HK$ 2.27 2.29 -0.9% ATK per HK$’000 staff cost Unit 1,805 1,783 +1.2% ATK per staff ‘000 604 603 +0.2% Aircraft utilisation Hours per day 12.0 12.2 -1.6% On-time performance % 74.2 74.1 +0.1%pt * Shareholders’ funds, net borrowings and net debt/equity ratio at 30th June 2019 are arrived at after taking account of the effect of HKFRS 16. Further details can be found in note 2 to the financial statements. ** Including mail. Mail is no longer referred to separately but mail services continue to be accounted for under cargo services. *** Underlying costs exclude exceptional items and are adjusted for the effect of foreign currency movements and the adoption of HKFRS 16. 2 CHAIRMAN’S STATEMENT We are in the final year of our three-year transformation programme, which is designed to make our businesses leaner, more agile and able to compete more effectively. Work on the programme continues and, as evidenced by our return to profitability in 2018, we are moving in the right direction. Our positive performance continued in the first half of 2019, but the operating environment for our airlines worsened as geopolitical and trade tensions intensified. The Cathay Pacific Group reported an attributable profit of HK$1,347 million for the first six months of 2019. This compares to an attributable loss of HK$263 million in the first half of 2018. The earnings per share in the first half of 2019 were HK34.2 cents, compared to a loss per share of HK6.7 cents in the first half of 2018. Cathay Pacific and Cathay Dragon reported an attributable profit of HK$615 million in the first half of 2019, compared to an attributable loss of HK$904 million in the first half of 2018. Passenger revenue was satisfactory, but overall yield declined. Our cargo business was weaker, due in part to US-China trade tensions, with a decline in both volume and yield. We benefited from lower fuel prices but were adversely impacted by a stronger US dollar. Business performance compared to the same period in 2018. Flown cargo capacity of Cathay Pacific and Cathay Dragon increased by 1.1%, The Group’s passenger revenue increased by 5.6% to principally due to additional belly cargo space in newly HK$37,449 million in the first half of 2019. Capacity acquired passenger aircraft. Facing weak demand, we increased by 6.7%. The growth in revenue reflected the full rationalised freighter capacity and emphasised shipments impact of new routes introduced in 2018, the introduction of of specialist cargo. Load factor decreased by 4.9 two new routes in 2019, increased frequencies on existing percentage points, to 63.4%. Tonnage carried decreased by routes and the use of larger aircraft on popular routes. Load 5.7% to 979 thousand tonnes. Yield decreased by 2.6% to factor remained unchanged at 84.2%. Passengers carried HK$1.88. increased by 4.4% to 18.3 million. Yield decreased by 0.9% to HK54.9 cents due to intense competition in premium Total fuel costs for Cathay Pacific and Cathay Dragon classes and long haul economy class, and adverse foreign (before the effect of fuel hedging) decreased by HK$674 currency movements. million (or 4.5%) compared with the first half of 2018, reflecting a 6.5% decrease in average into-plane fuel prices Cathay Pacific introduced a year-round service to Seattle in and a 2.0% increase in consumption. Fuel is the Group’s March and a summer seasonal service to Komatsu in April. most significant cost, accounting for 28.2% of total These services have been well received and have helped to operating costs in the first half of 2019 (compared to 30.1% boost Hong Kong International Airport’s status as Asia’s in the same period in 2018). Fuel hedging losses were largest international aviation hub. reduced. After taking fuel hedging into account, fuel costs Cargo revenue declined, reflecting weaker global trade decreased by HK$1,213 million (or 7.7%) compared with the brought about in part by US-China trade tensions. Volume first half of 2018. Fuel consumption per available tonne and yield declined. The Group’s cargo revenue in the first kilometre fell by 1.5%, reflecting the continued introduction half of 2019 was HK$11,498 million, a decrease of 11.4% of more fuel efficient aircraft. Cathay Pacific Airways Limited Interim Report 2019 3 CHAIRMAN’S STATEMENT There was a 2.6% decrease in non-fuel costs per available Prospects tonne kilometre, to HK$2.23.