Cathay Pacific - Hong Kong's Flag Carrier

[hkskyline]

Cathay orders six Boeing 747-400 freighter planes
Thursday, 22 Jun 2006

HONG KONG (AFP) - Hong Kong flag carrier Cathay Pacific said it has ordered six Boeing 747-400ERF freighter aircraft in a billion dollar deal for delivery between May 2008 and April 2009.

The airline said the list price for the planes was 1.56 billion US dollars in total and the deal is its largest ever purchase order for its freighter fleet.

The order will take its freighter fleet from the current 14 to 20 as the airline continues to invest in additional cargo capacity to meet aggressive growth plans for the Hong Kong hub, the airline said.

"This latest investment further underscores our long-term commitment to invest in Hong Kong, and is an expression of our confidence in Hong Kong as the premier aviation hub in the Asia Pacific region," Cathay Pacific Chief Executive Philip Chen said on Thursday.

"Cargo is a major contributor to our continued growth, and we are committed to expanding our freighter fleet to ensure it plays a key role in the future of both Cathay Pacific and Hong Kong as a leading cargo hub."

The airline took delivery of the worlds first 747-400BCF in December last year. A second one is due next month and a third in September this year. Three more will enter service in 2007.

Cathay has retained its options on a further six 747-400BCFs which are now scheduled for delivery from the end of 2008 to 2010, it said.

[vincent]

hkskyline, you beat me.

http://www.boeing.com/news/releases/...60622c_nr.html

[hkia]

Notice that the price Cathay paid to buy DragonAir is just a little bit over the price of the 6 Boeing planes.

[hkskyline]

Airlines tend to get discounts for their aircraft purchases, so the $1.56 billion is just a list price for reference. The manufacturers are very secretive about the actual price negotiated with the customers.

[hkskyline]

An impression of Boeing 747-400ERF

[hkskyline]

Scraped, scrubbed, buffed carriers strive to be lean
23 June 2006
South China Morning Post

Desperate times call for desperate measures and the dramatic rise in jet fuel prices over the past year has definitely triggered a desperate search for ways to reduce fuel consumption in the airline business.

They may have been more profitable but chances are you have never seen the global fleet looking more immaculate than now as attention is paid to every dent and speck on aircraft fuselages which now are scrubbed daily to limit drag when airborne.

The freighter fleet for Cathay Pacific Airways, which grew by six aircraft yesterday, will be sporting a new "silver bullet" design after the airline scrapes off all paint but the livery, reducing weight to gain fuel efficiency and save a few thousand dollars per flight.

Airlines are reducing the magazines and duty free they carry, instituting ice quotas and limiting the amount of water in the toilets, all in reaction to the rise in the price of jet fuel.

According to the International Air Transport Association (Iata), these efforts, plus enhancements in labour productivity and reduced sales and distribution costs, have driven up the industry's "break even" price for a barrel of jet fuel to US$50 from US$14 at the turn of the decade.

In other words, higher fuel prices have forced airlines to be more efficient. (Where was that sentiment 10 years ago in an industry that insists its raison d'etre is to deliver value to its shareholders?)

Despite all those efficiency gains, jet fuel has been trading at an average price of US$80 per barrel for the past six months. Iata reckons the industry will pay US$112 billion for fuel this year - up US$21 billion on last year.

While airlines have squeezed all they can from their fuel tanks, analysts say they could do more to protect their shareholders from market volatility.

According to a Morgan Stanley survey on fuel hedging among 48 airlines, 74 per cent of respondents said they would be less than 60 per cent hedged this year.

A third were less than 30 per cent hedged, with larger airlines - those using more than 38 million barrels a year - less likely than their smaller counterparts to have substantially raised their protection against market swings in the past two years.

Granted, carriers have not been as disciplined as they could have been. But what has become apparent after running all costs through a fine-tooth comb for the past few years is that the areas where advances can be made are largely out of the airlines' hands.

Chief among them is air traffic control systems which, rather than direct traffic in the most efficient manner, are too often used to block the most direct path between two points or at least to force carriers to queue up for less efficient pathways.

South China - where airlines spend 20 minutes more than they need spiralling down to Hong Kong from 9,100 metres due to a lack of co-ordination among the region's air traffic control (ATC) systems - has come under scrutiny.

Progress is being made, apparently, but nowhere near fast enough for the carriers.

At Iata's annual general meeting in Paris earlier this month, Owen Dell, Cathay's manager of international operations, revealed it was responsible for about 2 per cent of the industry's fuel bill last year, a contribution disproportionate to its fleet size due to the long-haul nature of its business.

Cathay burns roughly US$5 million a day in jet fuel.

Mr Dell reckoned that in areas where ATC was inefficient (read South China), Cathay's fuel bill increased 8 to 10 per cent (Iata says it is closer to 12 per cent globally).

In effect, many airlines are not benefiting from the technological advances their new aircraft offer simply because national ATC systems have not kept pace with the industry.

However, some of the industry's top executives, such as Lufthansa chairman Wolfgang Mayrhuber, saw it another way in Paris this month.

"ATC's are a huge opportunity for us. The way our airplanes are designed, they could do much more in terms of fuel efficiency. But we hinder them," Mr Mayrhuber said.

"We manage them as if they were a railroad. We queue up for four entry points into China when birds use millions."

[hkskyline]

Take a friend to Hong Kong
24 June 2006
Calgary Herald

Deal - To celebrate its 60th anniversary, Cathay Pacific Airways is offering $60 business class airfares between Canada and Hong Kong.

Here's the fine print: To get the $60 companion ticket, flyers must first buy a qualifying round-trip business-class seat at regular price, leaving from Vancouver or Toronto between Aug. 1 and Sept. 30.

Tickets must be purchased by July 16, with travel completed by Oct. 31.

Details are at http://www.cathaypacific.ca/offers/S...subdefault.asp

[hkskyline]

Cathay Pacific endorses CEPA liberalisation measures
29 June 2006
Corporate Press Release

The Chief Executive of Cathay Pacific Airways, Mr. Philip Chen, today welcomed the announcement of further liberalisation measures in CEPA.

"This is another positive step in building a powerful economic synergy between the Hong Kong SAR and the Mainland," Mr. Chen said. In particular, I am very pleased to see that under this latest arrangement, Hong Kong air transport sales agencies will be allowed to set up wholly-owned offices in the Mainland.

“This is good news for the aviation industry, as it will facilitate the movement of freight and passengers between Hong Kong and the Mainland, reinforcing Hong Kong’s status as the leading aviation hub in the Asia Pacific.

"Cathay Pacific is certainly prepared to invest in related facilities and capabilities in Hong Kong to enhance the Hong Kong hub," he added.

[hkskyline]

Cathay Pacific Invites You To Experience A New Discovery
1 July 2006
Corporate Press Release



Cathay Pacific Airways has given a face lift to inflight magazine Discovery. Starting with the July issue, the magazine will come with a new look, fresh editorial concept and easier-to-navigate inflight entertainment guide.

Greater focus will be put on Asia, and in particular, Hong Kong — the airline's home base. It will be chock-full of facts and information, fascinating stories and stunning visuals. Stories will bring together the best of East and West in culture, food, entertainment, luxury and lifestyle; making Discovery unique among inflight magazines around the world.

New elements include Fusion, a bi-lingual section tackling topics of interest to both Western and Asian readers in a light-hearted, individual manner – from art and culture to entertainment and everyday incidences of language and life. A précis in secondary languages will supplement every single language feature.

Exciting features in the July issue include:

* New Global Asia: In this exclusive essay for Discovery, celebrated travel writer and author Pico Iyer explains how Asia is influencing the West, and is at the centre of the 21st century.

* Ethnic Hong Kong: Immigrants from every continent have made Hong Kong truly the place where the best of East and West comes together.

* Whistle Blower: While Whistler may have started as a ski resort, it has become just as successful and busy in summer.

* Stunning Berlin: A look at how the city prepare to put on an impressive show for big events such as the World Cup.

* New Zealand Escape: Visiting Marlborough and savour its fine wine and dine on superb cuisine.

The Entertainment section of Discovery, which has also been given a fresh look, provides helpful details on the programmes in a modern and refreshing layout.

The award winning magazine has been read on Cathay Pacific flights for more than 25 years.

[aznichiro115]

Originally Posted by hkskyline

An impression of Boeing 747-400ERF

why are the engines RR, i thought the -400ERF only had PW or GE

[hkskyline]

Traditionally CX has favoured Rolls Royce engines for its aircraft.

[hkskyline]

Unlocking value is Cathay's challenge - Swire chairman sees long-term benefits from Air China stake
3 July 2006
South China Morning Post

Part of the challenge for Cathay Pacific Airways in bidding for Hong Kong Dragon Airlines will be to "uncork the value" of Cathay's stake in Air China, which will double as part of the deal, says Christopher Pratt, chairman of Cathay's parent Swire Pacific.

When the deal was announced last month, the spotlight shone on the benefits of the $8.22 billion buyout of Dragonair. It may take longer for the benefits of Cathay's related $4.1 billion move to double its holding in Air China to become evident.

"Owning 20 per cent of Air China is very significant and very valuable, one senses. It's not immediately obvious how one gets to that value, but it's there - it is one of China's iconic brands," Mr Pratt said.

"It is not something one can rush. You have to observe the way they behave, how they take decisions, [and] get to know them. But I think we can help. And I think they think we can help, otherwise the deal wouldn't have happened."

"We've got skills they don't have and they have the influence we don't have in a very key market [China]," he said. "It's a good fit."

Industry pundits are still puzzled at the inherent value of the deeper shareholding structure - Air China will also spend $5.39 billion for 10.16 per cent of Cathay, a stake that will grow to 17.5 per cent after the mainland carrier privatises a subsidiary - in part due to its determination to join a rival alliance.

Cathay is in the oneworld alliance, while Air China has for the past two years doggedly pursued the Star Alliance, which includes its longtime ally Lufthansa. This may limit avenues for co-operation.

Air China believes it has negotiated the best of both worlds. The Cathay deal gives it a primary role in the Hong Kong-China market, while the Star Alliance opens key markets in Europe and the US through code-share deals with Lufthansa and United Airlines.

Air China flies 30 times a week to Germany - far more than to London, the home of oneworld partner British Airways - and Europe is its single largest market.

Star better develops Beijing as an international hub, while a oneworld membership would see most of Air China's overseas passengers funnelled through Hong Kong, says a banker involved in the deal.

"We don't see a conflict between co-operating with Cathay and joining Star since our co-operation with Cathay is focused on Greater China," said Cai Jianjiang, Air China's lead negotiator in the Cathay talks. "Both agreements will help us compete with other regional hubs such as Seoul and Tokyo."

Mr Pratt said Air China's insistence on joining Star was no surprise as the "emotional commitment" to do so was made years ago.

As a future 20 per cent shareholder, Cathay can live with Air China being a Star partner if Air China could get value out of it in the US and Europe, Mr Pratt said.

"I always expected them to [join Star] because Air China historically has been close to Lufthansa, probably closer to them than to any other single airline," he said.

"They always made it very clear to me that it could work together, and I think it can. I never saw that as a deal-breaker. I didn't allow myself to. It's a marketing alliance on several routes."

Both sides agree the key will be to forge co-operative benefits from a relationship that remains at its core a rivalry.

While competition for air-travel dollars in the Greater China market could become more civilised, the rivalry for intercontinental traffic appears destined to heat up.

"There is no point in denying there is competition; there is competition in many forms of co-operation," Mr Cai said. "We will treat ourselves as members of a big family, a family in which it is possible for siblings to compete."

[hkskyline]

Cathay Pacific Welcomes The Mainland-Hong Kong Sar Air Services Arrangement
3 July 2006
Corporate Press Release

Cathay Pacific welcomes the outcome of the latest discussions between the Mainland and Hong Kong SAR authorities which provides for an expansion of the air services arrangements, and the opportunity for the airline to resume passenger services to Shanghai after an absence of 16 years.

The airline has applied to the Hong Kong SAR Government requesting an allocation of rights to re-launch passenger flights to Shanghai, provide additional services to Beijing, and to increase all-cargo operations to the Mainland, tentatively in the fourth quarter of this year.

Shanghai is an important Mainland market for Cathay Pacific. It accounts for 35% of the passenger market and 68% of the cargo market between the Mainland and Hong Kong. The increased capacity to Beijing and Shanghai will be important in strengthening Hong Kong as the premier aviation hub in the Asia Pacific region as these two cities together represent 60% of the passenger market and 85% of the cargo market between the Mainland and Hong Kong.

Cathay Pacific Chief Executive Philip Chen said: “We appreciate the tremendous efforts made by the Mainland and Hong Kong authorities in expanding the air services opportunities. We are also encouraged that the overall arrangement supports the trend toward a more liberalized regime between the Mainland and Hong Kong”.

"We hope that both parties will continue to work towards a truly open aviation environment in China such that carriers will be free to develop their business for the greater good of Mainland aviation", he added.

[hkskyline]

Cathay Pacific Welcomes Constructive Debate On The Report Of The Competition Policy Review Committee
4 July 2006
Corporate Press Release

Cathay Pacific today welcomed the publication of the report of the Competition Policy Review Committee, and looks forward to a constructive debate within the community on the issues raised in the report during the forthcoming public consultation period. Cathay Pacific will study the report and submit a response to the government on its recommendations.

Cathay Pacific supports any policy and law that serves the best economic interests of Hong Kong and encourages fair competition on a level playing field. As a major regional and international centre for finance, trade and logistics, and the premier aviation hub of the Asia Pacific, we also believe it is very important that any competition law allows Hong Kong companies to compete on a level playing field internationally.

We believe any future competition law should serve the best overall interests of the economy in order to help improve Hong Kong’s competitive standing; apply equally to all sectors of economic activity; and recognise the unique conditions and characteristics of the Hong Kong economy.

Cathay Pacific has had considerable experience doing business in such environments, as we operate in many countries with competition laws, and make every effort to ensure full compliance with them.

[hkskyline]

Cathay To Keep China Flights After Dragonair Buyout
4 July 2006

HONG KONG (Dow Jones)--Hong Kong's Cathay Pacific Airways Ltd. (0293.HK), which Monday applied for additional flights to China, said it intends to continue flying to the mainland despite its buyout of China-focused rival Hong Kong Dragon Airlines Ltd.

Cathay will continue to offer its own flights to China alongside Dragonair flights, to give customers a wider product offering, Chief Operating Officer Tony Tyler said in the July issue of the airline's monthly staff magazine.

'We plan to run both carriers as a combined airline with two separate brands,' Tyler was quoted in the July edition of CX World magazine.

Hong Kong's dominant carrier in early June agreed to buy the remaining shares of Dragonair that it didn't already own for HK$8.22 billion, in a deal that would give Cathay coveted access to the mainland that it had lacked.

Cathay had previously been allowed to offer passenger flights to just Beijing and Xiamen, with its earlier efforts to gain more access hindered by China's reluctance to open its market and by Dragonair's opposition.

But an expanded air-services pact between Hong Kong and mainland China announced Monday could give Cathay a significant boost in flights to China, including passenger services to Shanghai for the first time in 16 years.

The airline said it has applied to the Hong Kong government for the allocation of rights to begin passenger flights to Shanghai, provide additional services to Beijing, and increase cargo flights to China beginning in the fourth quarter of 2006.

While the expanded pact could give Cathay the necessary rights to China that it has long desired, the Dragonair acquisition gives the airline immediate access to the markets along with the right infrastructure.

'For Cathay Pacific to organically grow that network would take forever and we can't afford to wait that long,' said Tyler. 'Dragonair has very attractive slots at Beijing and Shanghai too. Both those airports are pretty much full.'

Tyler said the merged carrier will have an integrated network and schedule, as well as more attractive fares for passengers traveling to China through Hong Kong.

'Sales teams will be able to market single 'through fares' across Cathay and Dragonair services in the same way connecting Cathay flights are now, making us more competitive in the marketplace,' he said.

Analysts forecast that Cathay will be able to realize savings in staff and maintenance costs due to synergies with Dragonair. However, Tyler said that no assessment has been made with regards to job cuts.

'We understand people will be concerned and hope everyone can continue to do their best for both airlines.'

[hkskyline]

Cathay Pacific Releases June 2006 Traffic Figures
11 July 2006
Corporate Press Release

Cathay Pacific Airways today released traffic figures that show a continued growth in passenger numbers and cargo tonnage in June 2006, and an overall strong performance for the first half of the year .
In the first six months of 2006, the airline carried 8,144,335 passengers, up 11.1% on the first half of 2005, while the amount of freight carried was up 10.5% at 572,552 tonnes. Rises in passenger and cargo traffic stayed ahead of capacity growth – 10.8% for available seat kilometres (ASKs) and 5.8% for available cargo/mail tonne kilometres (ATKs).

In June, Cathay Pacific carried a total of 1,392,462 passengers, up 10.7% on the same month last year. The passenger load factor for the month hit 82.8%, up 2.7 percentage points on 2005. The passenger number increase was marginally above the increase in capacity, measured in ASKs, which grew by 10.4%.

The airline carried 96,255 tonnes of freight in June, up 7.6% year-on-year. The growth in tonnage was above the capacity rise for the month, which came in at 6.9% measured in ATKs. The airline’s cargo business received a boost from the launch of a new service to Mumbai and Chennai in India, with flights commencing on 2 June.

Cathay Pacific General Manager Revenue Management, Sales & Distribution Ian Shiu said: "The performance for June is quite impressive. Long-haul routes to Europe and North America were particularly strong, with healthy front-end business helping to offset the impact of increased competition on back-end yields. All in all, it was a good build up to our summer peak and indications are that business will remain buoyant over the summer."

Cathay Pacific Director & General Manager Cargo Ron Mathison said: "For the past few months the story has been very similar – very strong demand out of Hong Kong and China to our long-haul freight destinations, with weaker traffic coming back due to excess capacity in the market. New competitors are coming into the market all the time so we don’t expect things to get any easier. However, we will get a welcome capacity boost when our second Boeing 747-400BCF ‘Boeing Converted Freighter' enters service in mid-July."

[hkskyline]

Hong Kong's Cathay Pacific to raise fuel surcharges
17 July 2006
AFX

HONG KONG (XFN-ASIA) - Hong Kong flag carrier Cathay Pacific Airways Ltd has obtained government approval to increase its fuel surcharges on passenger fares from next month, aviation authorities said.

The Civil Aviation Department (CAD) will allow Cathay Pacific to charge 481 hkd per ticket on each leg of long-haul flights, up from its current levy of 450 hkd.

The airline will also raise its levy on short-haul flights to 117 hkd per leg from 109 hkd.

The CAD reviews applications from airlines for revisions to surcharges every two months.

The price of Brent North Sea crude oil hit a record high 78.18 usd per barrel in London trade today as violence continued to rage in the Middle East amid concerns about a wider conflict.

[hkskyline]

Cathay staff escalator fall pure accident, court rules
284 words
18 July 2006
Hong Kong Standard

A former Cathay Pacific Airways ground staff claiming damages against the company after two elderly passengers fell on top of her while traveling up an escalator has been told by the court it was a "pure accident."

Winky Chau Chui-ping had claimed the airline was negligent in failing to provide her with any suitable means of communication, such as a walkie-talkie, so that she could call for further assistance in escorting the elderly passengers, when the accident happened at the old Kai Tak airport in 1998.

She suffered ligament damage and cartilage degeneration as a result of the fall.

Deputy High Court Judge John Saunders dismissed her claim Monday, ruling: "Cathay have not been negligent, so as to cause either wholly or in part the injury suffered by Ms Chau." In this case, "it was pure accident when one of the elderly men fell against the other who in turn fell against Ms Chau," Saunders said.

The judge acknowledged a recent Court of Final Appeal ruling against the same airline which said "the standard of care required of an employer is a high standard since personal safety is at stake." However, "the duty of care arises not from mere proximity, but from the relationship of employer and employee," he said.

In January 2000 the Employees Compensation Unit at the Labour Department had already awarded Chau compensation of HK$170,396.31.

"The high duty of care does not require the employer to be a general insurer for the employee," Saunders said. He noted that there had been a wall-mounted phone and an intercom system "convenient to the escalator."

[hkskyline]

GE Unit In 20-Yr $1B Pact To Svc Cathay Pacific Engines
18 July 2006
Dow Jones Chinese Financial Wire

General Electric Co.'s (GE) aviation services unit signed a 20-year contract worth more than $1 billion with Hong Kong-based Cathay Pacific Airways Ltd. (0293.HK) to provide maintenance and repair for at least 40 General Electric GE90-115B engines installed in the airliner's fleet.

Cathay Pacific currently has 11 Boeing 777-300 model airplanes equipped with these engines in its fleet, and has ordered 18 more aircraft equipped with the GE90-115B.

General Electric said the deal covers service to installed and spare engines, as well as any acquired engines through 2017.

For fiscal 2005, General Electric's infrastructure division, which includes the aviation services unit, reported unaudited revenue of $41.8 billion.

Shares of General Electric recently traded at 32.32, down 4 cents or 0.1%.

[hkskyline]

Cathay chief questions 35% fee hike; Also warns against premature opening
21 July 2006
Bangkok Post

Cathay Pacific (CX) has blasted Airports of Thailand Plc (AoT) for a hefty rise in charges at Suvarnabhumi Airport and warned that opening the airport before it's ready would be a huge embarassment.

CX chief operating officer Antony Tyler was critical of a 35% jump in overall charges AoT intends to impose at the new airport, saying it was unreasonable, unaccountable and lacked transparency.

"It doesn't make sense to us and we don't like it at all. We need to see some numbers to justify an increase," he said in an interview after visiting the 125-billion-baht airport east of Bangkok.

Mr Tyler is the most senior executive of a foreign carrier to openly voice displeasure with AoT, which has been heavily criticised by the industry - through the International Air Transport Association (IATA) and Board of Airline Representatives in Thailand - over the fees.

He also echoed the view of the global airline bodies that Thai authorities should not try to rush the opening of the much-delayed airport for commercial operation, now set on Sept 28, if it is not truly ready.

Discussing the fee increases, he said: "What can we do? Because airports are monopoly, their operators tend to raise charges to carriers as they want in the knowledge that airlines have to use their facilities."

Some airports such as Singapore's Changi are more friendly to carriers by actually reducing charges, handing out discounts, Mr Tyler noted.

However, he acknowledged that the charges at Suvarnabhumi were still lower than at Chek Lap Kok in Hong Kong, because Hong Kong was generally an expensive place.

AoT has so far turned a deaf ear to the carriers' call for leniency on fees, saying its landing fees are relatively lower than those of Hong Kong, Changi and Kuala Lumpur international airports.

Mr Tyler said he did not know whether Suvarnabhumi would be ready by Sept 28 as authorities have promised.

"You need to make a brave decision to delay it (if the airport is not ready) ... Better to say so in advance than to cope with the consequences," he said.

"Often it is not what we see that matters. It's more about systems - the computers, IT and baggage systems - which you don't see when you walk around the terminal. What you see is always not the most important things."

Mr Tyler warned that Thailand should avoid the same mistakes as authorities had made at the Hong Kong and Kuala Lumpur airports, which encountered a lot of trouble initially following their premature openings.

"I'm sure AoT and the Thai government are aware of the importance of the opening going well. It will be extremely embarrassing and [could create] a very bad image for the country," he said.

Even if Suvarnabhumi could be opened as scheduled, Mr Tyler said Thai authorities should brace for some teething problems in the initial stage of operation, which is common for such projects.

CX will be ready to operate from the new airport as and when the airport is up and running, he asserted. "We have lots of experience with new airports going many years back - Singapore, Hong Kong, Japan, Kuala Lumpur, Frankfurt."

The airline will have a fallback plan to carry out operations manually in case Suvarnabhumi is not functioning.

Bangkok is Cathay Pacific's busiest hub in Southeast Asia. It operates 51 flights a week with 35,000 passenger seats in and out of Bangkok. It flies from Bangkok to Hong Kong, Singapore, Colombo, Mumbai and Karachi.