Cathay to buy A350s, 777s as profit soars

Cathay Pacific has announced that it plans to order A350-900s and exercise options on 777-300ERs after it recorded a major jump in profit.

The Hong Kong based carrier and its Dragonair subsidiary announced that during the first half of 2010 that it earned a profit of HK$6.84bn (A$966m), a massive 724.4 per cent increase on the same period last year. Turnover for the six months was up 55.7 per cent to HK$41.34bn (A$5.84bn). The two airlines carried a total of 13 million passengers, an increase of 8.5 per cent. Load factor increased by 5.5 percentage points while yield increased by 17.5 per cent, representing a major rebound in its core long haul markets.

“If present trends continue, we expect our financial results to continue to be strong in the second half of 2010,” said chairman Christopher Pratt. “That said, conditions can change rapidly in the airline industry. Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.”

Nevertheless, the airline has had enough confidence to move ahead with upgrading its fleet, and has signed a letter of intent (LOI) to order 30 A350-900s, which are planned for delivery between 2016 and 2019. It has also started negotiations to exercise options on a further six 777-300ERs in addition to the 30 it has ordered previously. Cathay currently operates a fleet of 18 777-300ERs, with the remaining 12 currently due to be delivered by 2013. Together, the commitments are expected to cost HK$75bn (A$10.6bn) at list prices.

“The A350-900 is a perfect fit for the development of our fleet,” said Cathay Pacific chief executive Tony Tyler. “The delivery schedule fits our requirements very neatly. The 30 new aircraft will be deployed to replace older aircraft and grow our fleet to meet the challenges of the future.”