Cathay Pacific has reported a near doubling of full year net profit in 2015 and says its flights to Australia have been “satisfactory” over the past year amid a downturn in the mining sector and a weaker Australian dollar.
The airline group posted net profit of $HK6 billion for the 12 months to December 31 2015, up 90.5 per cent from $HK3.15 billion in the prior corresponding period.
The result was underpinned by lower fuel prices and strong demand in economy class, Cathay said in its full year results released on Wednesday. On a negative note, demand in its premium cabins was “not as strong as expected on some long-haul routes”, while cargo remained weak.
“The operating environment was better in 2015 than in 2014, but we faced some significant challenges, which we expect to continue in 2016,” Cathay chairman John Slosar said in a statement.
“Strong competition from other airlines in the region, foreign currency movements and weak premium class passenger demand will put pressure on passenger yield.
“Cargo demand will be adversely affected by industry overcapacity.
“Overall passenger demand remains strong and we expect to continue to benefit from low fuel prices.”
Cathay said fuel costs fell 18 per cent in 2015, compared with the prior year, even with some losses from old hedging positions. Meanwhile, passenger numbers rose 7.9 per cent to 34.1 million, and load factors rose 2.4 percentage points to 85.7 per cent.
However, passenger yields, which measure average airfares per passenger, fell 11 per cent in the year.
Cathay’s Australian network includes flights to Adelaide, Cairns, Brisbane, Melbourne, Perth and Sydney, as well as seasonal service to the Gold Coast during Chinese New Year.
Cathay said it continued to experience good demand from China to Australia. However, the financial performance of its Australian routes was hit by the weaker Australian dollar.
“The performance of our Australian routes was satisfactory in 2015. Demand for travel between Mainland China and Australia was stable,” Cathay said.
“The value of the Australian dollar fell significantly. This increased demand for travel to Australia but adversely affected yield.
“Business on the Perth route was affected by a downturn in the mining sector in Western Australia.”
Cathay said its Hong Kong-Auckland route, which it operates as part of an alliance with Air New Zealand, was steady in 2015.
In terms of the fleet, Cathay said it expected to receive its first Airbus A350-900 in May. It will be one of 12 A350-900s due for delivery in calendar 2016. The airline already had two A350 simulators for flight training purposes.
“The new Airbus A350XWB aircraft will have new cabins, seats and entertainment systems,” Cathay confirmed in its full year results release.
Revenue service with the A350 was expected to begin in June. The airline has 22 A350-900s and 26 of the larger A350-1000s on order.
Meanwhile, Cathay’s three remaining Boeing 747-400s were due to be retired before the end of 2016, with the last flight set to take place in October. As previously announced, the company has brought forward the retirement of the 747-400s from 2017 to 2016.