Cathay slumps to full year loss

Cathay, and others, have battled the rapid international expansion of Chinese airlines and the ongoing rise of Middle East carriers offering long-haul to long-haul connections through their hubs, which have bitten into previously lucrative markets. And in Asia, low-cost carriers have won passengers happy to pay lower fares for a no-frills product on shortand medium-haul routes.

Further, the economic slowdown – both in China and elsewhere – had led to a significant reduction in premium corporate travel in business and first class, particularly on long-haul routes.

The company has sought to regain lost ground through an overhaul that included a reorganisation of the business, likely staff layoffs and other cost reduction efforts.

This includes operational changes to improve the reliability of Cathay’s schedules and lift ontime performance. Replacing older Airbus A340-300s with newer more fuel-efficient aircraft such as the A350-900 will also help lower costs.

Cathay chairman John Slosar said the airline was targeting a reduction in unit costs excluding fuel over the next three years.

“We are starting on a threeyear program of corporate transformation with the intention of achieving returns above the cost of capital,” Slosar said in Cathay’s full-year results announcement.

“The goal is to become a more agile and competitive organisation in order to take advantage of changing market trends and customer preferences.

“The objective of the Cathay Pacific Group is to provide sustainable growth in shareholder value over the long term. We are confident of longer-term success.

We celebrated our 70th anniversary in 2016 and our commitment to Hong Kong and its people remains unwavering.”

Cathay said passenger yields across its network fell 9.2 per cent to 54.1 HK cents, from 59.6 HK cents in the prior corresponding period.

The company reported an increase in passenger numbers on its south-west Pacific and South African routes in calendar 2016.

However, it said yields were “adversely affected by the weakness of the Australian dollar and by overcapacity in the market”.

Further, transit traffic between mainland China and Australia – a key source of passengers for Cathay – was hurt by the availability of additional cheap nonstop flights. Elsewhere, Cathay said a reduction in corporate travel affected premium class revenue in major markets such as London and New York.

In terms of cargo, Cathay said strong competition, overcapacity and the suspension of Hong Kong fuel surcharges put significant pressure on yield.

And while lower fuel prices have boosted the bottom line, the benefit was offset by losses from Cathay’s fuel hedging program.

Slosar said market conditions were unlikely to improve in 2017.

“Strong competition from other airlines and the adverse effect of the strength of the Hong Kong dollar are expected to continue to put pressure on yield. The cargo market got off to a good start, but overcapacity is expected to persist.”

The airline plans to increase capacity between four and five per cent in 2017.

Cathay adding extra nonstop flights to Brisbane over summer

Cathay Pacific plans to offer more nonstop flights to Brisbane over summer through de-linking its four times weekly Hong Kong- Cairns-Brisbane services. Under the new schedule to operate from October 2017 to March 2018, Cathay will fly nonstop between Cairns and Hong Kong three times a week, while the Brisbane- Hong Kong route will be served with 11 weekly nonstop flights.

Currently, Cathay flies Brisbane-Hong Kong daily and operates four Hong Kong- Cairns-Brisbane-Cairns-Hong Kong services a week. While this represented a reduction of one flight a week to Cairns, there will be an overall capacity increase to the North Queensland city given all seats on the three flights will be available for the Cairns market, rather than a mix of Cairns and Brisbane bound travellers at the moment.

Meanwhile, Cathay said it would upgauge a third of its four daily Sydney-Hong Kong flights from the Airbus A330-300 to the larger Boeing 777-300ER from the end of October.

Airnorth to add more flights between Melbourne and Wellcamp

Regional carrier Airnorth says it will add an extra three return flights a week between Brisbane West Wellcamp Airport and Melbourne from May 8. Currently, offers seven return flights a week with 76-seat Embraer E170s on the route, with its services supported by a codeshare agreement with Qantas.

Under the new schedule, the airline will operate 10 return flights a week from May 8, with most weekdays featuring both a morning and afternoon option. This will increase further to 12 return flights a week from June.

Tigerair Australia to add Melbourne-Townsville

Tigerair Australia is launching nonstop service between Melbourne and Townsville from June 22.

The flights will operate on Tuesdays, Thursdays, Fridays and Saturdays as a morning departure from Melbourne and a lunchtime takeoff from Townsville.

Townsville is Tigerair’s fifth destination in Queensland alongside Brisbane, Cairns, the Gold Coast, Proserpine. Indeed, the airline said about 50 per cent of its domestic flights were either to, from or within Queensland.

Air NZ to deploy 787 to Adelaide

Air New Zealand will operate the Boeing 787-9 to Adelaide from October 26, offering South Australians business and premium economy options for travel to New Zealand, the South Pacific and the Americas via Air New Zealand’s Auckland hub.

Air New Zealand is the only airline offering nonstop flights between Adelaide and Auckland. Currently, it operates the route six times a week using A320 narrowbodies, with trans- Tasman alliance partner Virgin Australia codesharing on the flghts.

The decision to use the 787-9 to Adelaide will mean a reduction in frequency to three flights a week. However, Air New Zealand said it would add three A320 services on the route during the summer holiday period between December 2017 and January 2018. The airline said capacity on the route would increase by 23 per cent during the peak season from October to March, compared with the prior corresponding period