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Cathay Pacific cautiously optimistic about outlook

22-Feb-2010 11:31 AM

Cathay Pacific CEO, Tony Tyler, revealed the following in an interview with The Business Spectator on 19-Feb-2010:

  • Outlook: Optimistic of improving conditions, but cautioned, “if the world enters another a double dip [recession], then I may not even be here to say it, but I think could lead to much tearing out of hair and general alarm and despondency”.
  • Australian operations: Mr Tyler stated the carrier plans to continue to grow its operations to/from Australia, adding that while the carrier does not seen many opportunities for new points, it does see opportunities to add frequencies on existing sectors. He also sees more opportunities to partner with Qantas;
  • Qantas two-brand strategy: Mr Tyler stated Qantas' two-brand strategy was a “very smart” model, with the model doing “very well”. He added that Cathay has considered establishing a "lower cost carrier" in Hong Kong, but added, “we can't see how you can do it” in Hong Kong; 
  • Chinese carriers: Mr Tyler stated there may be opportunities for international airlines to take ownership positions in the increasingly competitive Chinese carriers. However, he warned of the difficulties in the market, adding that China is not a high-yielding market;
  • Indian market: The Indian market is “already a big bloodbath”, with a fight for market share currently occurring in the large and fast-growing market.

Cathay Pacific: “The airlines in this region are taking quite a hit. Traffic in this region actually was harder hit than it was in other parts of the world with the financial crisis. The other thing is that airlines in this region…have quite a high exposure to premium traffic. Cathay Pacific’s game is the front end; first and business class cabins and also the cargo business. Airlines in Asia tend to be combination carriers rather than just pure passenger players. And in a good year, cargo, in our case, is touching 30% of our revenue...However, Asia always bounces back faster and quicker than anywhere else and that’s happening again. Touch on wood that it continues. Certainly we saw in the last quarter of last year that our premium business and our cargo business came back quite strongly. And the momentum is being carried forward into this year,” Tony Tyler, CEO. Source: Business Spectator, 19-Feb-2010.

Cathay Pacific: “Jetstar is doing two things in Asia. One is, of course, Jetstar Australia is flying to and from Australia - between Australia and points in Asia. Qantas themselves have said that they’ve exhausted the opportunity to substitute Jetstar for Qantas in the places they currently serve, because the only places left where Qantas operates are the sort of premium places like Hong Kong and Tokyo where there’s a premium market you’d be crazy to abandon…There may well be places in Asia that Jetstar could fly to from Sydney, Melbourne and other places in Australia, which would be profitable with the Jetstar production costs….the other thing that they’re doing is that they’ve set up Jetstar in Singapore, where they have a minority stake of course, and they’ve also set up a Jetstar in Vietnam - again, a minority airline…Their view is that when aeronautical liberalisation comes to Asia the important thing will be to have a sort of pan-Asian brand - and so that’s why they’re doing it. Well, we’ll have to wait and see whether that proves to be a good strategy,” Tony Tyler, CEO. Source: Business Spectator, 19-Feb-2010.