Cathay Pacific, Dragonair and Air Hong Kong completed (15-Oct-2013) the transfer of cargo operations to the new freight terminal at Hong Kong International Airport in early Oct-2013. The airlines commenced a phased transition to the terminal in Feb-2013. The HKD5.9 billion (USD761 million) facility increases the airport's cargo capacity by 50% to 7.4 million tonnes p/a. Cathay Pacific director cargo James Woodrow said, "The new facility will not only enable the Cathay Pacific Group to offer tailor-made services to our own cargo customers, but it will also raise service standards within the industry to new heights." [more - original PR]
Cathay Pacific, Dragonair and Air Hong Kong complete move to new cargo terminal in Hong Kong
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Cathay Pacific ends 747 flights, its future defined not by 777s/A350s but by diversifying
For 37 years the Boeing 747 brought Cathay Pacific to the world. As it did for so many operators, the 747 transformed Cathay into a global airline. Cathay's final passenger 747 flight was on 01-Oct-2016. The occasion is filled with sentiment and the usual remarks of being the end of an era; the aircraft of course is iconic, and Cathay, which turned 70 in Sep-2016, has known the 747 for longer than it has not.
Yet the 747 era at Cathay ended long ago. The 747 gave Cathay a global footprint, but this is true for most current and former 747 operators. Cathay's position today against competitors is defined not by network reach but rather – depth. Mainland Chinese airlines, some of Cathay's closest competitors, know they have the local market and lower costs but acknowledge the one-stop challenge Cathay brings with hyperfrequency and a stronger product/brand.
That depth and domination, especially in the key North American market, was achieved with the 777-300ER. Cathay operates 53 777-300ERs – more than twice the 24 747-400s the airline had at its peak. Although A350s are arriving, Cathay's next evolution is defined not by aircraft and flying but rather by bringing new non-flying businesses into the group. For aviation this is seen as a partial surrender to competition. For the company it is a graduation to consistent and higher profits. As with the 747, it is time to move on and pursue a more productive future.
Cathay Pacific 1H2016: market squirms at 80% profit drop. Cathay not in crisis; but must cut costs
The public did not react well to Cathay Pacific 1H2016 group profits dropping over 80%. Ironically there was little attention that the airlines have returned to being unprofitable amid factors ranging from strong competition to a USD576 million fuel hedging loss, greater than a year ago. Growth for the year is turning out to have only a minor adjustment: Cathay does not consider itself to be in crisis.
Despite squirms of supposed displeased investors and their questions about the future of CEO Ivan Chu, the actual two investors that matter are majority owners Swire and Air China. Their vision is one for the long term. Unlike airlines in the US or Europe, Cathay does not answer to the market and does not need to produce quarterly improvements. If the shareholders retain their vision and believe overcapacity is necessary to hold market share for the long term, then yield declines and unprofitability are uncomfortably accepted. The balance sheet is strong enough.
So the question is not if Cathay should address sagging yields and hedging losses, but rather whether Cathay can achieve its long term goal of being not just a premium airline but more importantly – a travel and lifestyle brand. There may not be an answer in this decade. Cathay may have the greatest self-assurance measured against the potential risk of traffic being siphoned from competitors. What is certain is that cost-cutting is needed, but remains elusive.