Cathay Pacific, in its internal employee magazine CX World, stated load factors in economy-class remain strong, averaging 84.8% through summer for Cathay Pacific and Dragonair, but "volumes and revenues for premium traffic remained stubbornly below pre-downturn levels" (CX World, 05-Oct-2010). First-class demand remains softer than business demand. Cathay Pacific is now "gearing up for whether its passenger business has made a full recovery from the global economic slump" and is waiting to see how premium bookings recover in the traditional peak travel period. Premium bookings are expected to show some recovery for the October business travel peak, with Sep-2010 and Oct-2010 bookings showing a "promising trend". Premium travel on short-haul services has suffered a significant shortfall in comparison to economy bookings by businesses, and the segment is expected to remain under pressure, due to tightened corporate travel policies.
Cathay Pacific sees promising trend in premium bookings
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Cathay Pacific 1H2016: market squirms at 80% profit drop. Cathay not in crisis; but must cut costs
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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.
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.