16-Nov-2010 8:38 AM

Cathay Pacific expecting at least USD1.6bn profit for 2010

Cathay Pacific announced (15-Nov-2010) that it expects the consolidated profit attributable to the shareholders of Cathay Pacific for the 12 months ended 31-Dec-2010 will "not be less than HKD12.5 billion (USD1.6 billion)" as demand for passenger and cargo services had "remained very strong with revenues at high levels". The anticipated result is nearly triple its full-year profit from HKD4.69 billion in 2009. Details include:

  • Air China: A contributing factor to the profit outlook is the "very strong" profits earned by Cathay Pacific’s strategic partner, Air China Limited, for the nine months ended 30-Sep-2010. Cathay Pacific expects to record a share of HKD1.7 billion (USD219 million) in profits from Air China for 2H2010;
  • Other factors impact forecast: The profit forecast has also taken into account the aggregate profits of HKD2.165 billion (USD279 million) from the sale of its interests in Hong Kong Air Cargo Terminals Limited (HACTL) and Hong Kong Aircraft Engineering Company Limited (HAECO), and the European Commission's imposition of a EUR57.12 million (HKD618 million) fine on the airline;
  • Impact on staff: The carrier stated the carrier's employees will benefit from the results through its profit-share scheme. [more]

 Cathay Pacific: "We are expecting an outstanding financial result following a very difficult period brought about by the global financial crisis. We are of course delighted to be so handsomely in the black, but the dramatic turnaround in our fortunes serves to illustrate yet again the volatile and cyclical nature of our business. Two years ago we suffered a record loss - this year we expect to make a record profit. This only goes to show that we must manage our business prudently, so that we are able to thrive in the good times and survive the bad times," Tony Tyler, CEO. Source: Company Statement, 14-Nov-2010.

Cathay Pacific:  "I can assure our hardworking staff that when the company is performing well, they will have a good share of the rewards, primarily through the company's profit share scheme. Our policy is to reward staff during the good times through market based salary increases, supplemented by profit share and year-end bonus, and make every effort to preserve their jobs during the bad times, as we did in the recent downturn and during SARS, for example. Our intention is to follow that policy in this very good year, but we have to keep our feet firmly planted on the ground in controlling costs. We are in a very capital and people intensive business and managing our costs sensibly is an absolute imperative for the competitiveness of an airline like ours that is wholly commercial and receives no government financial support or subsidy. We therefore need to ensure that our financial resources are in the best possible shape to meet operating costs and our ongoing expenditure commitments. If we don’t stay competitive, we won't make money in the good times - and we won't be able to protect jobs in the bad times," Tony Tyler, CEO. Source: Company Statement, 14-Nov-2010.

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