Cathay Pacific issues profit forecast for 2010
15 Nov 2010
Cathay Pacific announced in a Trading Statement today that the company expects the consolidated profit attributable to the shareholders of Cathay Pacific for the year ending 31 December 2010 will not be less than HK$12.5 billion, as demand for passenger and cargo services had remained very strong with revenues at high levels.
Another contributing factor is the very strong profits earned by Cathay Pacific’s strategic partner, Air China Limited, for the nine months ended 30 September 2010. Cathay Pacific expects to record a share of HK$1.7 billion in profits from Air China for the second half of 2010.
Today's profit forecast of HK$12.5 billion has also taken into account the aggregate profits of HK$2.165 billion 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 Euros 57.12 million (or HK$618 million) fine on the airline.
Cathay Pacific Chief Executive Tony Tyler said: "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."
Mr Tyler paid tribute to the company's staff for its contribution to the turnaround of Cathay Pacific's financial situation, and for making sacrifices during the downturn of the previous 18 months.
He said: "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 have announced very substantial investment commitments over the next decade to grow the airline. This will mean job creation, career development and promotional opportunities to current and future staff, benefits to shareholders and the Hong Kong economy as a whole.
"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."
Full Trading Statement is available at http://www.cathaypacific.com/cpa/en_HK/aboutus/investor/announcement.