Source: The Standard Author: Mandy Lo 06/09/2009
Subject Concerned: Aircraft Opinion Airlines Aviation Fuel
Cathay Pacific Airways is seeking further deferrals on new aircraft orders amid a downturn in the industry.
"We have already delayed some of our deliveries," chief executive Tony Tyler said on the sidelines of a gathering in Kuala Lumpur.
Hong Kong's largest carrier was in talks with "both manufacturers" about further delays, he added. The airline has about US$10.66 billion (HK$83.15 billion) worth of new plane orders with Airbus and Boeing.
Nomura projected Cathay's fuel hedging to generate gains of HK$100 million from a loss of HK$2 billion, based on the revised forecast of crude oil prices to US$58 per barrel from US$48 per barrel.
"The turnaround of fuel hedging may offset the decline in the company's revenue from core business," said Nomura analyst Jim Wong.
Cathay reported a record net loss of HK$8.56 billion last year mainly due to fuel hedging losses of HK$7.6 billion.
"We expect Cathay's revenue to decline by 26 percent this year while the decrease in fuel surcharge on lower crude oil prices accounts for 10 percent of the income drop," said Wong. The carrier's revenue totalled HK$86.6 billion in 2008.
Tyler said Cathay did not plan to further cut capacity after making reductions earlier this year.
Turnover fell 22.4 percent in the first quarter ended on March 31.
The impact of a possible merger of Shanghai Airlines and China Eastern Airlines Corp on Cathay is expected to be minimal as they are not direct competitors, said Quam analyst Allen Wong Kin-sing.
On June 8, shares of Cathay sank 3.2 percent to HK$10.20.