Cathy Pacific

The Cathay Pacific Airways group's loss attributable to shareholders for the period was HK$175 million which compares to a profit of HK$1,068 million for the equivalent period in 1997.

The environment in which Cathay Pacific Airways is currently operating continues to be extremely difficult. Turnover dropped by 16.1% on the equivalent period in 1997 to HK$12,991 million whilst capacity, measured by available tonne kilometres (ATKs), rose by 2.6%. The economic downturn has adversely affected both traffic and yields. The number of passengers carried reduced by 4.7%, which resulted in a drop in the revenue load factor by 4.4 percentage points. The overall passenger yield, which has been adversely affected by the devaluation of a number of currencies in which the airline generates significant revenue, fell by 16.9%. Cargo also showed a slight downturn as currency rates and low yields have worked against revenue growth in the Hong Kong, Europe and North America markets. However, as a result of effective cost control, cost per ATK reduced by 11.6% to HK$2.36 which helped in part to offset the revenue shortfall.

Hong Kong International Airport began operating on 6th July and more than 3,000 staff will eventually relocate to Cathay Pacific City at the new airport. Although considerable difficulties were encountered in the first weeks of opening, operations on the passenger side have now settled down.

In the first half-year, the weak travel market resulted in the cancellation of one of the daily Osaka services and the consolidation of services to Penang and Jakarta. However, demand for long-haul flights remains strong, and London, Los Angeles and Sydney are now served on a double-daily basis. A new twice-weekly A340-300 service to Istanbul will be launched in August, and a daily service to San Francisco will be resumed in December.

In April, Cathay Pacific Airways completed the refurbishment of its Boeing 747-300 fleet with new galleys, overhead bins, personal televisions in every seat, and the seat pitch in business class and economy class improved to 45 inches and 32 inches respectively. By the end of August, five Airbus Industrie A340-300s and two B777-300s will have joined the fleet; five B747-200 aircraft have been withdrawn from service and a further two will be withdrawn before the end of the year.

Hong Kong Aircraft Engineering Company reported a profit attributable to shareholders for the first half of 1998 of HK$140 million, a decrease of 21.8% from that for the same period in 1997. Revenues declined slightly as the volume of air traffic at Kai Tak reduced, and