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Hong Kong`s Cathay expands as demand returns

International Desk |
Update: 2010-08-03 22:10:20
Hong Kong`s Cathay expands as demand returns

HONG KONG: Hong Kong`s Cathay Pacific on Wednesday announced plans to buy 30 new planes for almost eight billion US dollars, underlining the carrier`s expansion as it reported strong first-half profits.

In a statement to Hong Kong`s stock exchange, Cathay said the total catalogue price for the 30 Airbus A350-900s would be approximately 7.82 billion US dollars.

The planes, powered by new generation Rolls-Royce Trent XWB engines, will be delivered between 2016 and 2019 to form the backbone of the airline`s mid-size wide-body fleet for long haul flights.

"This is the largest single purchase the company has made, and, I dare say, the largest single investment made by any commercial company in Hong Kong in recent years," Cathay chairman Christopher Pratt told a press conference.

The carrier said it also intended to exercise existing purchase rights for six Boeing 777-300ER aircraft with a catalogue price of about 1.61 billion US dollars.

Tony Tyler, the company`s chief executive, said Cathay had no plans to buy the Airbus A380 superjumbo or Boeing 787 Dreamliner planes as the A350-900 was best suited to its services. "The others, certainly for the moment, are not under our consideration."

Cathay separately announced its net profit for the first half of 2010 had soared eight-fold to 6.84 billion Hong Kong dollars (880 million US) thanks to robust passenger and freight demand.

Pratt said the company expected financial results to stay strong in the second half of 2010, subject to further increases in fuel prices or any return to recessionary economic conditions.

The airline swung back to profit in 2009 after suffering a massive net loss of 8.6 billion Hong Kong dollars in 2008 on the back of huge fuel hedge losses and battered cargo and passenger services.

A collapse in business- and first-class travel was accompanied by a similar plunge in the carrier`s cargo business, as demand from the United States and Europe for products made in southern China`s factory belt disappeared.

Pratt said this year`s stellar performance was mainly due to a "substantial turnaround in operating profit".

"Our passenger and freighter schedules have been restored almost to their pre-downturn levels."

Cathay`s passenger business experienced a "marked improvement from the lows of 2009 with revenues returning to almost pre-financial crisis levels," he said, noting a particularly sharp increase in demand for business travel originating in Hong Kong.

Cargo revenue rose 63.1 percent to 11.84 billion Hong Kong dollars from the first half of 2009, while passenger revenue increased 25.7 per cent to 27.41 billion dollars over the same period.

Cathay would continue to strengthen its fleet by adding modern, fuel-efficient aircraft, Pratt said.

The airline is set to take delivery of 12 Boeing 777-300ER passenger aircraft between now and 2013, having added four planes of the same model to its fleet earlier this year.

Cathay has also added Milan and Moscow as its new passenger destinations this year.

Pratt said cargo business had been robust and that efficiency would be increased when Cathay takes delivery of 10 Boeing 747-8Fs next January.

Cathay`s shares ended 3.91 percent higher at 18.08 Hong Kong dollars (2.32 US), a two and a half year high.

BDST: 1933 HRS, August 04, 2010

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