Cathay Pacific Cargo Traffic Slumps In December

January 13, 2009

Cathay Pacific Airways, Hong Kong's dominant airline, said its cargo and mail traffic dropped nearly a quarter in December on weak demand from China while passenger numbers fell slightly.

The carrier warned of a weak first quarter of 2009 and revised its cargo capacity to Europe and North America downwards.

"We saw a big decline in goods being carried from the Pearl and Yangtze River Deltas last month, causing a further slump in the Hong Kong market," Titus Diu, Cathay's general manager cargo sales and marketing, said in a statement.

Cathay earlier forecast in its third profit warning in six months that its 2008 profit would be disappointing on weak revenue, hit by the global financial crisis and losses on fuel hedging.

The carrier moved 115,232 tonnes of cargo and mail in December, down 24 percent from a year ago, it said in a statement.

For the whole of 2008, it carried 1.64 million tonnes of goods, down 1.6 percent from 2007 and against a 0.7 percent growth in capacity in 2008.

Cathay said passenger numbers for the company and its unit, Dragonair, fell 0.3 percent to a total of 2.11 million last month. The load factor dipped by 1.8 percentage points to 79 percent.

It carried about 25 million passengers in 2008, up 7.3 percent from a year earlier, and compared to a capacity increase of 12.7 percent last year.

Cathay recorded lower yields per ticket in December caused by the continued slump in premium traffic and weak Hong Kong route demand. It expected a similar situation for Chinese New Year.

"The numbers of passengers actually paying proper First and Business class fares is now very low, whatever the on-board loads may look like," said chief executive Tony Tyler in its monthly company magazine published on Tuesday.

"The only glimmer of good news right now is the fact that fuel prices have fallen so much, but the reason for that is the weak world economy, which is also the cause of our revenue problems," he added.

Cathay's shares closed down 2.6 percent on Tuesday. They have fallen nearly 2 percent this year, outperforming the benchmark Hang Seng Index's 5 percent drop, helped by lower fuel prices.

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