CATHAY PACIFIC Airways produced a respectable rise in profits over the first half of the year, despite restrained growth and some pressure on costs. Hong Kong Aircraft Engineering (HAECO), the Hong Kong carrier's sister company within the Swire Group, saw profits dip again, however.
Financial analysts are relatively satisfied with Cathay's performance over the first six months, echoing comments by Cathay Pacific chairman Peter Sutch. "In general, the first six months has produced a good result," he says.
Net profits rose by 12.5%, to HK$1.1 billion ($143 million), despite what Sutch admits were difficult operating conditions. The recovery of the US dollar against the Japanese yen earlier this year helped to keep up the pressure on passenger yields, while a 20% increase in fuel costs also contributed to rising expenses. Cathay's first-half sales rose by 7%, to HK$15 billion. Cathay Pacific Cargo also struggled in an oversubscribed freight market, missing its targets on revenue growth and on load factors.
Freight revenue, nevertheless, grew by 4.8% over the first six months of the year and the cargo division promises an improved performance in the second half.
Elsewhere within the Swire Group, profits have continued to fall at HAECO. Net profits of HK$179 million are down by 6.5%, although increased line maintenance has pushed turnover up marginally, to HK$1.2 billion.
Although depressed world maintenance rates stiffened slightly over the half, HAECO warns that there is no sign yet, of a sustainable upturn and forecasts another slight dip in profits for the full year.
HAECO is already carrying initial start-up losses from Taikoo (Xiamen) Aircraft Engineering, the recently opened Chinese joint venture, and is now committed to the construction of a new three-bay hangar at Hong Kong's replacement airport at Chek Lap Kok.
HAECO's engine-overhaul business will be spun off from January 1997 into new joint venture, Hong Kong Aero Engine Services.
Source: Flight International
