Cathay Pacific revenue continues to fall as parking aircraft now seen as best remaining option.

Victoria
By Victoria April 23, 2012 16:28

Cathay Pacific revenue continues to fall as parking aircraft now seen as best remaining option.

Cathay Pacific Airways has warned that it may have to park aircraft because of weakening demand and rising fuel costs.
Hong Kong-based Cathay has confirmed that revenue has been falling short of target and most importantly, failing to keep pace with capacity growth.
Cathay confirmed that business conditions have worsened over the last month with passenger yields continuing to fall in economy class products, while at the same time it has also seen signs of weakness in first and business-class cabins, which together make-up the key driver for the airline.
All the while the cargo business remains flat. “Fuel prices remain at crippling highs and our cargo business still shows no sign of any sustained pick-up,” Cathay Pacific Chief Executive John Slosar said in a newsletter for the airline’s employees, published on Friday. “The recent turmoil in the euro zone reinforces the fact that the world is still balancing on a knife edge,” Slosar said.
Last month, the airline reported a 61% decline in net profit for 2011 due to rising fuel costs as well as softer demand for its freight services, and expects continued weakness for its cargo operations in 2012. For last year, Cathay Pacific’s fuel costs rose 38% to HK$38.9 billion from HK$28.28 billion in 2010.
We have been worrying about the fate of Cathay for quite some time now with them being squeezed by SIA, BA, Emirates and just about every other major on all routes. The problem for Cathay is that its model on the main is based on being the old colonial umbilical cord between the UK and Hong Kong but business travel between the two has collapsed again of late as the financial sector concentrates on cutting costs. Cathay cannot avoid the fact that it needs to look closer to home for route development and it may yet transpire that more services to Japan could be required. Of course then this puts the airline right up against Jetstar and the myriad of other cut throat low-cost carriers emerging in the region including in Hong King of course. Where does this leave Cathay? I fear that this wonderful airline is in the midst of being squeezed out of the market for good unless it can ditch 747s and such for smaller economical 787 types fast. Even then this may be a forlorn hope.

Victoria
By Victoria April 23, 2012 16:28
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