Cathay Pacific Airways Limited Annual Report 2019
A N N U A L R E P O R T XXXXXXXXXX
Cathay Pacific Airways Limited
Stock Code: 293
Management Discussion and Analysis
4 Financial and Operational Highlights
6 Chairman’s Statement
9 Review of Operations
26 Financial Review
33 Sustainable Development Review
Corporate Governance
36 Directors and Officers
38 Directors’ Report
45 Corporate Governance Report
Financial Statements
63 Independent Auditor’s Report
69 Consolidated Statement of Profit or
Loss and Other Comprehensive Income
70 Consolidated Statement of
Financial Position
71 Consolidated Statement of
Cash Flows
72 Consolidated Statement of
Changes in Equity
73 Notes to the Financial Statements
121 Principal Subsidiaries and
Associates
123 Principal Accounting Policies
138 Statistics
143 Glossary
144 Corporate and Shareholder Information
144 Disclaime
C O N T E N T S
A Chinese translation of this Annual Report is available
upon request from the Company’s Registrars.
本年報的中文譯本於本公司的股份登記處備索。
Cathay Pacific Airways Limited (“Cathay Pacific”),
with its subsidiaries Hong Kong Dragon Airlines Limited
(“Cathay Dragon”), Hong Kong Express Airways Limited
(“HK Express”) and AHK Air Hong Kong Limited
(“Air Hong Kong”), operated 236 aircraft at the end of 2019,
directly connecting Hong Kong to 119 destinations in
35 countries worldwide (255 and 54 respectively with
codeshare agreements), including 26 destinations in
Mainland China. The Cathay Pacific Group is the world’s
eighth-largest ca
ier of international passengers, and the
third-largest ca
ier of international air cargo.
Cathay Pacific was founded in Hong Kong in 1946. It has
een deeply committed to its home base over the past
seven decades and remains so, making substantial
investments to develop Hong Kong as one of the world’s
leading international aviation centres.
Cathay Pacific itself operated 155 passenger and cargo
aircraft at 31st December 2019. The Group’s other
investments include its catering, ground-handling and
cargo terminal companies, and corporate headquarters at
Hong Kong International Airport.
Hong Kong
Cathay Dragon, a regional full-service airline registered and
ased in Hong Kong, is a wholly owned subsidiary of Cathay
Pacific operating 48 aircraft at 31st December 2019.
HK Express, a low-cost airline based in Hong Kong offering
scheduled services within Asia, is a wholly owned subsidiary
of Cathay Pacific operating 24 aircraft at 31st December
2019. Air Hong Kong, an express all-cargo ca
ier offering
scheduled services in Asia, is a wholly owned subsidiary of
Cathay Pacific operating nine aircraft at 31st December
2019. Cathay Pacific owns 18.13% of Air China Limited
(“Air China”), the national flag ca
ier and a leading provider
of passenger, cargo and other airline-related services in
Mainland China. The Group continues to invest heavily in its
home city. At 31st December 2019 it had 70 new aircraft due
for delivery up to 2024.
At 31st December 2019, Cathay Pacific and its subsidiaries
employed more than 34,200 people worldwide, of whom
around 28,200 are employed in Hong Kong. Shares of Cathay
Pacific are listed on The Stock Exchange of Hong Kong
Limited, as are the shares of its substantial shareholders Swire
Pacific Limited (“Swire Pacific”) and Air China.
Cathay Pacific is a founding member of the oneworld global
alliance, whose combined network serves more than 1,000
destinations worldwide. Cathay Dragon is an affiliate member
of oneworld.
Cathay Pacific
Cathay Pacific Freighte
Cathay Dragon
HK Express
Air Hong Kong
Cathay Pacific Airways Limited4
G R O U P F I N A N C I A L S TAT I S T I C S
XXXXXXXXXXChange
Results
Revenue HK$ million 106,973 111, XXXXXXXXXX%
Profit attributable to the shareholders of Cathay Pacific HK$ million 1,691 2, XXXXXXXXXX%
Earnings per share HK cents XXXXXXXXXX%
Dividend per share HK$ XXXXXXXXXX%
Profit margin % XXXXXXXXXX%pt
Financial position*
Funds attributable to the shareholders of Cathay Pacific* HK$ million 62,773 63, XXXXXXXXXX%
Net bo
owings* HK$ million 82,396 58, XXXXXXXXXX%
Shareholders’ funds per share* HK$ XXXXXXXXXX%
Net debt/equity ratio* Times XXXXXXXXXXtimes
O P E R AT I N G S TAT I S T I C S – C AT H A Y PA C I F I C A N D C AT H A Y D R A G O N
XXXXXXXXXXChange
Available tonne kilometres (“ATK”) Million 33,077 32, XXXXXXXXXX%
Available seat kilometres (“ASK”) Million 163,244 155, XXXXXXXXXX%
Available cargo tonne kilometres (“AFTK”)** Million 17,558 17, XXXXXXXXXX%
Revenue tonne kilometres (“RTK”) Million 24,090 24, XXXXXXXXXX%
Passenger revenue per ASK HK cents XXXXXXXXXX%
Revenue passenger kilometres (“RPK”) Million 134,397 130, XXXXXXXXXX%
Revenue passengers ca
ied ‘000 35,233 35, XXXXXXXXXX%
Passenger load factor % XXXXXXXXXX%pt
Passenger yield HK cents XXXXXXXXXX%
Cargo revenue per AFTK** HK$ XXXXXXXXXX%
Cargo revenue tonne kilometres (“RFTK”)** Million 11,311 12, XXXXXXXXXX%
Cargo ca
ied** ‘000 tonnes 2,022 2, XXXXXXXXXX%
Cargo load factor** % XXXXXXXXXX%pt
Cargo yield** HK$ XXXXXXXXXX%
Cost per ATK (with fuel) HK$ XXXXXXXXXX%
Fuel consumption per million RTK Ba
els 1,867 1, XXXXXXXXXX%
Fuel consumption per million ATK Ba
els 1,360 1, XXXXXXXXXX%
Cost per ATK (without fuel) HK$ XXXXXXXXXX%
Underlying***cost per ATK (without fuel) HK$ XXXXXXXXXX%
ATK per HK$’000 staff cost Unit 1,879 1, XXXXXXXXXX%
ATK per staff ‘000 1,256 1, XXXXXXXXXX%
Aircraft utilisation Hours per day XXXXXXXXXX%
On-time performance % XXXXXXXXXX%pt
Average age of fleet Years XXXXXXXXXXyears
GHG emissions Million tonnes of CO2e XXXXXXXXXX –
GHG emissions per ATK Grammes of CO2e XXXXXXXXXX%
Lost time injury rate Number of injuries per 100
full-time equivalent employees
XXXXXXXXXX%
* Shareholders’ funds, net bo
owings and net debt/equity ratio at 31st December 2019 are a
ived at after taking account of the effect of HKFRS 16.
Disregarding the effect of adopting HKFRS 16, the net debt/equity ratio increased from 0.92 times to 0.96 times. Further details can be found in
accounting policy 1.
** Including mail. Mail is no longer refe
ed to separately but mail services continue to be accounted for under cargo services.
*** Underlying costs exclude exceptional items, non-recu
ing item for 2019 and 2018, and are adjusted for the effect of foreign cu
ency movements, as
well as the adoption of HKFRS 16 for the year ended 31st December 2019.
F I N A N C I A L A N D
O P E R A T I O N A L H I G H L I G H T S
5Annual Report 2019
F L E E T
H K E X P R E S S
C AT H A Y PA C I F I C / C AT H A Y D R A G O N
2020 Target –
3 Ai
us A XXXXXXXXXX
4 Ai
us A350-900
6 Ai
us A321-200neo
2019 Took delivery –
4 Ai
us A XXXXXXXXXX
2 Ai
us A350-900
3 Boeing XXXXXXXXXX
O P E R AT I N G H I G H L I G H T S
C U S T O M E R P R O P O S I T I O NN E T W O R K
XXXXXXXXXX2019
Cathay Pacific Cathay Dragon
Average 2019:
76.3%
Average 2018:
72.7%
O N -T I M E P E R F O R M A N C E
2019
Seattle Komatsu
Niigata
Average 2019*:
90.4%
2020 Target –
4 Ai
us A320-200neo
4x more
Inflight
Entertainment
Hong Kong
5Annual Report 2019
* Period from 20th July 2019 to 31st December 2019
New food
and beverage
offerings
New
products for
customers
7 destinations
unique to the Group
Cathay Pacific Cathay Dragon
Cathay Pacific Airways Limited6
O V E R V I E W
2019 was a tu
ulent year for the Cathay Pacific Group. With
our three-year transformation programme starting to bear
fruit we delivered a positive performance in the first half of
2019 notwithstanding a difficult environment
ought about
y geopolitical and trade tensions. However, with social
unrest in Hong Kong intensifying over the second half of
the year and mounting US-China trade tensions, we
experienced a sharp drop in both inbound and outbound
passenger traffic. We were faced with an incredibly
challenging environment to operate as the Hong Kong
economy slipped into recession. As a result, our second-
half results – traditionally stronger compared to first-half
esults – fell well below what we would have hoped for.
The Cathay Pacific Group reported an attributable profit of
HK$1,691 million for 2019. This compares with a HK$2,345
million profit for 2018. The earnings per share was HK43.0
cents in 2019 compared to an earnings per share of HK59.6
cents in 2018. The Cathay Pacific Group reported an
attributable profit of HK$344 million in the second half of
2019, compared to an attributable profit of HK$1,347 million
in the first half of 2019 and an attributable profit of
HK$2,608 million in the second half of 2018. Cathay Pacific
and Cathay Dragon reported an attributable loss of HK$434
million in the second half of 2019, compared to an
attributable profit of HK$675 million in the first half of 2019
and an attributable profit of HK$1,253 million in the second
half of 2018.
Overall, passenger and cargo yields were under intense
pressure in 2019 and both were below those seen in 2018.
Events in Hong Kong in the second half of the year
significantly reduced load factors, forward bookings and
the number of passengers we ca
ied. Inbound traffic was
hit hard, particularly on short-haul and Mainland China
outes, while outbound traffic also decreased. Demand for
premium travel was weak and we became increasingly
eliant on lower-yielding transit traffic. We ca
ied 0.7%
fewer passengers in 2019 than in 2018.
C H A I R M A N ’ S S T A T E M E N T
Cargo demand was depressed all year as a result of US-
China trade tensions and was noticeably below that of 2018.
However, it did pick up later in 2019 during the traditional
high season, reflecting new consumer product, specialist
airfreight shipments and