Cathay Pacific Posts Record Annual Profit for 2000

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Results                                     2000        1999        Change

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Turnover                HK$ million       34,523      28,702        +20.3%

Attributable profit     HK$ million        5,005       2,180       +129.6%

Earnings per share      HK¢                148.4        64.4       +130.4%

Dividend per share      HK¢                 65.0        30.0       +116.7%

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Cathay Pacific Airways produced a record profit attributable to shareholders of HK$5,005 million in 2000 compared with a profit of HK$2,180 million in 1999. Turnover rose 20.3% to HK$34,523 million and operating profit increased 88.2% to HK$5,289 million. The directors have recommended a final dividend of HK¢45 a share, 66.7% higher than in 1999.

The record result was due to the strengthening economies across the region and the resulting increase in demand for both passenger and cargo services. The 11.86 million passengers and the 769,075 tonnes of cargo carried in the year were both new records. Load factors were strong, however yields remained below the levels seen before the Asian economic crisis.

Cargo had another outstanding year, setting a new record turnover of HK$10,136 million, 20.8% higher than in 1999. Cargo accounted for 29.4% of total turnover, up from 29.2% the year before. Demand for air cargo was helped by the strong growth in Asian exports.

While revenue increased significantly, unit costs were contained despite the higher cost of fuel which represented 19.7% of the airline's operating expenses, compared to 13.8% in 1999. Excluding the impact of a higher fuel price, the company's unit cost per available tonne kilometre fell by 4.1%.

Cathay Pacific Chairman James Hughes-Hallett said: "This excellent result is due to the strength of our regional economies and the company's success in improving productivity over the past five years. If we had not reduced our cost base over this period, we would have struggled to break even in 2000."

In recognition of the hard work put in by staff during 2000, Cathay Pacific announced eligible employees would receive a profit share payment for the year of at least six weeks' salary depending on their salary level. This includes the advance profit share of three weeks' salary paid last August.

Despite some concerns over the slowing of the world economy, Cathay Pacific remains optimistic about both the long-term growth potential of the business and the strength of Hong Kong as Asia's leading aviation hub. The airline remains committed to its growth plans and is adding 11 aircraft this year, increasing its operating fleet to 78 aircraft by the end of 2001.

Cathay Pacific is also committed to adding new destinations and strengthening its regional network. Last month the airline announced it would commence passenger services to India's capital Delhi, on 26 March. A number of other new destinations are also being considered.

Adding new aircraft and new destinations requires additional staff. During 2000 Cathay Pacific recruited over 1,100 staff including over 600 cabin crew, 200 pilots and 300 ground staff. The majority of these are based in Hong Kong. The airline will recruit further staff during 2001.

In addition, Cathay Pacific is committed to further enhancing its product to ensure passengers have the very best travel experience both on the ground and in the air. The airline is in the process of introducing its new First Class cabin on its fleet of Airbus aircraft and has become the world's first airline to announce the introduction of inflight email and Intranet across its entire fleet.

A major focus is in the area of e-Business. Cathay Pacific is investing in a range of e-Business initiatives over the next three years to enhance customer convenience and increase efficiency. The initiatives cover over 30 projects, including further enhancements to its flagship corporate websites, a new online travel exchange and e-Marketplace.

Mr Hughes-Hallett said: "Cathay Pacific had a great year in 2000 and is in good shape. There is no doubt that 2001 will be a challenging year, however we remain very optimistic about the future of Hong Kong and its aviation industry. While watching economic developments carefully, we will continue to grow the airline and deliver our trademark Service Straight From the Heart."