Annual Report 2014
Aviation

Advancing World-Class Service

The Aviation Division recorded an attributable profit of HK$1,822 million in 2014, compared to a profit of HK$1,627 million in 2013. The Cathay Pacific group contributed a profit of HK$1,418 million, an increase of 20% compared with 2013. The first half of 2014 was affected by high fuel prices, reduced passenger yield and continued weakness and over-capacity in the air cargo market. For the full year, passenger demand was reasonably firm, with high demand during the peak summer and Christmas periods. After a prolonged period of weakness, cargo demand started to improve in the summer of 2014 and was strong in the fourth quarter. The business benefited from lower fuel prices in the final three months of the year, but this was partially offset by fuel hedging losses.   

The HAECO group's profit attributable to shareholders in 2014 was HK$430 million, a decrease of 8% compared with 2013. The group did more airframe work than in the prior year, principally due to the acquisition of TIMCO Aviation Services, Inc. (now known, with its intermediate holding company, as HAECO Americas) in February 2014. HAECO Americas recorded a loss in 2014 due to the costs of reducing the size of a seat manufacturing facility and the financing costs associated with the acquisition. Demand for the group's line services was stable. The group overhauled fewer engines compared with 2013, mainly due to the retirement of older aircraft types.

2014 Movement in Underlying Profit
Cathay Pacific's results benefited from firm passenger demand during the year and improved cargo demand in the second half of the year. Lower fuel prices in the fourth quarter were partially offset by fuel hedging losses.
Air China recorded lower profits, principally due to a difficult operating environment and substantial foreign exchange losses in the first half of the year.
HAECO Hong Kong's results benefited from cost savings.
HAESL overhauled fewer engines due to the retirement of older engine types.
TEXL performed more engine overhaul work.
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2014 Performance Highlights
Passenger Revenue
+5%
Cargo Revenue
+7%
Fuel Consumption
+6%
Cost per ATK
-2%