Airport Authority announces interim results
The Airport Authority Hong Kong announced its unaudited interim financial results for the six months ended September 30, 2008. Revenue and profit attributable to equity shareholder increased 7.9% and 19.5% from the corresponding period in 2007, to US$580.76 million and US$174.1 million, respectively.
Hong Kong International Airport (HKIA) recorded moderate year-on-year traffic growth for the first half of the fiscal year. Total passenger throughput rose 0.7% to 24.6 million; cargo volume grew 0.7% to 1.89 million metric tons and air traffic movements also increased 1.7% to 151,500.
Chief Executive Officer of the Airport Authority Hong Kong Stanley Hui said HKIA registered strong growth in traffic volumes during the first four months of the period under review. “The growth trend reversed in August when the global financial crisis started. A good part of the interim results therefore did not reflect the impact of the recent global economic downturn,” he said.
“The economic turmoil is taking a heavy toll across a range of sectors, including the aviation industry. Business and leisure travel, particularly the premium markets, continue to shrink. As the current economic environment is unlikely to improve soon, we expect traffic volumes at the airport to decline further,” added Mr. Hui.
The Airport Authority is making every effort to control expenditures and increase cost effectiveness in anticipation of continued global economic turmoil.
Despite the difficult operating and market environment, Mr. Hui said the Airport Authority is confident in the long-term growth of the aviation industry. “We also remain firmly committed to completing a number of improvement and growth projects that aim at enhancing the long-term competitiveness of the airport,” he said.
In July 2008, the Airport Authority appointed a consultant to draw up the Hong Kong International Airport Master Plan 2030, a 20-year blueprint of the airport’s development. The Master Plan 2030 study, which is expected to be completed within 2009, will assess the operational requirements and constraints of HKIA.
“A key part of our long-term planning is to assess the feasibility of building a third runway at HKIA. A third runway will have to be considered if we are to maintain Hong Kong’s economic growth and competitiveness in the long run,” explained Mr. Hui.
The US$576.92 million terminal and airfield enhancement program, which began in 2006, is making satisfactory progress. Projects under way include the reconfiguration of the North and South Departure Immigration halls in Terminal 1; expansion of the East Hall transfer area; consolidation of the two Arrivals Immigration halls; and the construction of the new North Satellite Concourse. They are scheduled for completion before 2011.
A number of other enhancement initiatives are completed or well under way. As part of an ongoing commitment to enhance passenger flow, 42 self check-in kiosks came into service earlier this year. By the end of 2009, a permanent SkyPier ferry terminal will commence operations to strengthen the connectivity between HKIA and the Pearl River Delta.
Hong Kong also continues to attract airlines starting new services to HKIA, which together with new services to new destinations or increasing frequencies launched by Hong Kong-based airlines are helping HKIA maintain its role as a major regional aviation hub. By the end of September, the total number of airlines operating at HKIA increased to 88, while the number of destinations increased to 154.
Airline makes changes due to global crisis
On November 28, Cathay Pacific Airways announced a series of new measures that will help the airline deal with a serious downturn in business as a result of the global financial crisis. The measures are: cutting back on planned passenger capacity growth in 2009; offering cabin crew and cockpit crew the opportunity to take voluntary unpaid leave; parking two Cathay Pacific freighters; and requesting a deferral on the construction of the Cathay Pacific Cargo Terminal.
The airline is paring back its projection of 6-7% growth in capacity in 2009 to less than 1% to reflect the anticipated decline in demand. Services on some routes will be adjusted accordingly though the airline is clear that it plans to keep its network integrity intact and not cut any destinations. The new capacity figure takes into account the airline’s previously announced decision to remove five Boeing 777-200 aircraft from its fleet and also covers delays in the deliveries of new aircraft as a result of the recent strike at the Boeing factory in Seattle.
With the reduction in planned passenger capacity growth, the airline will offer a voluntary unpaid leave program for its cabin crew and cockpit crew. The 2009 program for cabin crew will come into effect on January 1 and will offer periods ranging from two weeks to a maximum of 12 months. The program will apply to all ranks of Cathay Pacific’s 7,000 cabin crew based in Hong Kong. Unpaid leave also is being offered to all of the airline’s pilots on a voluntary basis. The airline will ensure it has sufficient crew for operational needs at all times.
The financial crisis is having a particularly severe impact on Cathay Pacific’s airfreight business as several of the world’s major economies head into recession. In light of this, the airline will park two Boeing 747-400BCF freighters at Victorville, Calif., for a year starting January 2009. Regionally there will be no significant changes to freighter schedules, though there will be some frequency reductions to Australia, North America and Europe. The airline will receive four new Boeing 747-400 Extended Range Freighters in 2009 though the delivery of its new Boeing 747-8Fs will now begin in 2010.
The airline has submitted a request to defer construction of the new Cathay Pacific Cargo Terminal at Hong Kong International Airport by up to two years in a move to keep capacity expansion in line with market growth, and to reduce its capital expenditure in 2009 and 2010. Discussions are taking place with the Airport Authority and no further details can be given until these are concluded. Preliminary work has begun already on the US$615.38 million facility, which was originally scheduled to begin operation in the second half of 2011. Despite the requested deferral, Cathay Pacific remains committed to building the terminal and to further developing Hong Kong’s position as a leading international airfreight hub.
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