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Cathay fears fuel prices will weaken freight volumes
POSTED: 10:03 a.m. EDT, May 18,2007
Cathay Pacific Airways is warning that stiffer market competition and the high price of fuel will affect airfreight volumes in the short-term.
"We face increased competition in a number of markets and many shippers are switching from air freight to marine transport due to the high price of fuel," said Cathay chairman Christopher Pratt after the company's recent annual general meeting.
In March, Cathay and its wholly-owned subsidiary Dragonair combined transported 140,002 tonnes of cargo, a decline of two per cent over the same month a year ago.
"Cargo is a very cyclical business. Cathay will see limited negative impact in the long term," chief executive Philip Chen Nan-lok said in a report by The Standard newspaper in Hong Kong.
On the other hand, the company is forecasting stronger growth in passenger demand, which rose by 2.7 per cent year on year in March with both the airlines carrying a combined 1.87 million passengers.
In a bid to ward off the negative affects of future fuel price spikes, Cathay has arranged hedging for up to the 55 per cent level in the second quarter, up to 45 per cent for the second half of this year, and nine per cent next year. In addition, the airline has introduced cargo surcharges of HK$2.20 (US$0.28) per kilogram for short-haul flights and HK$4.40 per kg for long-haul flights, the report said. |
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