Citing excerpts from the Cathay Pacific Airways Limited Announces 2023 Annual Results, Ronald Lam Chief Executive Officer stated that “We are ready to unleash the potential and innovation of our next exciting phase of development – Cathay is back!”
Rebuilding from the pandemic their primary objective in 2023 was to reintroduce more flights and destinations for their customers and for Hong Kong. They are pleased to have achieved their target of 70% of their pre-pandemic passenger flights, covering around 80 destinations by the end of 2023.
The significant pent-up demand for travel following three years of Covid-19 pandemic disruptions created a unique environment, in which there was a global imbalance between supply and demand that drove up yields. They expect this imbalance to diminish and yields to continue to normalise throughout 2024 as airlines around the world continue to add capacity. However, there will continue to be an impact from inflationary pressure along the entire aviation supply chain, which has persisted since the pandemic.
The global aviation industry continues to face rebuilding challenges and they have been similarly affected. At times this has hindered their ability to consistently deliver the highest service levels. Rest assured, they remain committed to mitigating these challenges, continuously improving their operations and meeting the expectations of their discerning customers.
Investing into the future
In 2023 they commenced a strategic investment programme across various aspects of their business, focusing on expanding their fleet, enhancing customer experience and recognising and rewarding their people. In terms of fleet, they announced an order of 32 additional Airbus A321neo and A320neo aircraft, and secured the right to acquire 32 more aircraft, complementing Their existing order of 32 A321neos. They also ordered six Airbus A350F freighters and secured the right to acquire up to 20 more of these aircraft in the future. In total, this brings their new aircraft on order to more than 70, with the right to acquire an additional 52 aircraft.
They are also exploring options for a new mid-size widebody aircraft. Their fleet investments not only strengthen Cathay, but also contribute to the growth and success of the Hong Kong international aviation hub. They are focused on enhancing their customer experience at every touch point. In 2023, they opened nearly all of their airport lounges, providing a comfortable and inviting space for their valued passengers. Furthermore, their first off-airport lounge at the Shekou Cruise Home Port in Shenzhen exemplifies their commitment to offer customers a seamless intermodal travel experience within the Guangdong-Hong Kong-Macao Greater Bay Area, expanding their reach and accessibility to customers.
In addition to airport lounge enhancements, they also prioritised inflight dining and entertainment. Collaborating with popular Hong Kong dining brands, they have developed special menus that showcase the culinary excellence of their home city. Moreover, their inflight entertainment experience was acknowledged at the Skytrax World Airline Awards, where they they were honoured with the prestigious World’s Best Inflight Entertainment Award for 2023.
This recognition motivates us to further enhance their entertainment offerings for their customers’ enjoyment. Recognising their people for their support and commitment has always been an important part of Cathay’s culture. They provided a special appreciation reward of up to six weeks’ eligible pay that was well received by their people and introduced a new profit-sharing scheme for 2023 equivalent to 7.2 weeks of eligible pay.
Business performance of Cathay
Cathay Pacific’s passenger revenue increased by 308.8% to HK$55,951 million compared with 2022. Available seat kilometres (ASKs) increased by 326.8%, while traffic, measured in revenue passenger kilometres (RPKs) increased by 396.8%. They carried a total of 18.0 million passengers in 2023, an average of 49,300 per day, which was 541.4% more than in 2022. Load factor was 85.7% compared with 73.6% in 2022, and yield decreased by 17.7% to HK76.3 cents.
Outlook
They are committed to continuing their rebuild journey in 2024. They have seen that the magnitude of the challenge that the aviation industry faces is truly significant. These challenges include but are not limited to recruitment, training and supply chain shortages. They are navigating similar challenges and are working diligently to mitigate their effects on their operations. In terms of their travel business, comprising Cathay Pacific and HK Express, they will reach 80% of their prepandemic passenger flights within the second quarter of 2024. They are now working towards reaching 100% within the first quarter of 2025. They acknowledge this would be up to three months later than their previous projections; however, they have learned from their recent experiences and their focus continues to be rebuilding in a measured and responsible manner as they look ahead to the exciting opportunities presented by the upcoming Three-Runway System at Hong Kong International Airport.
They are excited to be bringing their customers new cabin products in each of the coming three years. In 2024, they are launching an all-new Business class experience – Aria Suite – and Premium Economy product as part of a redesign of their long-haul Boeing 777-300ER cabins. In 2025, this will be followed by a new world-leading First class experience onboard their Boeing 777-9 aircraft. And in 2026, a new regional product on the Airbus A330 fleet will be introduced featuring flat beds in Business class.
They are committed to continuously enhancing their customer experience, including in their lounges, dining, inflight entertainment and their service delivery over the coming years. In terms of their cargo business, they anticipate continued strong demand from e-commerce in their home market of Hong Kong and the wider Greater Bay Area. However, they expect trade flow directional imbalances to persist, impacting overall load factors. Moreover, as the air cargo industry continues to normalise, yields will decrease in 2024, but are expected to remain above 2019 levels. Their recruitment and training activities will continue in earnest as they explore all options available to us. In 2024, they plan to expand their workforce by around 20% or 5,000 people compared with 2023. Furthermore, they are significantly increasing their training activities in 2024, more than doubling the levels seen in 2023.