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Cathay faces 'tremendous pressure' on yield amid stiffer competition

CATHAY Pacific suffered a 3

Cathay faces 'tremendous pressure' on yield amid stiffer competition

CATHAY Pacific suffered a 3

25 June 2019 - 19:00

CATHAY Pacific suffered a 3.9 per cent year-on-year decline in cargo tonnage in May to stand at 168,270 tonnes, with load factors falling 4.7 percentage points to 63.9 per cent.

Over the first five months of the year cargo tonnage dropped five per cent compared to the same period a year earlier.



'Our cargo business continued to be adversely affected by geopolitical tensions and resulting dampened market sentiment,' cargo and commercial director Ronald Lam was quoted as saying in a report by australianaviation.com.au.



'Despite positive capacity growth in May, cargo revenue saw negative growth over last year. Both volume and yield incurred decline year on year. We shall remain vigilant in order to best match our capacities to changes in market demand and trade flow.'



The decrease in freight volumes came as the airline warned of 'tremendous pressure' on passenger yields as competition was heating up and demand slowing for air travel.



'Whilst we have seen solid improvement in the first half driven by a good first quarter, our passenger revenue outlook for the coming few months has shown signs of slowdown,' Mr Lam said in the company's monthly operating statistics for May published on June 20.



'With declining travel demand in the market, especially to and from our long-haul destinations, overall yield has come under tremendous pressure.'



Passenger numbers for Cathay Pacific and regional wing Cathay Dragon combined increased by 4.7 per cent to 2.96 million in May.



Load factors, a measure of how full flights were, rose 0.9 percentage points to 82.9 per cent. Capacity, measured by available seat kilometres (ASK), was up 6.6 per cent in May.



The International Air Transport Association (IATA) in June downgraded its forecast for airline profitability for 2019, citing trade tensions, rising fuel prices and slumping cargo markets.



IATA expects airlines to reap US$28 billion in net profit in 2019, down from its earlier forecast of US$35.5 billion made in December 2018.


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