BEIJING Aug 14 Cathay Pacific Airways Ltd
, the world's largest international air cargo carrier,
is scaling back seating capacity on some long-haul routes to
offset declines in its air freight business and try to return to
Cathay, which competes in global markets with carriers such
as Singapore Airlines Ltd and Korean Air Lines Co Ltd
, retired three Boeing 747 jets in the first six
months this year and replaced them with two smaller but more
fuel efficient B777 planes, as the company squeezes more income
from its North American passenger routes, its biggest market.
Hong Kong's flagship airline was the only one of Asia's top
10 carriers to cut available seat kilometres - a measure of
passenger capacity - this year, down 4.8 percent in June from a
year earlier, according to Thomson Reuters data. Garuda
Indonesia Tbk led the gains with a jump of 16.5
percent year-on-year in April, the most recent month for which
the data was available.
Cathay also has been fine-tuning its seating arrangements
on U.S. flights to improve passenger yields, a gauge of
profitability, according to Geoffrey Cheng, an analyst at
securities brokerage BOCOM International.
"They pulled out the economy class and put back the premier
economy. They have fewer seats, but revenue from each seat is
higher," said Cheng.
Its first-half earnings report later on Wednesday is
expected to show a swing to profitability from a HK$935 million
($120.56 million) net loss for the same period last year,
according to analysts polled by Thomson Reuters. The loss was
its worst performance since the outbreak of Severe Acute
Respiratory Syndrome in 2003 curtailed air travel.
The company has been aggressively cutting capacity following
an 83 percent drop in its net income last year.
In June, Cathay told analyst it had revised its 2013
forecast for available tonne kilometres - a measure of both
passenger and cargo capacity - to a year-on-year decrease of 4.3
percent instead of an increase of 2.6 percent, largely because
of reduced freighter capacity. However, it maintained its
projection for a 1.5 percent contraction in available seat
North America passenger traffic dropped 12.5 percent during
the first half of the year, even as Cathay's passenger load
factor increased by 1.2 percentage points over a year earlier.
That is helping to offset a continuing drop in air freight
volume. Cathay's cargo traffic declined 1.8 percent for the
first six months of the year, following a 5.3 fall last year.
The airline, which is scaling back its cargo fleet, started
to retire its older B747 freighters in 2012, according to Eric
Lin, an analyst at UBS Investment Research in Hong Kong. In
March, Cathay canceled orders for eight B777 freighters.
Separately, the company will take delivery of
six more B777 passenger jets later this year.
($1 = 7.7556 Hong Kong dollars)
(Reporting by Fang Yan and Matthew Miller; Additional reporting
by Patturaja Murugaboopathy in Bangalore; Editing by Emily