Cathay Pacific to Boost Capacity 11% Next Year on Global Travel Pickup

Cathay Pacific Airways Ltd., the Hong Kong carrier expecting a record annual profit, will increase passenger capacity 11 percent next year as the economic pickup stokes demand for premium-class travel.

“It’s certainly very strong at the moment,” Chief Executive Officer Tony Tyler said in an interview in the city today. “That’s giving us a good feeling and, of course, great results.”

The airline is due to receive nine new widebody passenger aircraft next year as rising wages in China and a rebound in the global economy spurs demand for business and leisure flights. Asia-Pacific travel growth will likely continue to outpace global demand next year, said Andrew Herdman, director general at the Association of Asia Pacific Airlines.

“I’m optimistic we’ll see continued growth into 2011,” Herdman said in a Bloomberg TV interview in Kuala Lumpur. Airlines in the region “have got costs under control and they’re managing capacity carefully,” he said.

Hong Kong-based Cathay will boost cargo capacity by less than 10 percent next year after delays in the arrival of 10 on- order Boeing Co. 747-8 freighters, Tyler said. Operations at a freight venture with affiliate Air China Ltd. will begin next month or in January, he said.

Photographer: Thomas Lee/Bloomberg

Cathay Pacific Airways Chief Executive Officer Tony Tyler speaking in an interview in Hong Kong. Close

Cathay Pacific Airways Chief Executive Officer Tony Tyler speaking in an interview in Hong Kong.

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Photographer: Thomas Lee/Bloomberg

Cathay Pacific Airways Chief Executive Officer Tony Tyler speaking in an interview in Hong Kong.

Cathay expects to receive six 747-8 freighters in the second half of 2011. It will also get three Airbus SAS A330-300 passenger planes next year and six Boeing 777-300ERs, according to its interim results statement. The airline ordered 30 Airbus A350s and six more 777-300ERs in August.

A380 Order?

Cathay may eventually consider adding the A380, the world’s largest passenger plane, Tyler said in a Bloomberg TV interview. The carrier has so far favored the 777s because of their greater cargo capacity.

“I wouldn’t rule out the airline becoming a customer at some point,” Tyler said about the superjumbos. Qantas Airways Ltd. is set to resume A380 flights on Nov. 27, more than three weeks after grounding the planes following a mid-air engine explosion.

IATA Head

The South China Morning Post reported that Tyler may leave Cathay to become the head of the International Air Transport Association. Tyler confirmed that the group was looking for a new CEO, while declining to comment on whether he was a candidate. Tyler is a board member for the association, which represents about 230 carriers worldwide.

Cathay gained 0.9 percent to close at HK$22.80 in Hong Kong. The stock has climbed 57 percent this year, the second- best performer among the 45 companies on the benchmark Hang Seng Index.

Photographer: Tomohiro Ohsumi/Bloomberg

Cathay Pacific Airways Ltd., the Hong Kong carrier expecting a record annual profit, will increase passenger capacity 11 percent next year as the economic pick-up stokes demand for premium-class travel. Close

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Photographer: Tomohiro Ohsumi/Bloomberg

Cathay Pacific Airways Ltd., the Hong Kong carrier expecting a record annual profit, will increase passenger capacity 11 percent next year as the economic pick-up stokes demand for premium-class travel.

The airline’s passenger numbers rose 11 percent in the first 10 months of the year, while freight volumes surged 20 percent. Full-year net income will likely more than double to at least HK$12.5 billion ($1.6 billion), according to a Nov. 15 statement. The airline has also gained from the sale of stakes in an air-cargo handler and a maintenance company this year.

Asia Pacific carriers flew 14 percent more international passengers in the first 10 months of the year than a year earlier, according to the Association of Asia Pacific Airlines. International air-cargo traffic rose 29 percent, the group said.

To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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