ATW Daily News

Cathay plans 747 retirements to combat fuel costs

Thursday May 29, 2008

Cathay Pacific Airways plans to phase out 23 747-400s beginning in 2013 in an effort to realize fuel savings of 22% per seat. COO John Slosar told Hong Kong media that the carrier is considering a variety of replacement aircraft and that "the A380 is also an option." In the interim, it will raise its fuel surcharge 37% from June 1 in an effort to negate 40%-50% of the increase in fuel prices. CEO Tony Tyler said fuel now accounts for 40% of CX's total operating costs, up 10 points from last year. "At current prices, it costs us $360,000 in fuel alone to fly a 747-400 to London and back," he said.

Merrill Lynch predicted that CX's net income will drop 55% to HK$3.15 billion in 2008, which would represent its worst financial performance since 2003. ML estimated that the surcharge increase will add HK$8 billion in revenue but that the annual fuel bill will increase by HK$20 billion if the price of jet fuel holds at $150 per barrel this year.

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