Cathay Pacific is the de facto international flag carrier of Hong Kong, with its head office and main hub located at Hong Kong International Airport, although the airline's registered office is on the 33rd floor of One Pacific Place. The airline's operations including scheduled passenger and cargo services to 168 destinations in 42 countries worldwide, codeshares, and joint ventures, with a fleet of wide-body aircraft, consisting of Airbus A330, Airbus A340, Boeing 747 and Boeing 777 equipment. The airline also operates fifth freedom flights from Bangkok and Taipei, its focus cities. Its wholly owned subsidiary, Dragonair, operates to 44 destinations in the Asia-Pacific region from its Hong Kong base. In 2010, Cathay Pacific and Dragonair carried nearly 27 million passengers and over 1.8 million tonnes of cargo and mail.
The airline was founded on 24 September 1946 by American Roy C. Farrell and Australian Sydney H. de Kantzow, with each man putting up HK$1 to register the airline. The airline made the world's first non-stop transpolar flight flying over the North Pole in July 1998, and the same flight was the maiden flight to arrive at the new Hong Kong International Airport. The airline celebrated its 60th anniversary in 2006; and as of October 2009, its major shareholders are Swire Pacific and Air China. It is reciprocally one of the major shareholders of Air China. Cathay Pacific currently holds the title of the world's third largest airline, measured in terms of market capitalisation, according to the International Air Transport Association. In 2010, Cathay Pacific became the world's largest international cargo airline, along with main hub Hong Kong International Airport as the world's busiest airport in terms of cargo traffic.
Cathay Pacific is a founding member of the Oneworld alliance, with its subsidiary, Dragonair, as an affiliate member.
The airline was founded on 24 September 1946 by American Roy C. Farrell and Australian Sydney H. de Kantzow, with each man putting up HK$1 to register the airline. The airline made the world's first non-stop transpolar flight flying over the North Pole in July 1998, and the same flight was the maiden flight to arrive at the new Hong Kong International Airport. The airline celebrated its 60th anniversary in 2006; and as of October 2009, its major shareholders are Swire Pacific and Air China. It is reciprocally one of the major shareholders of Air China. Cathay Pacific currently holds the title of the world's third largest airline, measured in terms of market capitalisation, according to the International Air Transport Association. In 2010, Cathay Pacific became the world's largest international cargo airline, along with main hub Hong Kong International Airport as the world's busiest airport in terms of cargo traffic.
Cathay Pacific is a founding member of the Oneworld alliance, with its subsidiary, Dragonair, as an affiliate member.
History
1940s and 1950s: The early years
Niki, a DC-3 painted to imitate the appearance of the carrier's second aircraft, outside Cathay City
Cathay Pacific was founded in Hong Kong on 24 September 1946 by American Roy Farrell and Australian Sydney de Kantzow. Both men were ex-air force pilots who had flown the Hump, a route over the Himalayan mountains. Each man put up HK$1 to register the airline. Although initially based in Shanghai, the two men moved to Hong Kong where they formally began Cathay Pacific. They named it Cathay, the ancient name given to China, derived from "Khitan", and Pacific because Farrell speculated that they would one day fly across the Pacific (which happened in the 1970s). The Chinese name for the company "國泰" comes from a Chinese idiom meaning "Grand and Peaceful State".
According to legend, the airline's unique name was conceived by Farrell and some foreign correspondents at the bar of the Manila Hotel. On Cathay Pacific's maiden voyage, Farrell and de Kantzow flew from Hong Kong to Manila, and later on to Shanghai. They had a single Douglas DC-3, nicknamed Betsy. The airline initially flew routes between Hong Kong, Sydney, Manila, Singapore, Shanghai, and Canton, while scheduled service was limited to Bangkok, Manila, and Singapore only.
In 1948 Butterfield & Swire (now known as Swire Group) bought 45% of Cathay Pacific, with Australian National Airways taking 35% and Farrell and de Kantzow taking 10% each. The new company began operations on 1 July 1948 and was registered as Cathay Pacific (1948) Ltd on 18 October 1948. Swire later acquired 52% of Cathay Pacific and today the airline is still 45% owned by the Swire Group through Swire Pacific Limited.
1960s, 1970s, and 1980s: Expansion
The airline prospered in late 1950s and into the 1960s by buying its archrival, Hong Kong Airways, on 1 July 1959. Between 1962 and 1967, the airline recorded double digit growth on average every year and the world's first to operate international services to Fukuoka, Nagoya and Osaka in Japan. In 1964, it carried its one millionth passenger and acquired its first jet engine aircraft Convair 880 in 1964. In the 1970s, Cathay Pacific installed a computerised reservation system and flight simulators. In 1979, the airline acquired its first Boeing 747 and applied for traffic rights to begin flying to London in 1980, with the first flight on 16 July. Expansion continued into the 1980s, with nonstop service to Vancouver in 1983, with continuing service on to San Francisco in 1986 when an industry-wide boom encouraged route growth to many European and North American centres. On 15 May 1986, the airline went public and listed in the Main Board of the Hong Kong Stock Exchange.
1990s: Rebranding, renewal, and Oneworld
In January 1990, Cathay Pacific and its parent company, Swire Pacific, acquired a significant shareholding in Dragonair, and a 75% stake in cargo airline Air Hong Kong in 1994. During the early 1990s, the airline launched a programme to upgrade its passenger service. The green and white striped livery was replaced with the current "brushwing" livery. In 1994 the airline announced that it would establish its new corporate identity, with a 23 million Hong Kong dollar (RM 7.3 million) program to update its image. The fleet was expected to have the new logo within four years.
The airline began a US$9 billion fleet replacement program during the mid-1990s that gave it one of the youngest fleets in the world. In 1996, CITIC Pacific increased its holdings in Cathay Pacific from 10% to 25%, while the Swire Group holding was reduced to 44% as two other Chinese companies, CNAC and CTS, also bought substantial holdings.
On 1 July 1997, the administration of Hong Kong was transferred from the UK to the People's Republic of China. Most of the airline's aircraft were registered in Hong Kong with a registration beginning with "VR". Under the terms of an agreement within the Sino-British Joint Liaison Group (JLG), all registrations were changed by December 1997 to the prefix "B" used by the People's Republic of China and the Republic of China (Taiwan). Cathay Pacific aircraft formerly carried a painted UK Union Flag on the tail, but these were removed several years before the 1997 takeover.
On 21 May 1998, Cathay Pacific took the first delivery of the Boeing 777-300 at a ceremony in Everett. In 21 September 1998, Cathay Pacific, together with American Airlines, British Airways, Canadian Airlines, and Qantas, co-founded the Oneworld airline alliance. The airline was hurt by the Asian financial crisis of the late 1990s, but recorded a record HK$5 billion profit in 2000.
New Hong Kong airport and transpolar flights
On Monday, 6 July 1998, at 00:00 HKT, Kai Tak International Airport saw its last commercial departure in Cathay Pacific Flight 251 to London Heathrow Airport, after over 73 years of operation. The next day, Cathay Pacific Flight 889 from New York John F. Kennedy International Airport piloted by Captain Paul Horsting was the first arrival to the new Hong Kong International Airport at Chek Lap Kok west of Hong Kong. Also onboard was Captain Mike Lowes and First Officer Kelvin Ma. This flight was also the world's first nonstop transpolar flight from New York to Hong Kong. The flight, dubbed Polar One, takes about 16 hours between Hong Kong and New York, saving about three to four hours compared to the one stop flight via Vancouver. It is Cathay Pacific's longest nonstop flight, and one of the longest in the world at 8,055 mi (12,963 km).
2000s: Industrial troubles and acquisitions
The 2000s saw Cathay Pacific experience labour relations issues, and complete the acquisition of Dragonair. The airline operated the first commercial nonstop transpolar flight from Canada on 19 May 2000, with Cathay Pacific Flight 829 from Toronto to Hong Kong. The flight flew directly over Hudson Bay and passed within 50 nautical miles (93 km; 58 mi) of the North Pole, it took just 14 hours and 59 minutes and saved almost three hours from the normal route, which included a technical stop in Anchorage. It is Cathay Pacific's second longest nonstop flight with a distance of 7,809 mi (12,567 km). Compared to other airlines in Asia, Cathay Pacific was little affected from September 11 attacks, and increased its routes and fleet.
On 28 November 2002, the airline took delivery of its first Airbus A340-600 aircraft at a ceremony at the Airbus factory in Toulouse. Cathay Pacific was the launch customer in Asia for the A340-600 and the aircraft was the first of three leased from International Lease Finance Corporation (ILFC). On 1 December 2005, Cathay Pacific announced an order for 16 Boeing 777-300ER aircraft, four on lease from ILFC, to be delivered between September 2007 and July 2010, plus options on 20 more of the type, two of which were converted to orders on 1 June 2006. The airline also ordered 3 more A330-300 on the same day, with the delivery of the aircraft scheduled for 2008. On 7 August 2007, Cathay Pacific announced that it had placed an additional order for five more wide-body Boeing 777-300ER aircraft for a total price of about US$1.4 billion, increasing its commitment to a total of 23 of the aircraft type.
The 49ers – employment dispute
In 2001, the Hong Kong Aircrew Officers Association (HKAOA) launched a "work to rule" campaign to further its campaign for pay improvements and changes to roster scheduling practices. The action involved pilots refusing to work flights that were not scheduled on their roster. Although this alone did not cause extensive disruption, rostered pilots began to call in sick for their flights. Combined with the work to rule campaign, the airline was unable to cover all of its scheduled flights, and cancellations resulted. Cathay Pacific steadfastly refused to negotiate with the HKAOA under threat of industrial action.
On 9 July 2001, reportedly following a comprehensive review of the employment histories of all its pilots, the company fired 49 of its 1,500 pilots. This group became known colloquially as "the 49ers". Nearly half of the fired pilots were captains, representing five percent of the total pilot group. Of the 21 officers of the HKAOA, nine were fired, including four of the seven union negotiators.
Then-HKAOA president Captain Nigel Demery took the view that "the firing was pure intimidation, a union-bust straight up, designed to be random enough to put the fear in all pilots that they might be next, no reason given". The dismissals were challenged in a number of legal proceedings, but none were reinstated. The airline later offered the 49 pilots it terminated in 2001 the chance to reapply for pilot positions with its cargo division, guaranteeing such applicants first interviews, subject to passing psychometric testing. Nineteen former employees applied and twelve were offered jobs.
Current relations between the company and the HKAOA are cordial. The replacement of Captain Demery by Captain Murray Gardner was said to have had a lot to do with this change in relationship. Captain Gardner favoured a more diplomatic and conciliatory approach to dealing with management, and workplace relations between the two groups have been largely conciliatory since 2002. On 11 November 2009, 18 of the 49ers succeeded in the Hong Kong Court of First Instance concerning their joint claims for breach of contract, breach of the Employment Ordinance, and defamation.
Judge Anselmo Reyes ruled that the airline had contravened the Employment Ordinance by dismissing the pilots without a valid reason, adding that they had been sacked primarily because of union activities. He also held that remarks by then chief operating officer Philip Chen Nanlok and current chief executive Tony Tyler after the sackings were defamatory. The judge handed the pilots a victory in their long-running legal battle, with individual awards of HK$3.3 million for defamation together with a month's pay and HK$150,000 for the sackings.
On 24 December 2010, judges Frank Stock, Susan Kwan, and Johnson Lam of the Court of Appeal overturned the judgment of the lower court to the extent that the claim for wrongful termination of contract was dismissed. The finding that Cathay Pacific wrongly sacked the 18 pilots for their union activities was upheld. The court upheld the defamation claim, but reduced the damages for the defamatory comments made by Cathay Pacific management. The judges also modified the judgment awarding payment of legal costs to the pilots and instead said that they should now pay some of Cathay’s costs. The leader of the 49er Plaintiffs, Captain John Warham, launched a book titled "The 49ers – The True Story" on 25 March 2011.
The pilots were awarded leave on 26 October 2011 to take their case to the Court of Final Appeal. The matter was heard before Hon. Mr. Justices Bokhary, Chan, & Ribeiro who are all Permanent Judges of the Court of Final Appeal. The matters to be decided upon by the Court will concern wrongful termination of contract and the level of damages for defamation. The case was heard by the Court of Final Appeal on 27 August 2012.
On 26 September 2012, 11 years after they were sacked, the 49ers were finally judged to have won the 3 prime issues of their legal case: breach of contract, breach of the Employment Ordinance, and defamation. The Court of Final Appeal agreed with the Court of Appeal's methodology for reducing the defamation damages. However, it reinstated one month's salary for each of the 49ers.
Regarding breach of contract, the overall picture leading to dismissal and events immediately after will be analysed by the courts, not just the dismissal letter. Regarding the Employment Ordinance, an important aspect was that the judgment defined the scope of "union activities" and its protection for workers in Hong Kong. The Court concluded: "Accordingly, most (possibly all) union-sponsored action is potentially protected by s 21B(1)(b), but if the action is not carried out “at [an] appropriate time”, it is excluded from the provision." There was no challenge by Cathay Pacific to the Court of Appeal’s decision to uphold the {original} Judge’s conclusion that the statements made by Cathay Executives were defamatory of the plaintiffs.
John Warham, referring to the effect the fight has had on pilots' families, said: "In terms of human life, three people are dead because of what Cathay Pacific did to us. That's on their conscience, I hope they can live with that."
1940s and 1950s: The early years
Niki, a DC-3 painted to imitate the appearance of the carrier's second aircraft, outside Cathay City
Cathay Pacific was founded in Hong Kong on 24 September 1946 by American Roy Farrell and Australian Sydney de Kantzow. Both men were ex-air force pilots who had flown the Hump, a route over the Himalayan mountains. Each man put up HK$1 to register the airline. Although initially based in Shanghai, the two men moved to Hong Kong where they formally began Cathay Pacific. They named it Cathay, the ancient name given to China, derived from "Khitan", and Pacific because Farrell speculated that they would one day fly across the Pacific (which happened in the 1970s). The Chinese name for the company "國泰" comes from a Chinese idiom meaning "Grand and Peaceful State".
According to legend, the airline's unique name was conceived by Farrell and some foreign correspondents at the bar of the Manila Hotel. On Cathay Pacific's maiden voyage, Farrell and de Kantzow flew from Hong Kong to Manila, and later on to Shanghai. They had a single Douglas DC-3, nicknamed Betsy. The airline initially flew routes between Hong Kong, Sydney, Manila, Singapore, Shanghai, and Canton, while scheduled service was limited to Bangkok, Manila, and Singapore only.
In 1948 Butterfield & Swire (now known as Swire Group) bought 45% of Cathay Pacific, with Australian National Airways taking 35% and Farrell and de Kantzow taking 10% each. The new company began operations on 1 July 1948 and was registered as Cathay Pacific (1948) Ltd on 18 October 1948. Swire later acquired 52% of Cathay Pacific and today the airline is still 45% owned by the Swire Group through Swire Pacific Limited.
1960s, 1970s, and 1980s: Expansion
The airline prospered in late 1950s and into the 1960s by buying its archrival, Hong Kong Airways, on 1 July 1959. Between 1962 and 1967, the airline recorded double digit growth on average every year and the world's first to operate international services to Fukuoka, Nagoya and Osaka in Japan. In 1964, it carried its one millionth passenger and acquired its first jet engine aircraft Convair 880 in 1964. In the 1970s, Cathay Pacific installed a computerised reservation system and flight simulators. In 1979, the airline acquired its first Boeing 747 and applied for traffic rights to begin flying to London in 1980, with the first flight on 16 July. Expansion continued into the 1980s, with nonstop service to Vancouver in 1983, with continuing service on to San Francisco in 1986 when an industry-wide boom encouraged route growth to many European and North American centres. On 15 May 1986, the airline went public and listed in the Main Board of the Hong Kong Stock Exchange.
1990s: Rebranding, renewal, and Oneworld
In January 1990, Cathay Pacific and its parent company, Swire Pacific, acquired a significant shareholding in Dragonair, and a 75% stake in cargo airline Air Hong Kong in 1994. During the early 1990s, the airline launched a programme to upgrade its passenger service. The green and white striped livery was replaced with the current "brushwing" livery. In 1994 the airline announced that it would establish its new corporate identity, with a 23 million Hong Kong dollar (RM 7.3 million) program to update its image. The fleet was expected to have the new logo within four years.
The airline began a US$9 billion fleet replacement program during the mid-1990s that gave it one of the youngest fleets in the world. In 1996, CITIC Pacific increased its holdings in Cathay Pacific from 10% to 25%, while the Swire Group holding was reduced to 44% as two other Chinese companies, CNAC and CTS, also bought substantial holdings.
On 1 July 1997, the administration of Hong Kong was transferred from the UK to the People's Republic of China. Most of the airline's aircraft were registered in Hong Kong with a registration beginning with "VR". Under the terms of an agreement within the Sino-British Joint Liaison Group (JLG), all registrations were changed by December 1997 to the prefix "B" used by the People's Republic of China and the Republic of China (Taiwan). Cathay Pacific aircraft formerly carried a painted UK Union Flag on the tail, but these were removed several years before the 1997 takeover.
On 21 May 1998, Cathay Pacific took the first delivery of the Boeing 777-300 at a ceremony in Everett. In 21 September 1998, Cathay Pacific, together with American Airlines, British Airways, Canadian Airlines, and Qantas, co-founded the Oneworld airline alliance. The airline was hurt by the Asian financial crisis of the late 1990s, but recorded a record HK$5 billion profit in 2000.
New Hong Kong airport and transpolar flights
On Monday, 6 July 1998, at 00:00 HKT, Kai Tak International Airport saw its last commercial departure in Cathay Pacific Flight 251 to London Heathrow Airport, after over 73 years of operation. The next day, Cathay Pacific Flight 889 from New York John F. Kennedy International Airport piloted by Captain Paul Horsting was the first arrival to the new Hong Kong International Airport at Chek Lap Kok west of Hong Kong. Also onboard was Captain Mike Lowes and First Officer Kelvin Ma. This flight was also the world's first nonstop transpolar flight from New York to Hong Kong. The flight, dubbed Polar One, takes about 16 hours between Hong Kong and New York, saving about three to four hours compared to the one stop flight via Vancouver. It is Cathay Pacific's longest nonstop flight, and one of the longest in the world at 8,055 mi (12,963 km).
2000s: Industrial troubles and acquisitions
The 2000s saw Cathay Pacific experience labour relations issues, and complete the acquisition of Dragonair. The airline operated the first commercial nonstop transpolar flight from Canada on 19 May 2000, with Cathay Pacific Flight 829 from Toronto to Hong Kong. The flight flew directly over Hudson Bay and passed within 50 nautical miles (93 km; 58 mi) of the North Pole, it took just 14 hours and 59 minutes and saved almost three hours from the normal route, which included a technical stop in Anchorage. It is Cathay Pacific's second longest nonstop flight with a distance of 7,809 mi (12,567 km). Compared to other airlines in Asia, Cathay Pacific was little affected from September 11 attacks, and increased its routes and fleet.
On 28 November 2002, the airline took delivery of its first Airbus A340-600 aircraft at a ceremony at the Airbus factory in Toulouse. Cathay Pacific was the launch customer in Asia for the A340-600 and the aircraft was the first of three leased from International Lease Finance Corporation (ILFC). On 1 December 2005, Cathay Pacific announced an order for 16 Boeing 777-300ER aircraft, four on lease from ILFC, to be delivered between September 2007 and July 2010, plus options on 20 more of the type, two of which were converted to orders on 1 June 2006. The airline also ordered 3 more A330-300 on the same day, with the delivery of the aircraft scheduled for 2008. On 7 August 2007, Cathay Pacific announced that it had placed an additional order for five more wide-body Boeing 777-300ER aircraft for a total price of about US$1.4 billion, increasing its commitment to a total of 23 of the aircraft type.
The 49ers – employment dispute
In 2001, the Hong Kong Aircrew Officers Association (HKAOA) launched a "work to rule" campaign to further its campaign for pay improvements and changes to roster scheduling practices. The action involved pilots refusing to work flights that were not scheduled on their roster. Although this alone did not cause extensive disruption, rostered pilots began to call in sick for their flights. Combined with the work to rule campaign, the airline was unable to cover all of its scheduled flights, and cancellations resulted. Cathay Pacific steadfastly refused to negotiate with the HKAOA under threat of industrial action.
On 9 July 2001, reportedly following a comprehensive review of the employment histories of all its pilots, the company fired 49 of its 1,500 pilots. This group became known colloquially as "the 49ers". Nearly half of the fired pilots were captains, representing five percent of the total pilot group. Of the 21 officers of the HKAOA, nine were fired, including four of the seven union negotiators.
Then-HKAOA president Captain Nigel Demery took the view that "the firing was pure intimidation, a union-bust straight up, designed to be random enough to put the fear in all pilots that they might be next, no reason given". The dismissals were challenged in a number of legal proceedings, but none were reinstated. The airline later offered the 49 pilots it terminated in 2001 the chance to reapply for pilot positions with its cargo division, guaranteeing such applicants first interviews, subject to passing psychometric testing. Nineteen former employees applied and twelve were offered jobs.
Current relations between the company and the HKAOA are cordial. The replacement of Captain Demery by Captain Murray Gardner was said to have had a lot to do with this change in relationship. Captain Gardner favoured a more diplomatic and conciliatory approach to dealing with management, and workplace relations between the two groups have been largely conciliatory since 2002. On 11 November 2009, 18 of the 49ers succeeded in the Hong Kong Court of First Instance concerning their joint claims for breach of contract, breach of the Employment Ordinance, and defamation.
Judge Anselmo Reyes ruled that the airline had contravened the Employment Ordinance by dismissing the pilots without a valid reason, adding that they had been sacked primarily because of union activities. He also held that remarks by then chief operating officer Philip Chen Nanlok and current chief executive Tony Tyler after the sackings were defamatory. The judge handed the pilots a victory in their long-running legal battle, with individual awards of HK$3.3 million for defamation together with a month's pay and HK$150,000 for the sackings.
On 24 December 2010, judges Frank Stock, Susan Kwan, and Johnson Lam of the Court of Appeal overturned the judgment of the lower court to the extent that the claim for wrongful termination of contract was dismissed. The finding that Cathay Pacific wrongly sacked the 18 pilots for their union activities was upheld. The court upheld the defamation claim, but reduced the damages for the defamatory comments made by Cathay Pacific management. The judges also modified the judgment awarding payment of legal costs to the pilots and instead said that they should now pay some of Cathay’s costs. The leader of the 49er Plaintiffs, Captain John Warham, launched a book titled "The 49ers – The True Story" on 25 March 2011.
The pilots were awarded leave on 26 October 2011 to take their case to the Court of Final Appeal. The matter was heard before Hon. Mr. Justices Bokhary, Chan, & Ribeiro who are all Permanent Judges of the Court of Final Appeal. The matters to be decided upon by the Court will concern wrongful termination of contract and the level of damages for defamation. The case was heard by the Court of Final Appeal on 27 August 2012.
On 26 September 2012, 11 years after they were sacked, the 49ers were finally judged to have won the 3 prime issues of their legal case: breach of contract, breach of the Employment Ordinance, and defamation. The Court of Final Appeal agreed with the Court of Appeal's methodology for reducing the defamation damages. However, it reinstated one month's salary for each of the 49ers.
Regarding breach of contract, the overall picture leading to dismissal and events immediately after will be analysed by the courts, not just the dismissal letter. Regarding the Employment Ordinance, an important aspect was that the judgment defined the scope of "union activities" and its protection for workers in Hong Kong. The Court concluded: "Accordingly, most (possibly all) union-sponsored action is potentially protected by s 21B(1)(b), but if the action is not carried out “at [an] appropriate time”, it is excluded from the provision." There was no challenge by Cathay Pacific to the Court of Appeal’s decision to uphold the {original} Judge’s conclusion that the statements made by Cathay Executives were defamatory of the plaintiffs.
John Warham, referring to the effect the fight has had on pilots' families, said: "In terms of human life, three people are dead because of what Cathay Pacific did to us. That's on their conscience, I hope they can live with that."
Acquisition and downsizing of Dragonair
On 9 June 2006, the airline underwent a shareholding realignment under which Dragonair became a wholly owned subsidiary but continued to operate under its own brand. By acquiring Dragonair, this meant gaining more access to the restricted, yet rapidly growing, Mainland China market and more opportunities for sharing of resources. CNAC, and its subsidiary, Air China, acquired a 17.5 percent stake in Cathay Pacific, and the airline doubled its shareholding in Air China to 17.5 percent. CITIC Pacific reduced its shareholding to 17.5 percent and Swire Group reduced its shareholding to 40 percent. Dragonair had originally planned significant international expansion. It was already operating services to Bangkok and Tokyo, and was to have a dedicated cargo fleet of nine Boeing 747-400BCF aircraft by 2009 operating to New York, Los Angeles, Chicago, San Francisco and Columbus. It had also acquired three Airbus A330-300 aircraft to commence services to Sydney and Seoul.
Following the acquisition by Cathay Pacific, Dragonair's proposed expansion plans underwent a comprehensive route compatibility analysis with the Cathay network, in an effort to reduce duplication. Dragonair services to Bangkok and Tokyo were terminated, and new services launched to Sendai, Phuket, Manila and Kathmandu. With the merging of similar departments at the two previously separate airlines, some Dragonair staff have had their employment contracts transferred to Cathay Pacific, and others made redundant due to the efficiencies gained in the merger. This has resulted in an approximately 37 percent decrease in the number of staff contractually employed by Dragonair. Although there has been speculation that Dragonair will cease as a brand and be fully absorbed into Cathay Pacific, this is unlikely as Dragonair enjoys significant market awareness in regional Chinese markets.
Economic challenges
To celebrate the airline's 60th anniversary in 2006, a year of road shows named the "Cathay Pacific 60th Anniversary Skyshow" was held where the public could see the developments of the airline, play games, meet some of the airline's staff, and view vintage uniforms. Cathay Pacific also introduced anniversary merchandise and in-flight meals served by famous restaurants in Hong Kong in collaboration with the celebrations.
In June 2008, Cathay Pacific entered into a plea bargain with the United States Department of Justice in respect of antitrust investigations over air cargo price fixing agreements. It was fined US$60 million. The airline has subsequently set up an internal Competition Compliance Office, reporting to chief operating officer John Slosar, to ensure that the Group complies with all relevant competition and antitrust laws in the jurisdiction in which it operates. The breaches for which Cathay Pacific Cargo were being investigated in the U.S. were not illegal under Hong Kong competition law.
In March 2009, the airline reported a record full-year loss of HK$8.56 billion for 2008, which was also the carrier's first since the 1997 Asian Financial Crisis. The record loss included fuel-hedging losses of HK$7.6 billion and a HK$468 million charge for a price-fixing fine in the U.S. It had to scrap its final dividend. The hedging losses were a result of locking in fuel prices at higher than prevailing market price. As of the end of 2008, Cathay Pacific has hedged about half of its fuel needs until the end of 2011. The airline at the time estimated that it would face no further cash costs from the hedges if the average market price stood at US$75, enabling it recoup provisions it made in 2008.
The flattening out of fuel prices resulted in Cathay Pacific recording a paper fuel hedging gain for its half-year reports for 2009. However, as a result of the global economic situation, the Group reported an operating loss. Given the current economic climate, and in line with the steps being taken by other major airlines around the world, the airline has undertaken a comprehensive review of all its routes and operations. This has resulted in frequencies being reduced to certain destinations, ad hoc cancellations on other routes, deferred capital expenditure, parked aircraft and introduced a Special Leave Scheme for staff to conserve money. According to CEO Tony Tyler, the yield from passengers was "hugely down" and the airline had lost "a lot of premium traffic". He noted that it could take 20 passengers in economy to make up for the lost revenue of one fewer first class passenger flying to New York from Hong Kong.
2010s: Current developments
In 2010, the airline set another record high profit, amounting to HK$14.048 billion despite record losses set in the same decade. At the same time, Cathay Pacific had taken delivery of several new aircraft types, including the Airbus A330-300 and Boeing 777-300ER. Tony Tyler left his position as CEO at the airline on 31 March 2010 to pursue his new job at the IATA. chief operating officer John Slosar had succeeded Tony Tyler as the new CEO. In addition, New Zealand's Commerce Commission had dropped charges against Cathay Pacific concerning the air cargo price fixing agreements.
Fleet
As of April 2014, the Cathay Pacific passenger fleet comprises the following aircraft:
On 9 June 2006, the airline underwent a shareholding realignment under which Dragonair became a wholly owned subsidiary but continued to operate under its own brand. By acquiring Dragonair, this meant gaining more access to the restricted, yet rapidly growing, Mainland China market and more opportunities for sharing of resources. CNAC, and its subsidiary, Air China, acquired a 17.5 percent stake in Cathay Pacific, and the airline doubled its shareholding in Air China to 17.5 percent. CITIC Pacific reduced its shareholding to 17.5 percent and Swire Group reduced its shareholding to 40 percent. Dragonair had originally planned significant international expansion. It was already operating services to Bangkok and Tokyo, and was to have a dedicated cargo fleet of nine Boeing 747-400BCF aircraft by 2009 operating to New York, Los Angeles, Chicago, San Francisco and Columbus. It had also acquired three Airbus A330-300 aircraft to commence services to Sydney and Seoul.
Following the acquisition by Cathay Pacific, Dragonair's proposed expansion plans underwent a comprehensive route compatibility analysis with the Cathay network, in an effort to reduce duplication. Dragonair services to Bangkok and Tokyo were terminated, and new services launched to Sendai, Phuket, Manila and Kathmandu. With the merging of similar departments at the two previously separate airlines, some Dragonair staff have had their employment contracts transferred to Cathay Pacific, and others made redundant due to the efficiencies gained in the merger. This has resulted in an approximately 37 percent decrease in the number of staff contractually employed by Dragonair. Although there has been speculation that Dragonair will cease as a brand and be fully absorbed into Cathay Pacific, this is unlikely as Dragonair enjoys significant market awareness in regional Chinese markets.
Economic challenges
To celebrate the airline's 60th anniversary in 2006, a year of road shows named the "Cathay Pacific 60th Anniversary Skyshow" was held where the public could see the developments of the airline, play games, meet some of the airline's staff, and view vintage uniforms. Cathay Pacific also introduced anniversary merchandise and in-flight meals served by famous restaurants in Hong Kong in collaboration with the celebrations.
In June 2008, Cathay Pacific entered into a plea bargain with the United States Department of Justice in respect of antitrust investigations over air cargo price fixing agreements. It was fined US$60 million. The airline has subsequently set up an internal Competition Compliance Office, reporting to chief operating officer John Slosar, to ensure that the Group complies with all relevant competition and antitrust laws in the jurisdiction in which it operates. The breaches for which Cathay Pacific Cargo were being investigated in the U.S. were not illegal under Hong Kong competition law.
In March 2009, the airline reported a record full-year loss of HK$8.56 billion for 2008, which was also the carrier's first since the 1997 Asian Financial Crisis. The record loss included fuel-hedging losses of HK$7.6 billion and a HK$468 million charge for a price-fixing fine in the U.S. It had to scrap its final dividend. The hedging losses were a result of locking in fuel prices at higher than prevailing market price. As of the end of 2008, Cathay Pacific has hedged about half of its fuel needs until the end of 2011. The airline at the time estimated that it would face no further cash costs from the hedges if the average market price stood at US$75, enabling it recoup provisions it made in 2008.
The flattening out of fuel prices resulted in Cathay Pacific recording a paper fuel hedging gain for its half-year reports for 2009. However, as a result of the global economic situation, the Group reported an operating loss. Given the current economic climate, and in line with the steps being taken by other major airlines around the world, the airline has undertaken a comprehensive review of all its routes and operations. This has resulted in frequencies being reduced to certain destinations, ad hoc cancellations on other routes, deferred capital expenditure, parked aircraft and introduced a Special Leave Scheme for staff to conserve money. According to CEO Tony Tyler, the yield from passengers was "hugely down" and the airline had lost "a lot of premium traffic". He noted that it could take 20 passengers in economy to make up for the lost revenue of one fewer first class passenger flying to New York from Hong Kong.
2010s: Current developments
In 2010, the airline set another record high profit, amounting to HK$14.048 billion despite record losses set in the same decade. At the same time, Cathay Pacific had taken delivery of several new aircraft types, including the Airbus A330-300 and Boeing 777-300ER. Tony Tyler left his position as CEO at the airline on 31 March 2010 to pursue his new job at the IATA. chief operating officer John Slosar had succeeded Tony Tyler as the new CEO. In addition, New Zealand's Commerce Commission had dropped charges against Cathay Pacific concerning the air cargo price fixing agreements.
Fleet
As of April 2014, the Cathay Pacific passenger fleet comprises the following aircraft:
Source: Wikipedia
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