Cathay Pacific’s venture with DHL soaring
Sales contributions from Cathay Pacific Airways’ cargo partnership with logistics giant DHL could almost triple by 2007 as demand expands in the Asia Pacific, according to a statement from the carrier to the stock exchange yesterday.
Cathay, which is the majority 60-40 partner with DHL in the all-cargo airline, Air Hong Kong (AHK), said DHL’s growing appetite for space on AHK flights might generate annual sales as high as 2 billion dollars by 2007, compared with an estimated 715 million dollars last year.
The international express delivery specialist uses AHK’s seven-strong freighter fleet to connect a network of Asian cities – from Shanghai to Singapore – to its USD100 million central Asia hub at Chek Lap Kok.
Asia’s biggest express operator by volume has also been reviewing expansion plans for the hub, which is operating at near its daily 440-tonne capacity after a year of operations.
“That’s all under review at the moment and there should be a decision made over the next few months,” said Ross Allen, a vice-president at DHL Express, referring to decisions on the size and pace of expansion.
Cathay’s sales to DHL are considered connected transactions under stock exchange rules, due to their joint venture, and sales above a pre-determined value must receive shareholder approval.
Cathay yesterday said it expected DHL to buy a maximum of $1.35 billion in transport services from AHK this year, almost double last year’s annual limit and above a 3 per cent threshold.
It has set a limit of 1.6 billion dollars in sales for next year.
The carrier must seek shareholder approval when the estimated maximum yearly value of DHL’s transactions with AHK, or the “annual cap”, exceeds 3 per cent of Cathay’s net asset value.
Cathay, after approval from shareholders Swire Pacific and Citic Pacific, yesterday asked the exchange to waive its disclosure rules relating to DHL sales, citing the continuing nature of the service.
AHK might also make a decision soon on the last two options it owned of a 10-freighter order from European consortium Airbus signed in 2002, Cathay said.
It has a 45-tonne capacity A300F on lease and two more aircraft from the original order are scheduled for delivery in May and June next year.
Cathay will start offering four flights a day to London from December, supplementing its night flights from Chek Lap Kok with a 9am flight.
The carrier will use a 300-seat Airbus A340 for the expanded service as it looks to grab a greater share of passengers travelling during the peak holiday season, especially on the lucrative London-Sydney route through Hong Kong.
It will be the first Asian carrier to fly four times daily to London.
