(Hong Kong) Cathay Pacific @·AIRCRAFTUBE

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Cathay Pacific

Cathay Pacific is the flag carrier airline of Hong Kong, with its head office and main hub located at Hong Kong International Airport. The airline's operations include 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. 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 Australian Sydney H. de Kantzow and American Roy C. Farrell, 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, which was also the maiden flight to arrive at then time, 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.

Cathay Pacific was awarded Skytrax's 2014 Airline of the Year. Cathay Pacific has won the "World's Best Airline" award four times, more than any other airline.

1940s and 1950s: The early years

Cathay Pacific was founded in Shanghai on 24 September 1946 by Australian Sydney de Kantzow and American Roy Farrell. 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, 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 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 was 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 invested in a 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 International Airport and transpolar flights

On Monday, 6 July 1998, at 00:00 HKT, Kai Tak International Airport saw its last commercial departure, 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, Hong Kong. Also on board were 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 Kennedy, 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, while completing the acquisition of Dragonair.

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 ordered 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 ordered 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.

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.

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 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.

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. Acquiring Dragonair 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, with the exception of Dragonair Pilots and Cabin Crew 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.

There has been speculation that Dragonair will cease as a brand and be fully absorbed into Cathay Pacific.

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. In 2014, the airline underwent the largest network expansion in recent years which included the addition of links to Manchester, Zurich and Boston.

Corporate affairs and identity

Cathay Pacific's head office, Cathay Pacific City, is located at Hong Kong International Airport, although the airline's registered office is on the 33rd floor of One Pacific Place. Cathay Pacific City was scheduled to be built in increments between April and September 1998. The headquarters opened in 1998. Previously the airline's headquarters were at the Swire House, which was a complex in Central named after the airline's parent company.

Fleet History

Since its conception in 1946, the airline had operated many types of aircraft. The first two aircraft were two World War II surplus Douglas DC-3s named Betsy and Niki. Betsy (VR-HDB), the first aircraft for Cathay Pacific, is now a permanent exhibit in the Hong Kong Science Museum. Niki (VR-HDA) was lost, but a similar DC-3 was purchased as a replacement. It was refurbished and repainted by the airline's Engineering Department and maintenance provider, Hong Kong Aircraft Engineering Company, and it now wears the second Cathay Pacific livery from the late 1940s. This aircraft received Niki's old VR-HDA aircraft registration and is now on public view in the car park outside the Flight Training Centre of Cathay City.

Cathay Pacific Retired Fleet
Aircraft Year Retired Notes
Airbus A340-200 1996 Leased from Philippine Airlines before delivery of A340-300
Airbus A340-600 2009 Leased from ILFC
Avro Anson 1950 Two operated for the Burmese government
Boeing 707-320B 1983
Boeing 747-200B 1997/2009 Some were converted to freighter. All 747-200s retired in 2009.
Boeing 747-300 2002 Five leased to Pakistan International Airlines from July 2002
Bristol Britannia Leased from BOAC for a few months whilst the Electras were taken out of service due to defects
Consolidated PBY Catalina 1948 Two used for a few months in a joint venture in Macau Air Transport Company
Convair 880 1975 First jet aircraft type operated by the airline.
Douglas DC-3 1961
Douglas DC-4 1963
Douglas DC-6B 1962
Lockheed L-1011-100 TriStar 1997 Largest operator of the type outside the United States in late 1980s and early 1990s
Lockheed L-188 Electra 1967

Incidents and accidents

  • On 16 July 1948, Miss Macao, a Cathay Pacific-subsidiary-operated Consolidated PBY-5A Catalina (VR-HDT) from Macau to Hong Kong was hijacked by four men, who killed the pilot after take-off. The aircraft crashed in the Pearl River Delta near Zhuhai. Twenty-six people died, leaving only one survivor, a hijacker. This was the first hijacking of a commercial airliner in the world.
  • On 24 February 1949, a Cathay Pacific Douglas DC-3 (VR-HDG) from Manila to Hong Kong, crashed near Braemar Reservoir after a go-around in poor weather. All 23 people on board died.
  • On 13 September 1949, a Cathay Pacific Douglas DC-3 (VR-HDW) departing from Anisakan, Burma, crashed on take-off when the right hand main gear leg collapsed. There were no reported fatalities.
  • On 23 July 1954, a Cathay Pacific Douglas DC-4 (VR-HEU) from Bangkok to Hong Kong was shot down by aircraft of the People's Liberation Army Air Force in the South China Sea near Hainan Island. Ten people died, leaving nine survivors. After the incident, Cathay Pacific received an apology and compensation from the People's Liberation Army Air Force. It was apparently mistaken for a Nationalist Chinese military aircraft.
  • On 18 September 1963, Cathay Pacific Flight 34 overran the runway at Kuala Lumpur International Airport, causing 3 deaths, including one crew member. The aircraft was written-off.
  • On 5 November 1967, Cathay Pacific Flight 33, operated by a Convair 880 (VR-HFX) from Hong Kong to Saigon, overran the runway at Kai Tak Airport. One person was killed and the aircraft was written-off.
  • On 15 June 1972, Cathay Pacific Flight 700Z, operated by a Convair 880 (VR-HFZ) from Bangkok to Hong Kong, disintegrated and crashed while the aircraft was flying at 29,000 feet (8,800 m) over Pleiku, Vietnam after a bomb exploded in a suitcase placed under a seat in the cabin, killing all 81 people on board.
  • On 13 April 2010, Cathay Pacific Flight 780, an Airbus A330-342 from Surabaya Juanda International Airport to Hong Kong landed safely after both engines failed due to contaminated fuel. 57 passengers were injured. Its two pilots received the Polaris Award from the International Federation of Air Line Pilots' Associations, for their heroism and airmanship.

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