Cathay Pacific has taken steps to restructure cargo capacity in line with downgraded growth expectations.
An order placed in 2011 for eight Boeing 777-200 freighters due for delivery during the period 2014-16 has been canceled, and Cathay has sold four of its converted B747-400s back to Boeing for an undisclosed fee.
Set against the capacity cuts, pre-delivery payments already made to Boeing for the eight canceled freighters will be offset against the purchase by Cathay of three B747-8 freighters that are scheduled for delivery this year. Options to purchase five B777-200 freighters have also been agreed with Boeing.
Cathay said the deal would boost payload range capability at its operating cost base, with the new freighters primarily set to be deployed on long-haul destinations to North America and Europe.
As part of the transaction, a statement by Cathay to the Hong Kong Exchange said the transaction would also see Air China Cargo — in which Cathay owns a 49 percent stake — purchase eight B777-200Fs and sell seven B747-400 converted freighters.
Air China, in which Cathay owns a 19.28 percent equity interest, will also “purchase certain other aircraft” from Boeing, the statement said.
Cathay said the deal would allow it to reduce cargo capacity but retain options to expand if the market improved, while Air China Cargo would benefit from replacing its existing freighters with more fuel efficient B77-200Fs.
"These arrangements are in line with our reduced expectation for future cargo growth and enable us to reduce future cargo capacity,” a Cathay spokesperson said. “If the cargo market rebounds at a quicker pace than we expect, then we could add capacity in a timely manner by exercising our purchase options.
“In addition, the Boeing 747-8 freighter brings added environmental benefits, and the transactions will enable us to further speed up our efforts to have a quieter and more fuel efficient fleet