Airport Authority's net profit up 265%

(HONG KONG, 29 June 2005) - The Airport Authority Hong Kong (AA) recorded a profit attributable to shareholder of HK$1,410 million for the financial year 2004/05, achieving a 265 per cent increase over the last financial year.  This was also the Authority's fifth consecutive year of profit. 

The year saw a record turnover of HK$6,506 million, a rise of 29 per cent over the previous year. Operating costs before depreciation reported a slight increase of 4 per cent to HK$2,803 million, reflecting effective and prudent cost control and productivity enhancement. Return on net assets (RONA) reached 4 per cent, a significant improvement from last year's 1 per cent, to a level that is close to similar infrastructure companies in Hong Kong.

The AA Board has declared to pay a dividend of HK$1,000 million to the HKSAR Government.  The financial results, detailed in the AA's 2004/05 annual report, were tabled at the Legislative Council today (29 June 2005).

AA's Chief Executive Officer, Dr David J Pang, said, "The Authority's outstanding financial performance was mainly driven by the records made in all categories of air traffic.  The substantial increase in net profit was also attributable to a large proportion of expenses being fixed costs, with the majority of the incremental additional revenue contributing to the bottom line."

All-time high records were attained in passenger and cargo throughput, as well as aircraft movements in the year.  Passenger traffic reached 38.3 million and cargo throughput amounted to 3.1 million tonnes, representing a remarkable increase of 38 per cent and 15 per cent respectively over the same period last year.  As a result, aircraft takeoffs and landings climbed 27 per cent to a record 242,000 movements.

"In the past year, Hong Kong International Airport (HKIA) faced immense competition in the aviation business in the region," said Dr Pang. "However, the strong economic growth in the Pearl River Delta and the Mainland has created huge demands for air traffic and was the major driving force in the surge in traffic."

 "The Government's progressive policy in liberalizing air services, allowing airlines to offer competitive airfares, also contributed to the rise," he added.

 "HKIA is now entering a high growth path of its business cycle.  We must ensure that we are geared to capitalize on this exponential growth, especially in view of the increasingly competitive business environment for the airport industry.  We are mindful of the need to continuously strengthen our competitiveness in order to sustain our growth and maintain HKIA's hub status."

Over the years, the Authority has been reinforcing HKIA's position as the gateway of China through extending its home market to and beyond the Pearl River Delta and enhancing connectivity of its home market with the world.

In addition to the multi-modal transportation services that have strengthened HKIA's connectivity with the Pearl River Delta, the AA endeavored to reach out to a wider source of customers through the building of "air bridges" with Mainland airports.  An agreement to form a strategic alliance with Hangzhou Xiaoshan International Airport in April will give the Authority the opportunity to tap into the fast-growing source of traffic flows coming from the inner regions of the Mainland.

Facility enhancement and expansion works are being carried out to further boost the capacity of HKIA.  Four additional parking stands dedicated for freighters and another four new stands for passenger aircraft are now under construction and are scheduled to commence operation within this financial year.

Business partners, airlines, facility franchisees and ground handlers have demonstrated their confidence in the growth potential of HKIA through investment in various expansion and development projects.  Local carriers Cathay Pacific Airways and Dragonair are enlarging their fleets; Asia Airfreight Terminal will triple its capacity with its facility expansion to complete in 2006; while DHL is considering to advance its Express Cargo Centre expansion plan from the original schedule of 2009.

The Authority continues to work with the Government and its business partners to explore and develop new initiatives, including upstream check-in passenger service, air cargo consolidation centre and a Mainland airport system, with the aim of enticing new sources of customers through the provision of economical, efficient and reliable services.