Message from the CEO

2016 was a very difficult year for our core airline business, which reflected the testing times in which we operated. This has been influenced by many factors, including global economic uncertainty; adverse currency movements with a strong Hong Kong dollar; overcapacity and fierce competition, particularly in this region; weak premium travel; and political uncertainty – all of which have impacted our revenues and presented us with significant challenges.

Despite this, we still managed to achieve a great deal. We continued to expand our long-haul network with the launch of London Gatwick and Madrid – and increased frequencies to many other routes. We rebranded Dragonair to Cathay Dragon to provide a more seamless experience for our customers.

We retired our last Boeing 747-400 in 2016 after over 30 years of service. A sentimental affair for all those involved but an important milestone in our pledge to modernise and make our fleet more efficient. As we said goodbye to the 747’s we welcomed our first Airbus A350-900. This was a big highlight of the year. These fuel efficient, technologically advanced aircraft will enhance the flying experience of our customers as well as offering a significant improvement in environmental performance by using less fuel and being quieter.

This marks the start of our new fleet strategy with the A350-1000s and B777-9X to be delivered over the next seven years. The net result of this will be a modern and efficient fleet that will drive up our overall fuel efficiency and reduce emissions.

Another important milestone in 2016 for us was the use of biofuels for the first time. All of our new A350s were delivered from Toulouse with a 10% blend of biofuel made from sustainable sugars. Biofuels is an important part of our long term climate strategy.

All these investments will be ever more important in light of the new International Civil Aviation Organisation (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) that was agreed by 191 states in October 2016. This was a truly landmark agreement that will effectively put a price on carbon and where our fuel efficiency improvements and biofuel use will help reduce our carbon offset costs.

Looking ahead, we will be fully implementing our corporate transformation over the next three years, a strategy that is centred on us being singularly focused on delivering our customers with a Life Well Travelled. Sustainability will be an important and integral part of this strategy, in order to enhance our brand and our proposition to our customers.

With these foundations in place, I’m confident we will see an accelerated delivery of our sustainability objectives in the years to come.

In a changing world, we need to be agile, focused and innovative. We are prepared to meet the challenges that lie ahead, but we are also confident that we can lead our industry into this exciting new era.

Rupert Hogg

Chief Executive Officer