Cathay payout ratio payout ratio is the percentage of

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5.2.3.4. Payout Ratio
Payout ratio is the percentage of earnings distributed in the form of cash dividends.
Data source: Calculated from Annual Reports of Cathy Pacific and Singapore Airlines
The ratio of Singapore Airlines is always higher than that of Cathy Pacific. Cathy
Pacific needs to retain some income in retained earnings for future expansion, so we
expect the payout ratio will remain stable for next several years.
5.2.3.5. EPS, P/E
Earnings per share is a measure of the net income earned on each share of common
stock while Price- Earning ratio reflects investors’ assessments of a company’s future
earnings.
Cathy Pacific has similar EPS with Singapore Airlines and while its P/E ratio is
higher than that of the latter.
5.3. Risk
5.3.1 Foreign currency risk
The revenue of Cathay Pacific Airways Limited are denominated in a number of
foreign currencies resulting in exposure to foreign exchange rate fluctuation. The
currencies giving rise to this risk are primarily United States dollars, Euros, Australian
dollars, Singapore dollars, Renminbi and Japanese yen. It is assumed that the pegged
60.54
65.55
59.45
70.52
72.35
71.55
0
10
20
30
40
50
60
70
80
2015 2014 2013
Payout Ratio
Payout Ratio(%)
Cathy Pacific Singapore Airlines

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rate between Hong Kong dollars and United States dollars would be materially
unaffected by any changes in movement in value of United States dollars against
other currencies. To manage this exposure, the company finances in those foreign
currencies in which net operating were surpluses, thus establishing a natural hedge.
Also, the company uses currency derivatives to reduce anticipated foreign currency
surpluses.
5.3.2 Interest rate risk
The company’s cash flow exposure to interest rate risk arises primarily from long -
term borrowings at floating rates. Its long-term loans increased from 30,286 in 2014
to 32,630 in 2015, so it is expected that loans would have a gradual increase in the
future. To manage the interest rate profile of interest-bearing financial liabilities on a
currency, the company uses interest rate swaps to maintain an appropriate fixed rate
and floating rate ratio.
5.3.3 Fuel price risk
Fuel accounted for 34.0% of the company’s total operating expenses (2014: 39.2%).
Cathay Pacific uses fuel derivatives to weaken the influence of exposure to
fluctuations in the fuel price.
5.3.4 Credit risk
The company normally grants a credit term of 30 days to customers or follows the
local industry standard with the debt in certain circumstances being partially protected
by bank guarantees or other monetary collateral. Trade debtors mainly represented
passenger and freight sales due from agents and amounts due from airlines for
interline services provided. To manage credit risk, the company only cooperates with
the financial institutions which have high credit ratings. There was no significant
concentration of credit risk at the reporting date in 2015. The main exposure to credit
risk is represented by the carrying amount of each financial asset in the statement of
financial position and the guarantees. Collateral and guarantees received in respect of
credit terms granted at 31st December 2015 is HK$1,373 million (2014: HK$1,413
million).

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6. Reference
1. Cathay Pacific Annual Report 2010-2015
2. Singapore Airlines Annual Report 2010-2015
3. Civil Aviation Department Annual Report 2014-2015
4. Cathay Pacific Corporate Overview.
5. Singapore Airlines Corporate Overview.
6. Cathay Pacific Lunar New Year Parade.