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Cathay Pacific Investment Plan

In: Business and Management

Submitted By OoTiannaoo
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2. A review of current and expected economic conditions (e.g. inflation, recession) that would be material in forming your recommendation.The current global economy highly influenced by the debt crisis in Europe zone, the overll air freight is weaken compared to previous year however the number of air freight remaining positive except middle eastern airlines taking more than 50% of the air freight than other regions. IATA (2012) indicated the growth rate of China’s gross domestic product has resulted in a three-year low, a slow growth for industrial production as well as retail sales, contributing a slow growth rate at 4.4% in China's domestic passenger markets. In Lanman, S. and Panckhurst, P., (2012)'s news report, China’s export growth cooled to 9.2 percent in the first half of the year, a 24 percent decrease in the first six months of 2011, the figure reflected declining number in both cargo and passengers carrier for Cathay Pacific and China Southern Airways, accompany with the high jet fuel prices, the future in airlines industry is pessimistic.According to Wallis (2012), China Southern Airlines claimed there is 50% drop in net profit compare to last year, contributed by high jet fuel costs, losses in exchange rate (6.3760 against the dollar) and China’s slowing down economy due to Europe’s austerity measures and government debt burdens. On the other hand, its major rival Cathay Pacific announced billions dollars investment on more fuel efficient and nautical miles aircrafts airbus A350-1000. With better fuel efficiency aircraft and well-tailored flight patterns, Wallis (2012) believes it shall remain its competitive position in the industry.IATA (2012) believes that both the air travel and freight volumes are likely to show slow growth in the coming period due to deepening economic recession and consumer confident. Although the fuel price has a significant

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