Cathy Pacific: Analyzing Aviation Industry Impact of Protests

This report examines the impact of anti-government protests in Hong Kong on Cathy Pacific, a major airline hub. It begins by defining democracy and analyzing its relevance to the protests, which aimed for greater autonomy from China. The report then presents current trends in the aviation sector, highlighting the negative impact of the protests, including flight delays, cancellations, and financial losses, exacerbated by the COVID-19 pandemic. Performance data for Cathy Pacific and Hong Kong International Airport are compared, including liquidity, profitability, and efficiency ratios over three years. The analysis reveals declining financial performance across key metrics. Finally, the report assesses Cathy Pacific's recovery strategies, which included staff regulations, boycotting campaigns, and increased security measures, to mitigate the impact of the protests and maintain operational stability. The report concludes that the protests significantly affected the airline's financial health and operational efficiency.

Dynamic aviation
environment

A INTRODUCTION
The aim of the report is to identify the impact of anti government protest on Cathy
pacific which is the airline hub established in Hong Kong. The protest was leading out with
many impact on the business practices of Cathy pacific and creates impact on its profitability
due to Chinese restrictions which stop the staff to take part in protest. This protest is to claim the
democratic power which was started in 2019. the protest consist its demand to have freedom or
and autonomy which Hong Kong wants by being into one country of China. Therefore, these
Chinese protest to allow extradition form Hong-Kong to mainland China. The impact on aviation
industry face many losses during these protests which cause in delay and cancellation of flights.
As in case of Cathy pacific, they were suffered with the Chinese legislations. Therefore, this
report is going to present means of democracy for Hong Kong also, evaluating organisation
performance while facing protest.
MAIN BODY
TASK
B Declinational analysis of the term Democracy.
Author Definition Key points
(Causa, and Fasano,, 2021)
Democracy is the terms which
defines freedom and autonomy
that enable equal rights,
opportunity to live in a
country obliged to legal
restriction for doing business.
 Democracy is about
freedom, autonomy and
equality.
 Obliged by legal laws
and power are
authorised by
government.

(Maiouak, and Taleb, , 2019) Democracy is the opportunity
that government allows every
individual to take their
anonymous decisions on the
basis of self believe and
values.
 It gives opportunity to
take decisions.
 People feel free to
believe in independent
country.
(Seppelt,. and Lee, 2019) Democratic society provide a
reliable existence to the
individual, business and every
creature on planet to live their
life in their own way.
Democratic country allows
right to participate, raise voice
and sue or be used.
 Democratic country is
full of right to live own
life.
 People have right to
participate, raise voice
and take stand for own
self.
Democracy is defined to be a power and authority to be self decision maker. It is a
government principle which see every individual with equal and valuable preceptive by
enabling them to take own decision and live however they want to. Therefore, define democracy
lead to broader section of individual right that are reserved by government authority. In which,
one could nor force another individual to take decisions. Mainly these autonomy give individual
right to choose their government by freedom of anonymous voting.
C Based on given data sets, determine current trends in aviation sector250
Current Trends Of Hong Kong international Airports-
Passenger Number Current Trends
70513000 0
72866000 3.3369733241
71543000 -1.8156616254
8835000 -87.6507834449

Passenger Number Current Trends
Aircraft movements Current Trends
412000 0
421000 2.1844660194
428000 1.6627078385
420000 -1.8691588785
161000 -61.6666666667
Cargo Handled Current Trends
4521000 0
4937000 9.201504092
5121000 3.7269596921
4809000 -6.0925600469
4473000 -6.9868995633
Current Trends of Traffic of Cathy Pacific
Passenger Current Trends
35.5
35.2 0.0
4.6 -8.2
RPKS Current Trends

Passenger Current Trends
130626 0
134397 0.03
20079 -0.86
ASKS Current Trends
1555361 0
163744 -0.9
34609 -0.79
Current Trends of Airline Industry Net Profit-
North America
Year Net Profit Current Trends
2018 14.5 0
2019 17.4 0
2020 -45.8 -4
Europe
Year Net Profit Current Trends
2018 9.1 0

North America
2019 6.5 -0.2857142857
2020 -26.9 -5.1384615385
Asia Pacific
Year Net Profit Current Trends
2018 6.1 0
2019 4.9 -0.1967213115
2020 -31.7 -7.4693877551
Middle East
Year Net Profit Current Trends
2018 -1.5 0
2019 -1.5 -0
2020 -7.1 3.7333333333
Latin America
Year Net Profit Current Trends
2018 -0.8 0
2019 -0.7 -0.125
2020 -0.5 -0.2857142857
Africa
Year Net Profit Current Trends

North America
2018 -0.1 0
2019 -0.3 2
2020 -2 5.6666666667
World
Year Net Profit Current Trends
2018 27.3 0
2019 26.4 -0.032967033
2020 -118.5 -5.4886363636
As mentioned in the above table , Current trends indicates that aviation industry is not in good
condition and it is suffering loss. The main reason that impacted airline industry is pandemic.
Covid -19 affected aviation industry very badly.
D performance of the organisation for many categories over past 3 years 1200
Performance Measurement of Cathy Pacific and Hong Kong International
Airport
Cathy
Pacific
Hong
Kong
internatio
nal
2018 2019 2020 2018 2019 2020
Liquidity
ratios
Liquidity
ratios

Cathy
Pacific
Hong
Kong
internatio
nal
Current ratio:
Current
assets/current
liabilities
Current
ratio:
Current
assets/curr
ent
liabilities
Current
assets
29678 56862 46724 Current
assets
21870 24938 16336
Current
liabilities
18727 29578 19157 Current
liabilities
8652 14977 15581
current ratio. 1.58 1.92 2.44 current
ratio.
2.53 1.67 1.05
Profitability
ratio
Profitabilit
y ratio
Operating
profit ratio:
OP/sales*100
Operating
profit
ratio:
OP/sales*1
00
Operating
expense
3595 3441 -18144 Operating
expense
12839 9320 6296
Net sales 111060.
00
106973.00 46934 Net sales 21994.00 19470.00 17106

Cathy
Pacific
Hong
Kong
internatio
nal
OP Ratio 3.23698
90149
3.22 -38.66 OP Ratio 58.375011
3667
47.868515
6651
36.805799
1348
Net Profit
ratio; NP/Net
sales*100
Net Profit
ratio;
NP/Net
sales*100
Net Profit 2777 1691 -21647 Net Profit 11486 8402 5898
Net sales 111060 106973 46934 Net sales 21994.00 19470.00 17106
Net profit
ratio
2.50045
02071
1.5807727
183
-
46.122214
1731
Net profit
ratio
52.223333
6364
43.153569
5942
34.479130
1298
Efficiency
ratio
Efficiency
ratio
Fixed Assets
Turnover
ratio:
Revenue/Fixe
d Assets
Fixed
Assets
Turnover
ratio:
Revenue/F
ixed
Assets
Revenue 111060 106973 46934 Revenue 21994.00 19470.00 17106
Fixed Assets 128298 155265 146986 Fixed 54960 72651 87164

Cathy
Pacific
Hong
Kong
internatio
nal
Assets
FATR 0.86564
09297
0.6889704
698
0.3193093
22
FATR 0.4001819
505
0.2679935
582
0.1962507
457
Liquidity Ratios –
Liquidity ratio determines ability of company to pay off its debts without raising extra
funds. Liquidity means hard cash company having in order to pay its debts. There are
three kinds of liquidity ratios- Current Ratio, Quick Ratio and Cash Ratio.
Current Ratio-
Current ratio is a liquidity ratio that measures company's ability to meet its short term
obligations within one year. Ideal current ratio is 2:1.
Current Ratio can be calculated as – Current assets/current liabilities
After analysing current ratio of Cathy Pacific we found that current ratio in 2018 was 1.58. It
means company can meet its short term obligations easily where as current ratio in 2019 was
1.52 that is less compared to 2018 and in 2020 current ratio is more than two which means
company has more assets than liabilities. It means company will not be facing problems in
meeting its short term obligations. On the other hand ,Hong kong international airport 's
financials dictates a different story means company is loosing its assets as the time passes by.
There is exponential decrease in current ratio. In 2018 current ratio was more than 2 and in
contrary current ratio is only 1.05.
Profitability Ratios -

As the name suggests, Profitability ratio measures company's ability to generate earnings. It
shows how much profit company is earning and shareholder's value. Higher the profitability ratio
indicates that company is profitable. These ratio are also useful and gives much more
information when compared with other companies.
Operating Profit-
Operating profit is a profitability ratio. It shows the efficiency of the company. It is also
known as operating income and reveals the factors and eliminates that can obscure company's
performance. As mentioned in above table cathy pacifc performed very worst in comparison to
Hong kong international. Ideal Operating profit margin lies between 20 to 30%.It shows how
much profitable a company is after all the operating expenses like cost of production, salaries
and wages etc.
Net Profit -
When all the business expenses are subtracted from the revenue then remaining amount of
money is known as net profit. 10% of net profit is considered as average profit. 20% is
considered as high net profit and 5% profit is considered as low net profit.
Net profit can be calculate as – Net profit/Net sales *100
Since operating profit of cathy pacific is very low it affected net profit of the company.
Company suffers loss in 3 years and unable to perform good. Whereas, Net profit margins of
hong kong international are quite good in 2018,2019 and 2020 as compared to cathy pacific but
there is exponential decrease in profit margin. Net profit affected overall net profit margin. The
cause behind decrease in net profit margin in 2020 was covid-19. This pandemic badly affected
aviation industry. So, profit margins in year 2020 are affected by pandemic.
Fixed Asset Turnover Ratio -
It is an efficiency ratio. Efficiency ratio analyse how well company can manage its assets and
liabilities. Fixed asset turnover ratio indicates that how well company uses its fixed assets to
generate sales. Higher fixed asset turnover ratio indicates that companies are using its fixed
assets effectively. Fixed asset turnover ratio can be calculated as- Revenue/ Fixed assets

As mentioned in the above table performance of both the companies are quite similar . There is
an exponential decrease in ratios. When we compare ratios of year 2018 to 2020. Cathy pacific's
fixed asset turnover ratio in year 2018 ,2019 and 2020 was 0.86,0.26 and 0.31, respectively. It
means Cathy pacific used its assets properly in order to generate sales in 2018 but in 2020 asset
management is not done properly. On the other hand, Hong kong international fixed asset
turnover ration in the year 2018,2019 and 2020 was 0.40,0.26 and 0.19. Cathy pacific used it
assets properly compared to Hong Kong International.
E Determine the effectiveness of Cathy pacific recovery from Hong Kong pro-democracy protest
Aviation industry is highly affected by the protests that come in-between country to
country and demand for rights of freedom and autonomy. Therefore, aviation industry faces
many losses and expenditures which is found through the analysis on their financial cost
management. As the flights and travel get impacted heavily, people does not prefer to take
services and lowers down travel and tours due to heavy protest running into country. As in case
of Cathy pacific, the airport was affected through less arrival of passengers, low travel booking
and cancellation of flights which charged cost of staff and other materials(Lee, Marla, and
Jacquillat, 2020). The protest was totally stop the arrival of staff into mainland of China through
which company made highest profit. So that, this pro-democracy protest was become a major
cause of loss to Cathy and pacific. Therefore, they have found some ways to deal with the
situation and come back to fulfil their targets of making travel grow. These effective measures
are discussed below:
 Cathy pacific made their regulation to eliminate all the staff who ever support the protest
in order to lowers down the influence of protest which impact on the profitability and
tourism of country.
 The company made regulation by boycotting the campaigns against China. They serve
the companies who are engaged into the protest and bane all the campaign flushed out
from country so that protestors would not make their way and impact on the society.
They find protestors of companies like Pocari sweets, sports drink, television station
which protestors are engaged in it.
 In China, they made separate rules of one country two system in order to not involve
cross cultural issues and create poor image into market(Kumar. and Xu, , 2017)