Fuel cost key to survival, says Swire
Hughes-Hallett sees offshore vessels business as 'perfect hedge' to airline industry with high oil prices driving exploration and development
Fuel price is the biggest issue facing the airline and shipping industries, the chairman of John Swire & Sons said yesterday.
James Hughes-Hallett said fuel costs meant "survival or failure" for airlines, while in the shipping sector, high fuel prices were generating "excitement" about more fuel-efficient eco-ships.
But high oil prices also led to an increase in offshore exploration and development, which benefited Swire's burgeoning offshore vessels business as it meant higher charter rates and utilisation levels for its fleet.
"We love the offshore business. It is a perfect hedge to the airline business," Hughes-Hallett said, delivering the seventh Singapore maritime lecture.
But he added Swire's offshore operation "is a lot smaller than the airline business" although there were 30 ships on order. "We could see much further growth."
Swire has an offshore fleet of about 75 specialist vessels including platform support and anchor handling tugs.
Swire Pacific Offshore generated a net profit of HK$917 million last year on revenue of HK$4.86 billion. By comparison, Cathay Pacific Airways and related airline operations contributed HK$412 million in net profit to Swire Pacific on a turnover of HK$99.38 billion.
