Combining cathay: competition is coming from unlikely places, so cathay pacific and DHL are finding closeness counts. (Pacific).

January brought lots of champagne toasts and million-dollar smiles to senior executives at Cathay Pacific Airways. Business was good and the outlook for 2003 quite positive, and the airline even had a rare meeting with its unionized pilots on the schedule. December saw an 11.9 percent increase in passenger traffic over 2001 with cargo tonnage up 4.6 percent while the yearly results showed a 9.3 percent increase in passenger numbers and a 15.2 percent jump in cargo tonnage.

Combine this with the airline's decision to buy six A300-600 freighters for subsidiary Air Hong Kong and the progress on the trans-Pacific code share with partner American Airlines and the executives had good reasons to clink their champagne glasses.

However, these smiles seem a bit strained on closer scrutiny.

It …