Source: Financial Times Author: Justine Lau 04/17/2009
Subject Concerned: Airlines Cargo
Cathay Pacific plans to cut capacity and ask staff to take unpaid leave as sales from passenger and cargo flights dropped 22.4 per cent in the first quarter amid a deep recession.
The Hong Kong carrier, which has slashed prices in various routes to drum up demand, said on Apr. 17 that it would reduce passenger capacity by 8 per cent from next month while Dragonair, its China-focused arm, will see a 13 per cent cut. Cargo capacity will be lowered by 11 per cent.
The company, one of Hong Kong's biggest employers, has also requested its 27,000 staff worldwide to take periods of unpaid leave over the next 12 months.
Cathay's initiatives come as airlines around the world struggle to battle with a mounting crisis in aviation. Qantas this week said it was likely to deliver its worst full-year results since listing 14 years ago and announced plans to cut 1,750 jobs, or about 5 per cent of its workforce.
As part of its cost-saving measures, the Australian flag carrier also said it would cut flying capacity by 5 per cent, defer aircraft orders and ground aircraft. The latest restructuring will cut capital expenditure by at least AU$800 million (US$580 million) in 2009.
Singapore Airlines has reported a more than 20 per cent drop in passenger loads in February.
The International Air Transport Association (IATA), an industry organization, has forecast carriers in Asia Pacific to be the hardest hit by the current downturn as exports from Japan, the region's largest market, plunge. Asian airlines are expected to report losses of US$1.7 billion this year, while the sector worldwide is predicted to lose US$4.7 billion.
Cathay in March said the aviation industry was "in crisis" after the company suffered its biggest annual loss in its 63-year history last year.
In the first quarter of this year, Cathay carried 2.7 per cent fewer passengers and 18.7 per cent less cargo.