Cathay measures to tackle slowdown
Updated: 2008-11-29 07:53
By Carmen To(HK Edition)
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Cathay Pacific has taken a raft of measures to cope with the global slowdown, including cutting back on planned passenger capacity in the coming year, offering staff to take voluntary unpaid leave and requesting a deferral on the company's cargo terminal construction. AFP |
Cathay Pacific Airways announced on Friday new measures to tackle the business downturn amid the global financial crisis.
"This is a very difficult time for our airline and for the aviation industry as a whole, and we cannot see light at the end of the tunnel at this point. Given the impact the current crisis is having on our core business, we have taken a number of measures to help ensure the financial health and long-term well-being of our airline," Tony Tyler, chief executive said.
These measures include cutting back on planned passenger capacity in the coming year, offering staff to take voluntary unpaid leave and requesting a deferral on the construction of the company's cargo terminal.
Responding to the anticipated decline in demand, the airline cut down its projection of 6-7 percent growth in 2009 to less than 1 percent. The new figure takes into account the airline's previous announcement of removing five Boeing 777-200 aircraft from its fleet.
On the job front, the airline will offer a voluntary unpaid leave scheme for its crew members. The scheme will come into effect on Jan 1, 2009, offering leave from two weeks to a maximum of 12 months.
The airline has also requested to defer construction of a new cargo terminal at the Hong Kong International Airport by up to two years, trying to keep capacity expansion in line with market growth and to reduce capital expenditure in 2009 and 2010.
Earlier in November, the airline said its 2008 annual profits would be "disappointing" as revenue had begun to "weaken materially". Revenue was hit by the recent strength of the US dollar, and fewer first and business class passengers.
According to some analysts, these measures may help the airline hang on to their business for a longer period but they don't necessarily help improve the business.
"I don't think these measures have much impact on Cathay Pacific business. It is the growth in the core businesses that helps a company. Cutting costs or layoffs can only reduce losses," Patrick Shum, senior analyst at Karl Thomson, said.
"Aviation businesses will be bad as the economy looks grim. Cathay Pacific can only improve its business if the fundamentals get better," Shum added.
Shares of Cathay Pacific closed down HK$ 0.1 or 1.31 percent to HK$7.52 on Friday.
(HK Edition 11/29/2008 page2)