Cathay makes cuts as revenue plunges
18-04-2009
Cathay Pacific has announced further cost-cutting measures, after revenue plunged 22 percent in the first quarter of the year .
All 17,000 employees are being asked to take unpaid leave ranging from one to four weeks in the next 12 months.
The airline's latest move follows an annual loss of HK$8.6-billion in 2008 - its first loss since the height of the Asian financial crisis in 1998.
"We have no option but to take measures that will help us weather the current storm and maintain the long-term sustainability of the business,' said chief executive Tony Tyler in a statement.
Cathay Pacific and its subsidiary Dragonair reported a 22.4 percent year-on-year decline in turnover in the first quarter.
"A toxic combination of low fares, a big drop in premium travel, weak cargo loads, poor yields and a negative currency impact is making it more important than ever to preserve cash," Mr Tyler said.
Cathay Pacific said it would reduce planned passenger capacity by eight percent and that of Dragonair by 13 percent, starting next month.
It plans to cut cargo capacity by 11 percent, with freighter frequency falling t 84 flights a week from their 2008 peak of 124.
The company is also grounding two more of its Boeing 747 freighters, taking the total to five, and negotiating the sale of five aircraft.
Reaction from Cathay Pacific staff unions has been mixed.
The local staff union said it recognised the big challenge the airline is facing during the economic recession and understood the need to work together to help the company.
It said it appreciated that the airline had not decided to fire staff or make any long -term salary cuts.
However, the unions representing Cathay Pacific and Dragonair flight attendants expressed reservations.
