Cathay Pacific cuts capacity - Auckland flights safe for now

Hong Kong-based airline Cathay Pacific has slashed capacity and cut costs in response to “deteriorating” business conditions, a week after Qantas made a similar announcement.

Starting from May, the airline will reduce passenger capacity by 8% and overall cargo capacity by 11%; sister airline Dragonair will see a 13% cut in capacity.

There will be a reduction in flight frequencies or seat capacity to cities such as London, Paris, Seoul, Mumbai and Sydney, but flights from Auckland to Hong Kong aren’t affected at this stage.

The weekly freighter frequency will fall to 84 flights, well down from the peak of 124 flights a week reached during 2008.

The company is also negotiating the sale of five aircraft and will park two more of its Boeing 747-400BCF freighters, taking the total to five, and wet-lease one BCF to subsidiary Air Hong Kong.

To cut its wage bill Cathay Pacific will introduce a four-tier, top down “Special Leave Scheme”, asking staff to take between one and four weeks of unpaid leave over the next year depending on their seniority.

Cathay Pacific chief executive Tony Tyler says, “We anticipate an extremely challenging year in 2009 and 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.”

He says the first quarter of 2009 saw a “marked deterioration” in Cathay Pacific’s business compared to the same period last year; turnover was down 22.4%.

“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.”

Mr Tyler says the global economic meltdown is “hitting the aviation industry hard”, and that, unlike many of its competitors, Cathay Pacific gets no government financial support or subsidy.

“Our staff are being asked to make sacrifices that will be needed to see the company through this violent storm. The pain will be shared from the top down.”


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