April 17: Cathay Pacific Airways announced a series of measures to help it deal with a drop in business resulting from the current economic downturn. The airline will reduce passenger capacity by 8% and cargo capacity by 11%.
Cathay Pacific Chief Executive Tony Tyler said: “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. In the first quarter of 2009 we saw a marked deterioration in our business compared to the same period last year. Turnover for the first three months of this year was 22.4% lower than the same quarter in 2008.”
Capacity reductions will be achieved by operating fewer flights to specific destinations and suspending those to several Chinese airports. The airline is negotiating the sale of five aircraft and will park up two more of its Boeing 747-400BCF freighters – taking the total to five – and wet-lease one to subsidiary Air Hong Kong.
To avoid redundancies, all of the 17,000 staff working for the will be asked to take unpaid leave of one to four weeks, depending on seniority, over a 12-month period from May 1, 2009 to April 30, 2010 – top management and senior staff will be asked to contribute most.
The airline’s senior managers had no pay rise this year, and they were also excluded from the two-week year-end bonus that was awarded to the rest of the team in 2008. In addition, Chairman Christopher Pratt, Chief Executive Tony Tyler and Chief Operating Officer John Slosar are foregoing their 2008 bonuses, while the bonuses paid this year for other senior managers are being substantially reduced.