Hong Kong s Cathay to slash flights

April 17, 2009

, HONG KONG, April 17 – Hong Kong\’s Cathay Pacific said Friday it will slash flights to some of its major destinations and ask staff to take unpaid leave as the global economic crisis hammers demand.

The carrier said it plans to halve its service to Paris while cancelling some flights to London. It will also cut trips or seat capacity to Tokyo, Sydney, Frankfurt and Singapore, among other key routes.

The news came on the same day the airline announced a dive in first quarter revenue, a week after saying it had lost more than a billion dollars in 2008, its first yearly loss in a decade.

In a statement to the Hong Kong Stock Exchange on Friday the company said all 17,000 staff — of whom about 13,600 are based in Hong Kong — would be asked to take unpaid holiday between May 1 this year and April 30 next year.

Cathay chief executive Tony Tyler said: "Our staff are being asked to make sacrifices that will be needed to see the company through this violent storm."

The airline will make ad hoc cancellations of 17 round trips to London in May, with more likely in June, and cut its twice-daily service to Paris to one flight a day from September.

It said it will reduce flights or capacity to Frankfurt, Sydney, Singapore, Bangkok, Seoul, Taipei, Tokyo, Mumbai and Dubai.

The statement also said Cathay\’s China-focused unit, Dragonair, would suspend flights to Fukuoka, Dalian, Shenyang, Guilin and Xian while reducing services to Bengaluru, Busan, Sanya and Shanghai.

The moves are part of a plan to reduce passenger capacity by eight per cent from May on Cathay and 13 percent on Dragonair.

The carriers plan to cut their total cargo capacity by 11 percent from next month, the company said.

The length of time members of staff will be asked to take off will depend on seniority, with those in the lowest salary band being asked to take a week off and top-earners asked to take four weeks.

"The pain will be shared from the top down. We have tried to make the scheme as fair and equitable as possible," Tyler said.

"That means that no matter what level an employee is, everyone more senior is taking more pain."

Staff will receive emails asking them to consent to the scheme between April 20-30, the company said. Those objecting would not be forced to join.

Cathay Pacific said Friday that first-quarter revenue from passenger and cargo services fell 22.4 percent year on year.

In March it announced a loss of 8.6 billion Hong Kong dollars (1.1 billion US) last year — after a seven billion dollar profit the previous year — as it was hit by soaring fuel prices and falling cargo business.

Like other airlines, the global downturn has left Cathay stuck with money-losing fuel contracts — signed when prices were high before the slowdown kicked in.

In a sign of falling demand, earlier this year the airline shelved plans to build a new cargo terminal at Hong Kong International Airport for two years.

The global slowdown has battered Asia\’s major carriers, with Singapore Airlines, Japan\’s ANA and Australia\’s Qantas all cutting routes or grounding planes.

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