Cathay outlines plans to cut near-term costs

Cathay outlines plans to cut near-term costs Cathay Pacific Airways on Friday said it would idle freighters, pare back the frequency of passenger services, and offer pilots voluntary unpaid leave to combat a 'serious downturn in business as a result of the global financial crisis.'
   The Hong Kong-based airline also said it will defer the construction of the new Cathay Pacific Cargo Terminal at Hong Kong International Airport by up to two years in a move to keep capacity expansion in line with market growth, and to reduce its capital expenditure in 2009 and 2010.
   Cathay will park two 747-400BCF freighters at Victorville, Calif., for a year from January.
   'The financial crisis is having a particularly severe impact on Cathay Pacific's air freight business as several of the world's major economies head into recession,' the airline said. 'Regionally there will be no significant changes to scheduled freighter schedules, though there will be some frequency reductions to Australia, North America and Europe. The airline will receive four more new Boeing 747-400 Extended Range Freighters in 2009, though the delivery of its new Boeing 747-8Fs will now only begin in 2010.'
   Meanwhile, growth in passenger service capacity will be cut to 1 percent for 2009, from the previously planned 6 percent to 7 percent.
   'Services on some routes will be adjusted accordingly though the airline is clear that it plans to keep its network integrity intact and not cut any destinations,' Cathay said. 'The new capacity figure takes into account the airline's previously announced decision to remove five Boeing 777-200 aircraft from its fleet and also covers delays in the deliveries of new aircraft as a result of the recent strike at the Boeing factory in Seattle.'
   Unpaid leave is also being offered to all the airline's pilots on a voluntary basis.
   As for the dedicated air cargo terminal in Hong Kong, preliminary work has already begun on the $600 million facility but the finish date for the project will likely be pushed back from the original 2011 target date.
   '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,' said Cathay Chief Executive Tony Tyler. 'We have taken a number of measures to help ensure the financial health and long-term wellbeing of our airline. This is our No. 1 priority at this time. However, the plan may well have to be revised again depending on how things unfold. Nothing can be set in stone at the moment. Visibility is low and it's hard to predict developments with any real certainty. Flexibility will be the key word in the months ahead.'