Cathay Pacific Airways Ltd, Asia’s third-largest carrier, has asked staff to take unpaid leave while it cuts passenger and cargo capacity to cope with the global downturn.
All 17,000 of the company’s employees are being asked to take unpaid leave ranging from one to four weeks in the next 12 months, Hong Kong’s flagship airline said in a statement on Friday.
Cathay Pacific’s latest move comes a month after the airline recorded a worse-than-expected annual loss of 8.6 billion Hong Kong dollars ($1.1 billion) in 2008 _ its first annual red ink 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,” chief executive Tony Tyler said in the statement.
Cathay Pacific and its subsidiary Dragonair reported a 22.4 per cent 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,” Tyler said.
Most international airlines are bracing for pain this year as the industry grapples with low demand for business and first-class travel and a slump in global trade. Australian national airline Qantas Airways earlier this week slashed its profit forecast and said it would cut up to 5 per cent of its work force as the carrier grounds some aircraft amid the economic turmoil.
With the global picture still deteriorating, Cathay Pacific said it would reduce planned passenger capacity by 8 per cent and that of Dragonair by 13 per cent starting next month. It also planned to cut cargo capacity by 11 per cent with freighter frequency falling to 84 flights a week from their 2008 peak of 124 a week.
The company is also grounding two more of its Boeing 747 freighters, taking the total to five, and negotiating the sale of five aircraft.
Cathay Pacific shares are trading 0.2 per cent lower at HK$9.56 in morning trade on Friday in Hong Kong.