The chief of Cathay Pacific Airways said weak travel demand amid the economic crisis and the swine flu threat may “have stopped getting worse,” but prospects for a recovery remain uncertain.
Like airlines everywhere, Hong Kong’s flagship carrier has been hit hard by a travel industry slump over the last year.
CEO Tony Tyler suggested the “bumper couple of months” that usually accompany an uptick in demand in the summer is unlikely to pan out this year.
“The best we can say about our business at the moment ... is that things may now have stopped getting worse,” Tyler said in a company newsletter yesterday. “But we can’t even be certain about that. Certainly the flu threat is receding, which is very welcome, but the economic indicators are still highly uncertain.”
Tyler said there was “an unsettling lack of visibility” in the outlook for passenger and cargo traffic.
The company, which will report its half-year results next month, lost a worse-than-expected HK$8.6 billion (US$1.1 billion) last year. That was its first annual red ink since the height of the Asian financial crisis in 1998.
JOB CUTS
Elsewhere, British Airways’ proposed 3,700 job cuts were essential to its survival as it faces the “eye of the storm” ravaging the industry, CEO Willie Walsh said yesterday.
Walsh told shareholders at British Airways PLC’s annual general meeting that costs had to be reduced to keep the company viable. The proposed job cuts, to be made by next March, would come on top of the 2,500 positions that have been axed since last summer.
The airline also wants to freeze staff wages for two years, part of drastic expenditure cuts, as the global economic downturn eats away at demand for air travel.
“There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base,” Walsh told investors and employees in London. “These changes are essential to our short-term survival and, more importantly, to our long-term viability.”
Pilots for the airline voted on Monday to accept a 2.6 percent pay cut as part of a package of measures to save British Airways some US$42 million.
But thousands of baggage handlers and check-in staff are opposed to the cost-cutting plans. Their union, GMB, said they are angry that the lowest paid employees at the airline were being asked to give up their family-friendly flexible working patterns and accept permanent changes to their salary conditions.
“The broadest backs must carry the heaviest loads and bear a bigger brunt of the savings,” GMB spokesman Mick Rix said. “Why should our members ... continue to subsidize the highest earners when the very highly paid in the company are not accepting permanent change and leading by example?”
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