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Thu, Jul 24, 2003 - Page 12 News List

Cathay's efforts fail to lure passengers

BLOOMBERG

Cathay Pacific Airways Ltd, the larger of Hong Kong's two carriers, is carrying 14 percent fewer passengers than a year ago, improving from May and last month as SARS subsides and discounts encourage people to resume travel.

Cathay, Asia's sixth-largest airline by sales, carried an average of 31,000 passengers a day on Saturday and Sunday, compared with 36,000 a day at the same time last year, said spokeswoman Lisa Wong.

The airline will probably report a first-half loss because of the slump in demand following the SARS outbreak and reduced fares to attract travelers back, analysts said. Cathay offered discounts of as much as 30 percent off regular fares last month to encourage more people to travel. It also gave out 10,000 free tickets to entice travelers to visit Hong Kong last month.

To make a profit, "we need to drive larger volumes because the average fare is lower," said Wong.

Cathay probably made a loss of more than HK$1 billion (US$128.2 million) in the first half because of SARS, said Timothy Ross, an analyst at UBS Warburg. Cathay's passenger yield, a measure of an airline's profitability, probably fell as much as 15 percent in the first half from a year ago, he said.

The airline has said it normally needs 20,000 passengers a day to break even on an operating basis and 27,000 passengers a day to avoid a net loss.

"The breakeven level has changed because of lower yields," Wong said yesterday, declining to give the new levels.

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