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 yesterday.
Cathay Pacific’s move comes a month after the airline recorded an annual loss of HK$8.6 billion (US$1.1 billion) last year — 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,” Cathay Pacific chief executive Tony Tyler said in the statement.
Cathay Pacific and its subsidiary Dragonair reported a 22.4 percent 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 percent of its workforce 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 percent and that of Dragonair by 13 percent starting next month. It also planned to cut cargo capacity by 11 percent with freighter frequency falling to 84 flights a week from their peak last year 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 traded 0.2 percent lower at HK$9.56 in morning trade yesterday in Hong Kong.