Cathay Pacific Airways Ltd may force its 14,000 workers to take unpaid leave and Japan Airlines System Corp wants about 50 flight attendants to do the same as Asian carriers try to cut costs, following a slump in travel demand caused by the war in Iraq and a deadly virus.
Hong Kong-based Cathay, Korean Air Co and other airlines in the region said severe acute respiratory syndrome, or SARS, will harm earnings this year. Asian carriers have cut about 650 weekly flights this month. Some analysts predict airlines will lose money in the second quarter and potentially for the full year.
"Our first-quarter earnings won't be as good as a year earlier because we had to reduce some of our flights," said William Han, a Korean Air spokesman. Cathay Pacific is asking employees to clear their annual leave and take unpaid leave, said spokeswoman Rosita Ng.
Singapore Airlines Ltd, Asia's most profitable carrier, Korean Air and other carriers probably won't follow UAL Corp's United Airlines Inc into bankruptcy. Yet the disease means they are under even more pressure to save money after fewer passengers took to the skies because of war in Iraq.
"The main thing is to cut their operating costs," said Steven Lim, who helps manage about US$270 million at Daiwa SB Investments Ltd. "The stronger ones like Singapore Air and Cathay are strong enough to weather this period, but others may face more financial problems."
Asian airline stocks have slumped. Since mid-March, when the disease spread across the world, the Bloomberg Asia Pacific Airlines Index of 17 carriers have fallen 9 percent. Cathay's shares fell 24 percent for the period, while Singapore Airlines fell 15 percent and Eva Airways Corp's stock is down 12 percent.
Cathay shares closed unchanged at HK$8.80 in Hong Kong, while Singapore Air fell as much as 1.7 percent to S$8.65 in Singapore.
Earnings for EVA Air (
Asiana Airlines Inc, South Korea's second-biggest carrier said first-quarter earnings will be below last year's 24 billion won (US$20 million).
In Japan, All Nippon Airways Co, which analysts predict will report its ninth annual loss in a decade for the year ended March 31, will "see considerable impact for the next business year if the virus continues," spokesman Kazuyuki Iwakata said.
Japan Airlines asked its cabin attendants to take unpaid leave for a month, said spokesman Tatsuo Yoshimura. The company wants about 50 to 60 of its 7,000 flight attendants to take the leave in May.
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
RSS