Cathay to park freighters, offer unpaid leave
By MIN LEE,Associated Press Writer AP - Saturday, November 29
HONG KONG - Cathay Pacific Airways Ltd. said Friday it will park two freighters, offer unpaid leave to employees and may delay construction on a cargo terminal to cut costs amid the global economic downturn.
The new measures came three weeks after Hong Kong's flagship airline and Asia's No. 3 carrier issued a profit warning due to slumping revenue and losses from hedging jet fuel costs.
Cathay Pacific will park two Boeing 747-400BCF freighters in California in January for a year and reduce cargo flights to Australia, North America and Europe, chief executive Tony Tyler told reporters at a media briefing.
Voluntary unpaid leave will be offered to its pilots and all 7,000 Hong Kong-based cabin crew, Tyler said.
The carrier is also in talks with Hong Kong's Airport Authority about delaying construction on a planned $4.8 billion Hong Kong dollar ($619 million) cargo terminal at the territory's airport to reduce capital expenditures.
Meanwhile, Cathay Pacific will keep passenger growth flat in 2009 by scaling back services to North America and adding flights to Australia, the Middle East and Europe, but the airline won't cut any destinations, Tyler said.
Tyler did not announce job cuts, but cautioned that "the plan may well have to be revised again depending on how things unfold."
"The predictability of the business and visibility of future business is very low. It's very hard to predict what's going to happen with any real certainty. The key for our business over the next few months is flexibility," the executive said.
Cathay Pacific has said that fuel hedging contracts that run through 2011 were costing an estimated HK$2.8 billion ($361 million) as of Oct. 31, though the losses hadn't been realized and could be lower should fuel prices rise again.
The bets were originally placed to protect against surging oil prices earlier this year. The company's jet fuel costs are expected to be about HK$40 billion ($5.2 billion) in 2008.
The company posted a HK$663 million ($86 million) loss in the first six months of this year because of mounting jet fuel costs _ the first half-year loss in nearly five years. Average fuel costs for the first half were 60 percent above those a year earlier.
The number of passengers for Cathay Pacific and subsidiary airline Dragonair combined dropped from 2.13 million passengers in August to 1.88 million passengers in September. Passengers in September were down 0.7 percent from a year earlier.
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