Cathay Pacific says operating environment is 'very tough'; sees 'new normal' operating environment

Cathay Pacific CEO Ivan Chu, in the Oct-2016 edition of CXWorld, commented (28-Oct-2016) the operating environment at present is "very tough". He explained: "We have seen more and more capacity added into the market. Our revenues are declining and yield is under great pressure. The weakness of the global economy has led to a reduction in premium demand, with major companies tightening their belts on corporate travel". Other impacts impacting the operating environment include the Hong Kong's inbound tourism and the impact of security scares in Europe. He added: "We believe that what we are facing now is the "new normal". This is not a short-term crisis but one that will impact us over the long term - and it will require us to do things differently". Mr Chu noted that in recent years, the carrier has have been working hard to increase productivity and keep underlying cost base competitive. He explained: "We've had some success, but we need to do more. Other airlines are facing the same external environment as us, with fuel surcharges gone and revenues weakening, but they are doing better than we are because they have a leaner cost base. That's why we need to get more productive - and fast". The carrier has already begun a critical review of the business which will look at how to improve revenues and costs. Mr Chu added: "We will review every option for improving efficiency and productivity to help us maintain a strong financial position and deliver acceptable returns to our investors. We understand the need to continue to invest in our businesses and to continuously improve our products and services. But this is going to require us to do things differently, so we will review the way in which we are organised, the work which we do and our cost base. At the same time we are also in the process of developing our future strategy for the long term". [more - original PR]