Cathay sees “no end in sight” to current challenges, Jet Airways facing temporary closure
Cathay Pacific CEO, Tony Tyler, in a speech to the Asian Aerospace Congress, described the current economic environment as the "most destructive economic downturn in recent memory", adding "the worst thing of all is there is still no end in sight".
- Cathay Pacific CEO describes current economic environment as the "most destructive economic downturn in recent memory" with no end in sight.
- Cathay Pacific suffering from a collapse in front-end and cargo revenues, weak yields in Economy cabins, and volatile fuel prices.
- Uncertainty whether the current trend of lower premium demand and lower yields is structural or cyclical.
- Cathay Pacific CEO criticizes suppliers for overcharging airlines amid the downturn.
- Jet Airways faces potential temporary closure due to a mass "simulated" strike by pilots.
- Qantas reviewing its stake in Air Pacific and considering selling its 46% stake.
Mr Tyler stated the carrier is "suffering a toxic combination of a collapse in our front end and cargo revenues, extremely weak yields in our Economy cabins and still volatile fuel prices", with the carrier further affected by the swine flu outbreak and cross-Strait services. Also concerning is that Mr Tyler quested whether the current trends of lower premium demand and lower yields is structural or just cyclical, and whether this trend will become the 'new normal'".
Mr Tyler added, "we keep waiting for signs of the green shoots of recovery. We're in Asia so I'll use an appropriate analogy. When we look at the rice-paddy we see only one or two green shoots rising out of the watery mud. Certainly not enough to fill a rice bowl! The very best we can say is that things have stopped getting worse, but a real and sustained business upswing still seems like a distant dream".
Mr Tyler also criticised airframe, engine, parts, component and interiors suppliers for overcharging airlines for their products amid the current downturn.
Cathay Pacific shares were down 1.0% yesterday.
See related report: Cathay Pacific CEO lets fly at suppliers; business recovery "still seems like a distant dream"
Jet Airways could be temporarily closed down due to mass 'simulated' strike by pilots
Jet Airways' shares dropped the most in three months in Mumbai intra-day trading, falling by as much as 13%, after the carrier stated it would be forced to cancel approximately a third of its daily services on 08-Sep-2009, due to an alleged "simulated strike" by nearly 40% of the carrier's pilots.
The carrier's share price has gained 23% in 2009, compared to the benchmark Sensex Index's 67% gain, and was up 2.6% at the close of trading yesterday.
186 Jet Airways services, both domestic and international services were cancelled, affecting approximately 13,000 passengers, with Chairman, Naresh Goyal, stating he would "not hesitate to close down the airline", if the "philosophy" of Jet Airways' employees does not improve.
The airline, which reported its worst loss in at least a decade in 2008, stated it is in a "conciliation process" with the pilots, which the airline believes is sabotaging the carrier's operation to "damage the airline's operations."
Qantas reviewing stake in Air Pacific
Qantas Group shares were up 0.8% yesterday. The carrier confirmed it is currently reviewing its 46% stake in Air Pacific and is in talks with the Fijian Government over the possibility of selling its stake. The planned sale comes as the Group plans to launch Jetstar services to Fiji and focus on its core business amid the global financial downturn.
Virgin Blue issues over 50 million new shares
Also in the Australian market, Virgin Blue's shares slipped 5.5% yesterday, on the same day the carrier announced the issuance of 36.8 million ordinary shares in connection with its institutional placement of shares and 15.3 million ordinary shares in connection with its ineligible shareholder nominee process. The carrier also confirmed its allotment of ordinary shares under the retail entitlement offer took place on 08-Sep-09.
Asia Pacific selected airlines daily share price movements (% change): 08-Sep-09
