Talking Points - 10-Oct-08

Premium Analysis

Cathay seeing big hit on premium demand, warns “this is just the beginning”. Cathay Pacific’s hairy-chested expansion programme is hitting a potentially much bigger hurdle than fuel (which pushed the carrier deeply into the red in the first half). CEO, Tony Tyler admitted in an internal newsletter the airline is being “hit hard on the demand side” and the airline is “seriously worried” by stalling revenue growth as premium long-haul travel drops “significantly”. Cathay has expanded its capacity (ASKs) by an eye-popping 14.5% in the year to Aug-08. Sep-08 data is due out shortly and could show some further weakness in load factors. Yields, which the airline does not disclose in its monthly reports, are likely to be tumbling.

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