Cathay Pacific has made the difficult but inevitable decision to slow its aggressive expansion plans amid a severe downturn in demand, putting Boeing on notice that it intends to slow some B777 and freighter deliveries.
To preserve cash, two converted freighters will be parked in the California desert next year and the development of the carrier's new dedicated cargo terminal at Hong Kong International Airport will be delayed, pushing back its 2011 launch.
No destinations will be axed, but capacity will be reorganised around the Cathay network. Planned passenger capacity growth in 2009 will ease from 6-7% to less than 1%, after double-digit expansion in 2008.
The airline stated, "nothing can be set in stone at the moment. Visibility is low and it's hard to predict developments with any real certainty. Flexibility will be the key word in the months ahead".
The airline is also offering its pilots and 7,000 cabin crew members voluntary unpaid leave for up to one year.
CEO, Tony Tyler, stated, "this is a very difficult time for our airline and for the aviation industry as a whole, and we cannot see light at the end of the tunnel at this point". He added the measures are necessary "to help ensure the financial health and long-term well-being of our airline".
Cathay Pacific shares fell 1.3% on Friday. One piece of good news is shares in Cathay's cross-equity partner, Air China, continue to rise (gaining a further 6.5% on Friday) on expectations the Beijing-based airline will receive a government cash injection shortly.
Asia Pacific selected airlines daily share price movements (% change): 28-Nov-08