Cathay Pacific CEO John Slosar, in its CX World Magazine, warned (Apr-2012) the carrier may park aircraft and reduce services if weakening demand and high fuel costs continue. He stated while there have been numerous positive developments at the carrier in recent months, such as the continuing modernisation of the fleet and the installation of new in-flight products, the carrier "cannot ignore the current difficult state of our industry". The carrier said revenue growth in recent weeks has been falling "well short of target" and failing to keep pace with capacity growth. The carrier has seen signs of weakness in its first- and business-class demand and noted the yield situation is not sustainable. "Fuel prices remain at crippling highs and our cargo business still shows no sign of any sustained pick-up," Mr Slosar said, adding, "The recent turmoil in the euro zone reinforces the fact that the world is still balancing on a knife edge”. While Mr Slosar noted conditions have not reached the challenges seen during the global financial crisis in 2008-2009, the airline will need to take action to contain costs if the situation persists, noting it will have to consider more ways to further pare back spending. [more - original PR]
Cathay Pacific may park aircraft and reduce operations amid weakening demand
You may also be interested in the following articles...
Hong Kong Airlines becomes larger in Japan than in China: overlap with sister HK Express
The rapid growth of mainland China's HNA Group is resulting in companies being added ahead of integration. HNA's two Hong Kong-based airlines, Hong Kong Airlines and HK Express, are increasingly overlapping with each other. That their roles are undefined and uncoordinated risks the two fighting each other – rather than combining their different propositions to address multiple segments of the markets.
Hong Kong Airlines is rapidly growing in Tokyo and Osaka, and launching a new service to Seoul Incheon – its 11th new destination in 2016. These are strong O&D markets and present a change from Hong Kong Airlines' previous staple of connecting traffic from mainland China over Hong Kong, or competing mainly against Cathay Pacific in key regional Asian markets from Hong Kong.
Following Hong Kong Airlines' entry to Tokyo and Osaka it will further increase services to the point where Japan becomes a larger market for it than mainland China. This is of some concern given Hong Kong Airlines' still evolving strategy for Japan, and weakening of the market through the appreciation of the yen.
Cathay Pacific ends 747 flights, its future defined not by 777s/A350s but by diversifying
For 37 years the Boeing 747 brought Cathay Pacific to the world. As it did for so many operators, the 747 transformed Cathay into a global airline. Cathay's final passenger 747 flight was on 01-Oct-2016. The occasion is filled with sentiment and the usual remarks of being the end of an era; the aircraft of course is iconic, and Cathay, which turned 70 in Sep-2016, has known the 747 for longer than it has not.
Yet the 747 era at Cathay ended long ago. The 747 gave Cathay a global footprint, but this is true for most current and former 747 operators. Cathay's position today against competitors is defined not by network reach but rather – depth. Mainland Chinese airlines, some of Cathay's closest competitors, know they have the local market and lower costs but acknowledge the one-stop challenge Cathay brings with hyperfrequency and a stronger product/brand.
That depth and domination, especially in the key North American market, was achieved with the 777-300ER. Cathay operates 53 777-300ERs – more than twice the 24 747-400s the airline had at its peak. Although A350s are arriving, Cathay's next evolution is defined not by aircraft and flying but rather by bringing new non-flying businesses into the group. For aviation this is seen as a partial surrender to competition. For the company it is a graduation to consistent and higher profits. As with the 747, it is time to move on and pursue a more productive future.