HONG KONG (REUTERS) –
In a memo to staff on Wednesday evening (Sept 11), new chief executive Augustus Tang said he had asked executives to examine spending and focus on cutting costs. The airline will also not replace departing employees in non-flying positions unless approved by a spending control committee, he said.
Cathay Pacific has said it will cut capacity for the upcoming winter season after reporting an 11.3 per cent fall in passenger numbers for August. The airline does not expect September to be any less difficult, while analysts have projected it could swing to a loss in the second half.
Cathay Pacific shares fell 2.4 per cent early on Thursday, lagging the benchmark Hang Seng Index that was down 0.4 per cent.
The weak demand and cuts to capacity will heap more pressure on Cathay Pacific and its new management, appointed after
Cathay Pacific, which is trying to complete a three-year financial turnaround plan, has become the biggest corporate casualty of the Hong Kong protests after China demanded it suspend staff involved in, or supporting, the demonstrations that have plunged the former British colony into a political crisis.
Jefferies analyst Andrew Lee told clients he expected the airline could swing to a HK$973 million (S$170 million) loss in the second half of the year. BOCOM International analyst Luya You said second-half earnings could be “notably dismal”.
Cathay Pacific last month swung to its first profit for the January-June period since 2016 and said at the time that the second half was likely to be better than usual due to seasonality.