Paul Lewis/SINGAPORE
Cathay Pacific Airways is implementing a range of measures to boost revenue and cut costs as traffic figures and projected end-of-year profits for the Hong Kong carrier continue to plummet.
Its latest traffic figures show no sign of a turn-around, with a further 9.8% fall in passenger traffic for September, compared with the same month in 1996. This follows a 10.9% fall in August, 13% in July and 12% in June, as tourists - particularly from Japan and South-East Asia - continue to stay away from Hong Kong.
Cathay Pacific corporate development director Tony Tyler admits that there is "no light at the end of the tunnel", adding: "The position as we look forward into next year doesn't show any sign of improvement - we're fairly bearish."
Aviation analysts have continued to revise down their year-end profit forecasts for the carrier. Earlier predictions had been in the range of HK$3 billion ($388 million) to HK$3.7 billion, already suggesting a dip on the 1996 figure of HK$3.8 billion. Latest estimates range from Lehman Brothers' HK$2.3 billion down to HK$1.6 billion from Warburgs.
"If we see another month like this, we may have to drop it a bit further," warns Lehman Brothers analyst Philip Tulk.
Cathay's management has frozen all new staff recruitment and is reviewing required future departmental staffing levels at Hong Kong's planned new airport, scheduled to open in April 1998. "We're not going to allow the replacement of staff unless it is absolutely necessary," says Tyler.
The company is implementing initiatives to try to stimulate traffic, including special fares and travel incentives, a new advertising campaign and a wider Hong Kong tourist promotion.
"There has been tactical ticket pricing, but we're not going to slash prices across the board - that won't fix the problem," says Tyler.
Cathay remains committed to the seven Boeing 777-300s and six Airbus A330/A340s on order, but has put on hold until later in 1998 a planned purchase of additional Boeing 747s and A330/A340s.
The airline is understood to have told Airbus that it cannot finalise an order for the new A340-600s in time for the aircraft's expected launch, but wants to remain part of the airline working group.
"We're not going to be rushed into making commitments, "says Tyler. Cathay has asked the manufacturers to notify it if it gets into danger of losing delivery slots.
Source: Flight International
