Cathay Pacific Announces Capacity Cuts

Cathay Pacific Boeing 777-300ER
Cathay Pacific Boeing 777-300ER | Tis Meyer

Hong Kong-based Cathay Pacific and Cathay Dragon suffered an 11.3 per cent fall in passenger numbers in August.

Ronald Lam, Cathay Pacific Group Chief Customer and Commercial Officer, said:

“August was an incredibly challenging month, both for Cathay Pacific and for Hong Kong. Overall tourist arrivals into the city were nearly half of what they usually are in what is normally a strong summer holiday month, and this has significantly affected the performance of our airlines. Our inbound Hong Kong traffic was down 38% while outbound was down 12% year-on-year, and we don’t anticipate September being any less difficult. 

“Demand for premium class travel experienced a more significant drop relative to leisure travel and overall load factor dipped significantly to 80%. Inbound traffic demand to Hong Kong from regional markets, particularly mainland China and North East Asia, was severely hit, though our South Pacific routes were a bright spot. As a result of reduced travel demand, an increased mix of transit passengers and the negative impact caused by the strengthening US dollar, passenger yield was under further pressure.

“Given the current significant decline in forward bookings for the remainder of the year, we will make some short-term tactical measures such as capacity realignments. Specifically, we are reducing our capacity growth such that it will be slightly down year-on-year for the 2019 winter season versus our original growth plan of more than 6% for the period.” 

Cathay Pacific Group has also asked the management team to examine expenditure and to focus on increased productivity and cost-saving measures, as well as delaying non-critical spend. There is also a freeze on adding new headcount and replacing existing headcount for ‘non-flying’ positions unless it has been reviewed and approved.

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