Letter to all CX staff from David Turnbull.
Letter to staff from the Chief Executive
We are all still coming to terms with the devastating human impact of last week's tragic events in the US. Their long-term economic effects are not yet fully understood, but it is already clear that the global airline industry is taking the brunt of the initial impact.
Following the events of 11 September, the traffic of US and European carriers has already suffered such declines that most have found it necessary to announce major reductions in staff numbers and huge cutbacks in operations. The American carriers have even been granted government assistance and subsidies to keep them in business. Even before last week's terrorist attacks, traffic on Cathay Pacific routes had declined as a result of the on-going economic downturn and the impact of the AOA's industrial action. Since 11 September, our loads are down and forward bookings have fallen yet further, though the direct effect has not yet been as severe as it has for US and European airlines. While we cannot predict with certainty how our business will fare over the coming weeks and months, we do know that the future is going to be tough.
As a result we are conducting a top to bottom review of our operations. However, we will not be making any hasty decisions. In due course we will need to respond to reductions in traffic levels, and match our capacity to the level of demand. We will also look at what measures we can take to reduce expenditure, which will include the deferral or cancellation of capital projects and purchases. We implemented a hiring freeze for all ground staff and cabin crew in August, which remains in place. We will now also phase out all pilot recruitment.
Our strategy is to preserve the network, and to preserve the employment of our staff. We do not have any current plans to reduce our workforce, but this cannot be ruled out completely as the longer-term impact of last week's events makes itself felt. In the current situation what matters is not making a profit but having enough cash to pay the bills. After years of careful management Cathay Pacific is certainly in a stronger position than many of our competitors, but we will have to continue to manage the Company to keep our cash flows positive. Only if we are successful in this can we meet our objective of preserving jobs and salaries. If despite our best efforts we cannot do this, and sacrifices have to be made, we will share them together.
We all need to pull in the same direction if we are to bring our great Company through this crisis. Many thousands of Cathay Pacific staff have given strong support through recent difficult times, and I promise you that the management team will do everything we can to repay that support as we move forward together. It is most unfortunate that at this critical time the leaders of the pilots' union are still trying to fight for more money and "improved lifestyles" for their members by pursuing industrial action against our Company. This action is specifically designed to damage the Company financially. Despite all that is going on, the AOA seems blind to the fact that what their members need most is to secure the future of the airline that pays their salaries and provides them with the lifestyle they now have.
I want to assure you that our primary focus is on maintaining the operation and doing our utmost to ensure a strong future for Cathay Pacific - for your sake, for our passengers' sake and, indeed, for the benefit of the whole of Hong Kong. Thank you in advance for your understanding and hard work in the difficult times ahead.
David Turnbull, Deputy Chairman and Chief Executive