Cathay spreads wings on flights and services
Bigger fleet to open up additional destinations
Keith Wallis and Charlotte So
Dec 07, 2010
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New flights and services, enhanced products and a strengthening of Cathay Pacific (SEHK: 0293)'s relationship with shareholder Air China (SEHK: 0753, announcements, news) are among the priorities for the Hong Kong-listed airline, chief executive-designate John Slosar said.
Cathay Pacific is set to report record profits for 2010 in March. Slosar said that while the airline had yet to see any impact on its premium business and first-class traffic amid economic woes in some Western economies, "instability does give us concerns for 2011".
"Next year will be challenging," Slosar said at a press briefing yesterday after the airline confirmed late on Friday that he would take over as chief executive on April 1. This would follow Tony Tyler's departure on March 31 prior to his expected election in early June as the new director-general and chief executive of the International Air Transport Association in Geneva.
Slosar also downplayed the threat of possible disruption to flights during the Christmas and New Year holiday period due to industrial action by flight crew. He remained "reasonably optimistic" there would be no disruption and added the airline had enough crew to operate the carrier's flight schedule.
Around 93 per cent of the more than 1,400 pilots belonging to the Hong Kong Aircrew Officers Association have voted to work to rule in support of a 30 per cent pay rise spread over four years. Talks between pilot representatives and management are due to start next Monday and last a week. The exact timing of any action will depend on a decision by the pilots association.
Outlining the carrier's expansion plans, Slosar said Cathay would take delivery of 15 aircraft next year, which would be the highest number of aeroplanes ever delivered to the carrier in a single year. This would allow the airline to add extra destinations and boost existing flight schedules.
Explaining these additions, Tyler, who was also at the briefing, said a four-times-a-week service would be launched between Hong Kong and Abu Dhabi from June 2, while a daily flight to Chicago would start on September 1. There would be additional flights to New York from March and to Toronto from May.
On the airline's tie-up with Air China, Slosar said Air China Cargo, Cathay's "core relationship" with the mainland flag carrier, would get started this year. Cathay has agreed to sell four Boeing 747-400 freighters converted from passenger aircraft to its cargo joint venture with Air China.
Tyler added that Cathay Pacific already had a close relationship with Air China, which owns almost 30 per cent of the Hong Kong carrier, which it wants to develop further with more co-operation. He said Cathay Pacific was "looking to add one or two new (mainland) destinations".
Slosar would not be drawn on Cathay's new products ahead of a formal launch today but they will include a cabin revamp of the aircraft fleet that would include the addition of a premium economy class.
The airline plans to scrap its controversial hard-shell seat in economy on long-haul services in favour of a new seat that will partially recline and slide forward.
The hard-shell seat is expected to be kept on short- and medium-haul services. The herringbone seating arrangement - where seats are askew in one direction - in business class will also be revised.
Slosar also indicated the airline's tacit support for a third runway at Chek Lap Kok. He said the development of a third runway was "going to be a really important issue for Hong Kong to decide in 2011".
On his proposed move to IATA, Tyler said: "I have had a wonderful time at Cathay Pacific for many years but all good things come to an end."
Discussing the management change, observers said Slosar was more knowledgable about mainland culture and spoke Putonghua after working at Swire's beverage division for several years. This could help Cathay's relations with Air China.
"It is possible that John could make more breakthroughs in the relationship and co-operation with Air China due to his mainland experience," said Wei Sim a transportation analyst with Macquarie Securities.
A management insider said that both men were alike in their management style because of their extensive training within the Swire Pacific (SEHK: 0019) Group and had been moulded by the group's corporate culture for more than 30 years.