Another "The End of the World as We Know It" article:
Cathay fights Sars for survival
14/04/2003 16:54 - (SA)
Hong Kong - Leading Asian airline Cathay Pacific has been dealt a devastating blow by the Sars crisis, but analysts believe it will survive, despite massive cutbacks and a deeply shaken corporate psyche.
As demand for tickets to and from Cathay's base in Hong Kong has collapsed, the airline has cut more than 40% of daily flights. The airline says passenger numbers are down one third from last year, although media reports put the figure as high as 80%.
Aviation analyst Jim Eckes, managing director of Indoswiss Aviation, told AFP Cathay could see passenger services cut by at least 50% if the Severe Acute Respiratory Syndrome epidemic continued.
The Sars epidemic has killed over 130 people and infected some 3 300 in more than 30 countries. In a body blow for Hong Kong, the World Health Organisation issued an unprecedented advisory on April 1 warning against unnecessary travel to the territory and southern China.
Media reported at the weekend that a leaked internal company memo from Cathay's director of flight operations, Nick Rhodes, warned that if the number of passengers fell below 6 000 in May, the airline would have to consider suspending passenger flights.
Cathy disputed the report and Eckes said the airline was certainly not doomed by the crisis.
"There has to be a minimum amount of passenger service," Eckes said, adding that passenger flights, even though greatly reduced in number, were needed to protect the airline's franchises.
"If Cathay stops flying, for example, to London, who's to say Dragonair won't jump in and say, 'We'll do it'," Eckes said.
But he called the Sars epidemic "the worst thing to happen to the modern airline industry."
"It's been extraordinarily bad for Cathay, and what's worse is we don't know how much longer this is going to continue," Eckes said. "If this goes on, they're going to have very heavy losses."
He said, however, the airline is extremely well managed, calling it the lead indicator for most airlines. "If Cathay does something they usually do it first ... Cathay can turn on a dime and that's why they've been so successful."
It was only last month, in the aftermath of a dismal showing following the September 11, 2001 terror attacks in the United States, that the airline announced record profits.
But the company's celebrations were immediately cut short as Sars began to take Asia in its grip and the pneumonia-like illness was transmitted by airline passengers across the world.
Passenger bookings were "annihilated," Cathay's chief executive reportedly wrote in a letter to staff published by the company's in-house magazine CXWorld, and the airline very quickly began slashing its flight schedule.
As passengers disappeared, Cathay's stock also began to suffer, rapidly falling in value in mid-March from around HK$11.50 (US$1.47) to HK$8.40 at closing Monday.
The last month "has been quite dramatic," said Cathay spokeswoman Rosita Ng, who said the corporation's outlook had "changed totally" from the rosey view of a few weeks ago...
http://www.news24.com/News24/Finance...347590,00.html