Cathay Pacific chief calls for hiring freeze.....
 

Cathay Pacific Airways’ chief executive has called on all departments in the company to curb spending by “stopping all non-essential discretionary expenditure,” freeze hiring or replacing “non-operationally critical staff,” and to review operational budgets.

“It is now necessary for us to contain costs further,” chief executive Ivan Chu Kwok-leung told staff, according to the company’s internal magazine CX World released on Tuesday.

Chu said business challenges have become more acute in recent weeks, with continued pressure on its cargo business being compounded by “a weakening trend in the passenger business”.

The company said it was not considering laying off staff in response to an emailed query.

Passenger volume at Cathay Pacific and its subsidiary Dragonair declined 0.1 per cent in April compared to the same month last year, according to operational data released on Tuesday. The company said passenger demand weakened in general across most of its markets served and competition increased. Load factor, a measure of capacity utilisation, dropped 2.3 percentage points to 84.9 per cent in the month.

Chu said yield, a measure of unit profitability, is “coming under ever-more pressure” at the airline.

Cathay had seen high growth of passenger traffic at the back of its planes while demand for its premium cabins fell below expectations.

Load factors have fallen in recent months, which Chu blamed on a tourism slump in Hong Kong, a sluggish global economy and market competition.

Chu said the three key measures to cut costs will take immediate effect.

He did not give a target or timeframe, though he described the drive as “short-term.” Chu said “big-ticket items that will help to build a better, stronger airline would not be affected, such as the reopening of its business class lounge The Pier, the opening of its new Madrid route, and delivery of its A350 plane later this month — its first new aircraft model in two decades.

The airline recorded better than expected cargo tonnage last month, but the company said yield “remains under intense pressure”.

Will Horton, a Hong Kong-based analyst for the Centre for Aviation said the need to cut costs should be viewed independently from Cathay’s steep loss from making wrong bets about oil prices. It made HK$6 billion last year, while its oil hedging loss was a bigger HK$8.5 billion.

“Cost reduction is about securing a future for growth. Hong Kong is expensive and not getting cheaper. Mainland Chinese airlines will one day restructure and significantly reduce their cost base, changing the game for everyone,” Horton said.

Cathay did not respond to the Post’s query on whether there would be any cutback on its HK$100 million planned spending to rebrand Dragonair as Cathay Dragon in a bid to enhance the premium image of the short-haul unit.

Horton said the rebrand is “at the cost of a fraction of a new aircraft” and “can deliver profits potentially higher than a new aircraft


SCMP

"its first new aircraft model in two decades."

Strange, I thought the B747-8F was in this decade!!

Horton said the rebrand is “at the cost of a fraction of a new aircraft” and “can deliver profits potentially higher than a new aircraft

Mr Horton loses any credibility with those silly statements. It is clear he has never been on-board a KA flight delayed due to technical issues. A lick of paint is not going to make 20+ year old high cycle A330's or 15+ year old A320 aircraft any more reliable

BusyB, no. Just No. That line didn't work for potential customers, it won't work with me.

747 is a 60s model. Regardless what -Dash it is.

That's the first good news I heard for long time, throw us SLS and part time, it would make my job much better

Bet 5, by the same illogical argument then the Airbus 350 isn't new either.

SLS...haha. Fool me once....fool me twice. Well, we all know how that goes. Needless to say, they can get a polite "F*ck OFF" with any further requests for ME taking a pay cut, while the Directors keep their snouts firmly in the "25% annual pay raise and greedy bonus" system. I hope Ivan Clueless really does announce another SLS system, so I and thousands of others can have the pleasure of throwing it back in his face.

Enormous hedging losses are a good thing because it means fuel is cheap! (Not if you contract to buy it expensively you halfwit!!!)
These guys are being questioned by London and are panicking methinks.....
Beer and popcorn please.

YGBSM.

Why is anyone actually listening to any of the propaganda ? Does it really matter for anything in your life ?

I'd suggest one might be happier if they put them on ignore. Turn off the TV and live life.

Let things be and let the shareholders decide where the airline goes. They obviously don't listen to us very well. Maybe they'll listen to them.

Make your life as good as it can be and do things to keep yourself and your family well. Spend your time well and doing things you like. Do whatever you need to keep yourself balanced and fit for the long haul.

I WOULD say that if you let this place steal too much of your time, and would rather be doing something else, that you might regret this choice later.

Load factor dropped below 85%? Man the life boats Ivan! imagine how profitable that would be if we were paying the same for fuel as everyone else... I know, an old story. I honestly can't think of a department in the company that isn't understaffed other than management. I can suggest a few savings!

Managers are like holes in the cheese.
The more cheese there is, the more holes there are, and the more holes there are, the less cheese there is...

Loadfactor dropped by 0.1%, being less than 85% and I am sure we are also running double digits behind some wishful thinking key targets......

Why do I smell bull**** and think somebody is inventing a crisis:
- To distract what has to be the biggest most monumental misjudgment in the history of this company - an HK$ 8.4 ish BILLION mistake that might even bring it to its knees.
- To excuse and legitimize the cost cutting the sadly might actually need to happen to recoup the squandered money.
- Help the negotiations with the pilots along. After all the company has said in the papers and on TV that times are hard, so it must be true.

Perhaps slightly populist, but 8.4 billion in one year is such a huge number one has to bring it into context....
HK$ 23 Mil per day, HK$ 960.000 per hour, HK$ 16.000 per minute (extra housing allowance anybody), HK$ 266 per second
... tick tick tick ..... and the man has the audacity to stand in front of a camera and sell it as a success.

..... They would complain if the loadfactor was 200%, the jets could run on CCD statements (or some other form of manure) and it was raining money .... no credibility or integrity ...

Great post Shep, important at times like this.

I second that! Well said Shep. Cathay is your employer - that's all - just do your job as pleasantly and safely as possible and then go home, wherever you want that to be.

Meanwhile over the border, China Southern is going gang busters. Flights from Shenzen to Aust , ME & EUR have started to entice those from HKG & Shenzen away from CX. It's not much, but any passenger who gets onboard is one more passenger not getting on CX.

Right...bad management decisions and erosion of a premium product had nothing to do with it!