Cathay to Suspend Pax Flights in May?
 

Cathay May Halt Passenger Flights in May

Sat April 12, 2003 01:39 PM ET

By Rico Ngai

HONG KONG (Reuters) - Cathay Pacific 0293.HK , Asia's fourth-largest airline, is considering grounding all passenger flights next month as a deadly virus sweeping through Hong Kong scares away travelers and threatens the airline's survival.

The drastic measure being considered by Cathay, facing the worst crises in its history, comes as Asian carriers cancel hundreds of flights because tourists and business people stay at home, terrified of contracting Severe Acute Respiratory Syndrome (SARS).

An internal Cathay memo, sighted by Reuters on Saturday, showed the airline expected passenger numbers to shrink to less than 6,000 per day -- a fall of 80 percent from normal times.

"We forecast that the number of passengers could fall to less than 6,000 per day in May in which case we will have to consider grounding the entire passenger fleet," Nick Rhodes, Cathay Director of Flight Operations said in an internal Internet posting sighted by Reuters.

Hong-Kong's Cathay is currently carrying less than 10,000 passengers per day compared to the usual passenger levels of more than 30,000, Rhodes said in the grave memo.

Cathay issued a public statement later saying it "has no plans as of now to stop operation at any future date." It did not say whether it has plans to cancel all flights if passenger levels continue to deteriorate.

"This is an internal memo and I will not discuss it publicly," a Cathay spokeswoman told Reuters, referring to questions on the content of the memo.

SARS TOLL MOUNTS

The highly contagious pneumonia-like disease has already killed 120 people and infected more than 3,100 people around the world as the virus hitches a ride with air travelers.

The toll has been mounting by the day since a mainland Chinese carrying the virus died in Hong Kong last month before infecting scores of others.

Cathay is being especially hard hit because Hong Kong is at the epicenter of the outbreak which is causing tremors throughout the region's carriers.

Thai Airways International Plc THAI.BK , Malaysian Airline System Bhd (MAS) MASM.KL and Singapore Airlines Ltd SIAL.SI on Friday announced hundreds of cancellations. Australia's Qantas Airways Ltd QAN.AX has said it would fire 1,000 staff, or about three percent of its workforce, as it also feels the bug's bite.

Singapore Airlines, Asia's most profitable airline, plans to reduce capacity by almost 20 percent by cutting flights to mostly SARS-affected destinations.

BLEEDING CASH

"We are literally hemorrhaging cash -- approximately US$3 million per day. The current strategy is simply to stem the bleeding and buy time," Cathay's Rhodes said, citing a briefing given by the airline's chief executive officer David Turnbull on Friday.

Rhodes said the airline currently has canceled about 42 percent of its flights and the remaining flights are operating at a load factor of 30-35 percent. Load factor indicates the number of paying customers as a proportion of seats available.

In the public statement, Cathay said: "Despite the current difficult situation...the airline is maintaining its network and providing scheduled services as much as possible."

Among the hardest-hit by SARS, Hong Kong's tourism industry saw a free fall in air travelers getting on and off the tarmac. Luxury hotels record single-digit occupancy rates as the local Airport Authority said about 33 percent of the total number of scheduled flights for April has been canceled.

Cathay, with a turnover of more than HK$33 billion (US$4.23 billion) in 2002, issued its first-ever profit warning on Friday citing adverse impacts by the Severe Acute Respiratory Syndrome (SARS) virus and the war on Iraq.

The warning hammered Cathay's shares to their 16-month low, closing at HK$8.95 on Friday. They had lost nearly a quarter of their value in the last three weeks when SARS first reared its head in Hong Kong in March.

Cathay has already stopped all "non-essential" expenditure and it is offering voluntary unpaid leave.

"If there is not a miracle cure for SARS soon and a sudden withdrawal of the WHO advisory against travel to Hong Kong, the cuts are going to have to be deeper," the memo said.

The measures include involuntary unpaid leave and job sharing, it said.

"Whatever scheme is agreed, the company is determined that every employee will share the pain equally. We are all in this together," it said.

"Even if all employees worked for nothing at present, we would still be losing nearly US$2 million per day. Any savings will only buy time," it added.

Will they ever learn......NO
 

The PRC/HKG authorities have only themselves to blame for not getting a handle on the SARS problem sooner. To deny, then hide the facts....only makes it worse.
Many folks will postpone travel to asia for a long time.

411A posts re Cathay, and doesn't add any inane comments re. the AOA!:ooh:

There is a strange disturbance in the force

restructuring
 

Finally CX management has a legit reason to totally
restructure the whole company and remove the old binding
agreements and contracts..

An update:

SARS-Hit Cathay Won't Rule Out Grounding

Sun April 13, 2003 04:01 AM ET

By Rico Ngai

HONG KONG (Reuters) - Cathay Pacific Airways, Asia's fourth-largest carrier, said on Sunday it would not rule out grounding its passenger fleet as demand for travel into and out of its Hong Kong base is devastated by the deadly SARS outbreak.

"If demand falls still further, we will have to respond accordingly. Clearly we can't rule out any particular course of action, but we will respond to circumstances," Tony Tyler, director of corporate development at Cathay, told Reuters.

He was speaking after an internal Internet memo, seen by Reuters on Saturday, revealed that Cathay's passenger numbers could fall below 6,000 per day in May, which the memo said could drive the carrier to consider grounding its passenger fleet.

"The notice that was posted to our staff simply reflected the fact that, if things deteriorated, then we'd have to take appropriate steps," Tyler said, referring to the memo, which was posted internally on Friday.

"We have absolutely no plans to do that" -- cancel all passenger flights, he added...

http://reuters.com/newsArticle.jhtml...toryID=2555211

Revenge time! :cool:

No Truth To That Rumor as of Saturday
 

Cathay Pacific Has No Plans to Stop Operation
Saturday April 12, 9:32 pm ET

LOS ANGELES, April 12 /PRNewswire/ -- Cathay Pacific has no plans to stop operation at any future date.
Despite the current difficult situation with 42% of the Cathay Pacific schedule cancelled, the airline is maintaining its network and providing scheduled services.

Cathay Pacific has considered a number of contingency measures to maintain its services, preserve cash and minimize expenditure. Some measures already in place include the stopping of promotional and advertising activities. More measures will be implemented as and when necessary. Cathay Pacific will continue to work closely with the Hong Kong community to overcome the current challenges.

The internal memo was "amended slightly" by the DDFO and the offending line about closing the airline removed from it over the weekend. Corporate Comms. must have put in a bit of overtime Saturday...

Just shows that if you don't want it on Reuters, don't write or say it even if you are quoting the boss.

12 April 2003 - Cathay's Press statement:

Cathay Pacific has no plans to stop operation.

Cathay Pacific has no plans as of now to stop operation at any future date.

Despite the current difficult situation with 42% of the Cathay Pacific schedule cancelled, the airline is maintaining its network and providing scheduled services as much as possible.

Cathay Pacific has considered a number of contingency measures to maintain its services, preserve cash and minimize expenditure. Some of these measures are already in place such as stopping all promotional and advertising activities. More measures will be implemented as and when necessary. We certainly hope the situation will improve soon. Cathay Pacific will continue to work closely with the Hong Kong community to overcome the current challenges together.

---------------------------------------------------

Although they have withdrawn what they said on the internal memo, it sounds like a prelude for bigger and not really better things to come. It's a 'cushioning the blow' tactic, I believe.

This question is not posed out of any disrespect for the victims of the disease or their survivors. I'm simply curious about cold statistics on various dangers to people.

Aren't many more people killed each year, around the world, by either snakes or pigs (never mind the thousands of car accidents, with or without cell-phone use...), although few of these cases might happen in towns or cities?

Good luck with the toxic rumour mill, Cathay Pacific.:ugh:

IO

I haven't the time or data to analyse the whole world, but some detailed & updated numbers for Hong Kong are here:

http://home.so-net.com.hk/~pns/

Roughly, over the last month in HK since this broke about three times as many people have died from SARS as you would expect from transport accidents in the same period.

But on the other hand roughly 6 times as many people would be expected to die in that period from "typical" pneumonia as have died from SARS.

Which means the risk is still very low it is not igsignificant. What has changed in the last 2 or 3 days is that younger, previously healthy people are now starting to die from it. Whether this is because they sought treatment too late is still open to debate.

Can you justify that comment? According to the SCMP the last 2 victims have been 79 & 80yo. The 80yo chap had heart disease too.

According to my research to youngest victim was a 39yo Dr.

Tough times at CX but at this stage EVERYTHING is speculation.

Is it me that you are asking to justify? Which statement? If you meant the latest victims then I take my data directly from the Health Department press releases.

Everything I have written here is backed up by the data at the my site which I linked above; it includes a list of the age, sex and previous medical condition (if known) of all the 40 victims to date. The site also has links to the source data.

None of what I write is speculation - I leave that to the likes of the SCMP which you seem to regard as the fount of all wisdom, but which I feel is in no small part to blame for the current panic. My site contains facts and factual, verifiable analysis. Please take the time to read it and the sites linked from it before dismissing it out of hand.

No mate not you....Looking at the timings I think we all replied to Airbubba at the same time.

I agree with your sentiments entirely

A Doctor, who happens to be a old friend of my Uncle, was interviewed on a Sydney radio station today...he's a Virologist or whatever the specialist label is for this sort of bug.

He's simply dismayed at the level of panic caused by media and Govt alike over what is, essentially, nothing.

One statistic he used was 35000/annum die of Typical Flu in the US...think about that !!...it's nearly 100/day, every day, week in and week out, year after year.

What are we up to now...200 spread over Asia and North America in the last several months...even if it was 2000 is it worth the reaction being ellicited by frenzied Media bored with the war?

Australian 60 Minutes report last night drew direct comparisons with 1919 Flu pandemic and the Black Plague...suggesting 747s are the rats of the 21st century

They ask Doctors who have been working around the clock and who are exhausted leading questions get the sort of emotional answers which lead to panic, and do so with no thought other than to ratings.

What price freedom of the press?

40 million people died of Flu in Europe over something like 2 years just after WW1...that's 55555/day...in a period in history before anyone understood personal hygene and before antiviral drugs were invented.

Where's the comparison??

A few times every century a bug comes along and knocks off a chunk of the population...this, in the Doctors professional opinion, is not one of those.

Chuck

Couldn't agree more Chimbu. [But one f, two s];)

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

It doesn't matter what the statistics are. The big dull bulk of people react to perceived notions of fear and uncertainty. And as of today it's still just that. Educated business travellers included, they are not inclined to take to the air unless they absolutely, positively, as a last resort, must travel.
And that's just the way the cookie crumbles.

Thoroughly agree Chuck,

100's more will die from smoking (voluntary & involuntary) this year than SARS.
100's more from automobile accidents.
100's more from sex, drugs and rock and roll.

A few hundred in the population of HKG is total pants!!

Get real, people!!

ATB, PTC

It is true that many more die annually due to smoking / accidents/ typical pnemonia..., but they dont fill up all the hospital beds at the same time.

- All the ICU units in HKG are at a maximum capacity.
- The healthcare system is at the brink of collapse due the sudden load, the huge percentage of infections within the healthcare community and increased cost due to the prevention measures.
- The absence of a definitive cause, diagnostic test and how it is spread let alone the treatement, makes the people feel rather helpless and understandably anxious.
- The current cure that is being used is a cocktail of very strong antiviral drugs and steroids which has very serious side effects like anemia, birth defects, muscle and joint aches, fast heart rate, fatigue, insomnia, diarrhea, nausea, irritability and loss of libido,hair loss, depression and worsening of pre-existing psychiatric conditions, rash - which often requires discontinuation of the medication. Also, there is no clear evidence on the effevtiveness of this treatment.


Hence, it makes people feel threatened particularly because the threat can't be readily identified.