Cathay may halt all passenger flights
By Rico Ngai
HONG KONG (Reuters) - Cathay Pacific, Asia's =
fourth-largest airline, is considering grounding all passenger flights =
next month as a deadly
virus sweeping through Hong Kong scares away =
travellers 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
travellers.
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 =
epicentre of the outbreak which is causing tremors throughout the =
region's carriers.
Thai Airways International, Malaysian Airline System and =
Singapore Airlines on Friday announced hundreds of cancellations. =
Australia's Qantas Airways 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 haemorrhaging cash - approximately US$3 =
million (1.9 million pounds) 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 cancelled 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 travellers 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 cancelled.
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 said