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Cathay Pacific to stop new hiring, also cut cost and capacity

Cathay Pacific capacity cut

The airline is also planning to cut capacity for the fast-approaching winter season

According to reports, Hong Kong-based Cathay Pacific has stopped hiring new employees after reporting an 11.3 percent fall in passenger numbers for August. The fall in demand is majorly caused by the political unrest in Hong Kong.

The Hong Kong-based carrier’s Chief Executive Augustus Tang has asked executives to examine spending and focus on cutting costs.

Cathay Pacific has announced that it will cut capacity for the fast-approaching winter season. However, which routes will see the capacity cut is yet to be known.

Experts predict Cathay Pacific’s services to Europe and Northern America could mostly see the capacity cut as these flight routes take a long time and involve a much higher cost to operate.

The airline has also decided to not replace employees in non-flying positions who are exiting the airline. Experts predict the airline would start to incur losses during the second half of the year. Jefferies analyst Andrew Lee predicts the losses could be around HK$973 million.

In August, Cathay Pacific’s inbound traffic to Hong Kong decreased by 38 percent and outbound traffic by 12 percent when compared with the previous year.

The airline also reported that demand for its premium class travel had fallen more significantly compared to leisure travel.

With regard to the cost and capacity cut, Cathay Pacific Chief Customer and Commercial Officer Ronald Lam told the media that, “Given the current significant decline in forward bookings for the remainder of the year, we will make some short-term tactical measures such as capacity realignments.”

He added, “Specifically, we are reducing our capacity growth such that it will be slightly down year-on-year for the 2019 winter season (from end October 2019 to end March 2020) versus our original growth plan of more than 6 percent for the period.”

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