Cathay warns of hard times ahead

Cathay Pacific Airways has warned that its financial results for the first half of 2012 are “expected to be disappointing”. In response to the changing market conditions and challenging business environment, the group is readjusting the capacity of both Cathay Pacific and Dragonair by reducing capacity on some long-haul routes while increasing capacity and introducing six new destinations in its regional network.


Cathay Pacific Airways


Cathay Pacific Airways has warned that its financial results for the first half of 2012 are “expected to be disappointing”. In response to the changing market conditions and challenging business environment, the group is readjusting the capacity of both Cathay Pacific and Dragonair by reducing capacity on some long-haul routes while increasing capacity and introducing six new destinations in its regional network.

Since the airline announced its annual results in March, fuel prices have remained high, the cargo business, despite a temporary improvement in March, has shown no sign of a sustained recovery
and pressure on Economy Class yields has continued. There has also been some softening in yield in the premium cabins.

Cathay Pacific chief executive John Slosar said: “We previously warned that 2012 is looking even more challenging than 2011 and we were therefore cautious about prospects for this year. In response to the challenging environment we face, we are reducing costs where possible, including through a reduction of capacity.

The airline’s financial position remains strong which will enable us, despite the current difficult trading conditions, to maintain the quality of our products and services and to continue with our longterm strategic investment in the business.” Slosar added: “This is not just a Cathay Pacific problem; it is clearly an industrywide
issue, and continued high fuel prices in particular are hitting airlines hard across the globe. We have no option but to take concerted action to adapt to this volatile operating environment. We need to do this to protect our business in the short-run and to protect the Cathay Pacific team.”