Cost cutting and staff pruning are on the cards at Cathay Pacific as the Hong Kong-based airline battles increased competition from state-owned mainland Chinese carriers.
Cathay is seeking to turn around a three-year earnings slide and lift its sagging stock price, according to the South China Morning Post. It scrapped its second-half profit forecast in October. According to Reuters, some analysts forecast that Cathay will report a full-year loss for 2017 – which would be the carrier’s first since 2010.
Cathay Pacific admits 2017 presents many challenges, making it imperative to cut costs, beef up efficiency and find new revenue sources.
The strength of the Hong Kong dollar against the Chinese yuan is working against Cathay and the open skies agreement signed between China and Australia in October was another blow. Australia is a crucial market – both for direct flights and for connections throughout Asia and onwards to Europe.
“If our cost base is too high, we’ll have to find ways to be more productive and more efficient,” chief operating officer of Cathay Pacific Airways, Rupert Hogg, told the South China Morning Post.
He told the paper Cathay would have to “rethink its workforce,” reassigning staff from outmoded roles into new jobs more in tune with a “digital focus.” Hogg refused to rule out redundancies.
The airline will take delivery of 12 Airbus A350 planes this year, part of a 48-aircraft order.
In another symptom of increasing competition, Emirates is set to lift its service to Hong Kong later this year by adding a 615-seater A380 to the route. The Dubai-based carrier will start regular service on the Dubai-Bangkok-Hong Kong run – flights EK384/385 – from 1 October 2017, according to aviation data tracking service Airline Route.
Written by Peter Needham