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Cathay Pacific To Cut Capacity in 2020
Hong Kong-based Cathay Pacific has announced that capacity on the airline will be reduced in 2020 due to impacts from the recent unrest.
The capacity reductions will see a decrease of 1.4 percent year-over-year and an adjustment in the carrier’s budget in 2020. In September, the carrier was expecting capacity to grow to 3.3 percent next year.
Additionally, the carrier is planning on cutting its Q3 and Q4 profit forecast for the second time this month.
“Given the immediate commercial challenges and the fact that our position has deteriorated in recent weeks, we must take swift action to adjust our operating plan for 2020 downwards again. Put another way, rather than growing our airlines in 2020, for the first time in a long time, our airlines will reduce in size,” said Augustus Tang, chief executive of Cathay in a memo to staff.
The carrier has delayed delivery of four Airbus A320neo aircraft for subsidiaries HK Express and Cathay Dragon and will expedite the retirement plans of one of its Boeing 777-200ER aircraft and a Cathay Dragon A320.
Traffic has fallen significantly for Cathay, as well as other Hong Kong-based carriers due to pro-democracy protests.
The decrease in demand has pushed Hong Kong’s Civil Aviation Department to announce that it would be suspending its “use-it-or-lose-it” rule temporarily, which usually sees airlines losing their takeoff and landing slots for not using them.
“Revenue performance continues to be disappointing and advance bookings for 2020 remain much lower than we would hope for,” continued Tang in the memo.
Hong Kong Airlines has also seen trouble due to unrest in Hong Kong, which has resulted in the carrier cutting its capacity as well and not being able to pay employees this month. While reductions will affect all of Cathay’s operations, no routes will be ceased.
Correction: Cathay Pacific no longer operates Boeing 777-200ERs as the last one was retired in August 2019.
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