(Bloomberg) -- Cathay Pacific Airways Ltd., Hong Kong’s largest carrier, will cut capacity and ask staff to take unpaid leave as it battles plunging travel demand.
The airline will reduce the planned passenger capacity at its main unit by 8 percent from May and by 13 percent at its Hong Kong Dragon Airlines Ltd. arm, it said today in a Hong Kong stock exchange statement. The unpaid leave will be on offer over the next 12 months, the airline added.
The company’s first-quarter sales from passenger and cargo flights tumbled 22 percent as it slashed fares and carried fewer travelers because of the global recession. Qantas Airways Ltd. said earlier this week that it will fire about 5 percent of its workforce and delay planes as demand weakens.
“This slowdown will be deeper and longer” than previous recessions, said Winson Fong, who helps manage $2 billion at SG Asset Management H.K. Ltd. in Hong Kong. “The bad news will continue to come.”
Cathay Pacific rose 1.2 percent to HK$9.69 at 10:39 a.m. in Hong Kong trading. The carrier has gained 11 percent this year, outperforming the benchmark Hang Seng Index’s 10 percent rise.
Staff Leave
The airline will cut its overall cargo capacity by 11 percent from May, it said. The company didn’t say how much unpaid leave it wanted staff to take in the statement. The leave isn’t mandatory, Carolyn Leung, a spokeswoman, said by phone.
Chief Executive Officer Tony Tyler joins Singapore Airlines Ltd. and Qantas in cutting costs after traffic for Asia-Pacific carriers sank almost 13 percent in February, the steepest decline since June, according to the International Air Transport Association.
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