Cathay warns over outlook as cargo revenue tumbles

Pacific Airways Chief Executive Officer John Slosar told staff the carrier was facing a “very challenging year” and must reduce expenses as cabin crew seek above-inflation pay rises.

“We must tackle our cost base where we can,” Slosar said in an article in the Hong Kong-based carrier’s monthly in-house magazine. This is “a very challenging year,” he said. He didn’t specifically mention labour costs or wages.

Slosar highlighted a rise in fuel prices that has made actual fuel costs 6 per cent higher than expected, along with a decline in fares and a cargo slump caused by the economic slowdown. The airline, which had a first-half loss, has this year quickened the retirement of older planes, grounded freighters and offered cabin crew unpaid leave to cut costs.

“Cathay’s business will not be pretty this year,” said Kelvin Lau, a Hong Kong-based Daiwa Securities Group analyst. “It’s watering down expectations from both employees and investors by issuing this update.”

The airline dropped 0.6 per cent to close at HK$13.88 in Hong Kong trading, reversing gains of as much as 1 per cent in the morning session. The carrier distributed the article as a trading update via the exchange during the lunchtime break.

Cathay Pacific Airways Flight Attendants Union earlier this month requested a 5 per cent wage increase for next year. Hong Kong’s consumer prices were 3.8 per cent higher than a year earlier in October.

The union is in pay talks with Cathay, General Secretary Tsang Kwok-Fung said by phone. He didn’t comment on Slosar’s article. The group represents over 5,800 cabin crewmembers, according to its website.