Cathay Pacific Airways will cut passenger capacity 1.6 per cent next year, the first reduction since 2009, as it contends with slowing international travel demand and introduces smaller planes. The carrier has already pared frequencies on some North American and European routes, finance director Martin Murray said. It is also retiring Boeing 747-400s earlier than planned and replacing them with 777-300ERs, he said. The carrier is boosting its focus on short-haul routes and premium-economy cabins as the global economic slowdown saps demand for premium-class long-haul flights to cities, including New York. The airline also last week told staff it was stepping up cost-cutting measures because of the intercontinental slowdown, a cargo slump and higher fuel prices. The long-haul capacity reduction "implies a lack of confidence as well as a repositioning of the company's strategy", UOB-Kay Hian analyst K Ajith and Eugene Ng said in a note. "The focus towards short-haul is fraught with risk, especially given that various low-cost carriers have expanded in the region." Ajith and Ng cut their earnings estimate for the year to a HK$425 million loss from a HK$329 million profit. The airline lost HK$935 million in the first half. The analysts lowered their target price to HK$12.60 from HK$12.80. The capacity cut is "a slight surprise", Bank of Communications analyst Geoffrey Cheng said in a note. He maintained his neutral rating but cut his earnings estimates and target price for the airline. The airline rose 0.4 per cent to HK$13.92 in Hong Kong trading yesterday, while the Hang Seng Index declined 0.6 per cent. Cathay has risen 4.5 per cent this year. The carrier will boost cargo capacity 12 per cent next year, as it adds new freighters.