Cathay Pacific to save HK$2.2 billion by changing investment in new planes
Hong Kong’s flagship airline will delay delivery of five Airbus A350-1000 planes and opt for smaller models instead of six more
Cathay Pacific Airways has said it will save HK$2.2 billion (US$288 million) by delaying the delivery of long-haul aircraft and switching to smaller long-range planes as the company confirmed a HK$31.7 billion order for 32 short-haul aircraft.
Hong Kong’s flagship airline said it would tinker with its multibillion dollar investment in new planes, in an announcement to the stock exchange on Wednesday. The airline is cutting costs and restructuring in a bid to return to profit after producing the worst half-year results in almost 20 years last month.
The carrier said it will downsize six of its 26 Airbus A350-1000 planes for half a dozen smaller A350-900 planes, raising it from 22 to 28 aircraft. It will also delay the delivery of five more A350-1000 aircraft by one year to 2021.
The savings is based on the cost of at least six A350-1000, ordered between 2010 and 2012, worth an estimated HK$15.3 billion and its smaller sibling costing roughly HK$12.2 billion for the same quantity.
Cathay Pacific also confirmed its HK$31.7 billion order for 32 Airbus A321neo aircraft for its sister airline Cathay Dragon, to be delivered between 2020 and 2023.
It follows the trend of other airlines either delaying deliveries or reducing orders amid fears of an oversupply of air tickets while fares are low.
Cathay Pacific recorded a loss of HK$575 million last year and is facing intense competition with passengers being lured away by cheaper airfares. The environment worsened to a HK$2.05 billion deficit in the first six months of 2017, putting it on track for its first back-to-back loss in its 70-year history.
As part of its HK$4 billion three-year cost-saving programme, the airline has already cut 600 jobs at its head office, with more expected as a review of overseas employees is under way.
Discounted flights and hotel packages among Cathay Pacific’s bid to cater to ‘price-sensitive travellers’
Meanwhile the carrier is seeking to impose pay freezes and changes in pension benefits for its pilots to slash HK$1 billion in cockpit crew costs.
Expansion is still on the airline’s agenda though. Cathay Pacific on August 31 announced it would fly to Dublin, Brussels and Copenhagen. The airline will close its Dusseldorf route at the same time. The smaller long-range aircraft would allow it to target more new destinations.