Cathay to defer new plane purchases

Cathay to defer new plane purchases

HONG KONG (AFP): Cathay Pacific Airways is to defer options on new aircraft because of the slump in regional tourism caused by Asia's financial crisis, a company spokeswoman said yesterday.

Cathay may also sell some of its older planes because of the economic downturn, she said. "We're looking into the possibility, but nothing is confirmed," the spokeswoman commented.

The purchases have not been canceled just delayed by one or two years. The spokeswoman also said the move only affected some of its 25 options to buy Boeing and Airbus jets.

Cathay is still committed to taking delivery of 13 new aircraft over the next two years. Next year the Hong Kong airline will take four Boeing 777-400s, five Airbus 340-300s, and one Airbus 330-300 worth a total of HK$11.5 billion (US$1.49 billion).

On Monday, David Turnbull, Cathay Pacific's group managing director, said the airline's balance sheet remained strong, but the "dreadful state" of regional economies and a major tourism downturn had badly hit business.

Turnbull said in the airline's weekly corporate newsletter that such factors may undermine the airline's business outlook "for some time to come."

"It's quite clear that we cannot just continue doing what we do and what we were doing and simply hope it will get better. We have to change," Turnbull said.

"Over the years, we have become quite bureaucratic. We need to speed things up. We need to have less management by committee."

The airline is reviewing its organizational structure and needs "to streamline it and make ourselves come out even stronger," Turnbull said.

The airline will adopt a "more cautious approach" given the background of the economic environment, Turnbull said.

Asian economies have run into a downturn since the flotation of the Thai baht in July sparked off a regional currency crisis.

Hong Kong has been battling a slump in tourism since it was handed over by Britain to China on July 1.

In November, the Hong Kong Tourist Authority (HKTA) said tourism receipts in the nine months to September fell 9.2 percent year-on-year to HK$ 55.4 billion (US$7.14 billion).

Cathay's first half profits fell 35 percent to HK$1.06 billion Hong Kong because of the tourism decline.