Cathay Pacific takes a hit on lack of detail in review

The Hong Kong-based airline yesterday issued a strategic review indicating job cuts but investors have been left frustrated at what they see as a shortage of hard facts.

A Cathay Pacific Airways passenger plane takes off at the Hong Kong Airport. the carrier is struggling in the face of Chinese and Middle East competition. Tyrone Siu / Reuters

Cathay Pacific Airways shares slid nearly 6 per cent after a strategic review by the Hong Kong carrier of its operations left investors bemoaning a lack of detail, including how many jobs will be shed and whether flights might be cut to save money.

At 0138 GMT the shares were down 5.5 per cent at HK$10.22, the lowest since December 30, after Cathay emailed results of its biggest business review in two decades to employees late on Wednesday. Cathay said it would keep costs flat and consider moving some flights to its shorter-haul unit.

But an apparent lack of clarity and urgency on where costs might be cut in the face of accelerating competition left analysts and investors concerned. Cathay is under pressure to combat aggressive mainland Chinese carriers and growing competition from Middle East airlines, and to position itself to compete against the backdrop of an “open skies” deal signed last month between China and Australia.

“By the time [Cathay Pacific] takes action, the competitive landscape will have changed so much that it is no longer recognisable,” one aviation industry official said on Thursday.

* Reuters

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