(Bloomberg) -- Qantas Airways Ltd., Australia’s largest carrier, will cut about five percent of its staff in anticipation of a record loss caused by a drop in business class travel. Cathay Pacific Airways Ltd. and Singapore Airlines Ltd. may be next.
“All airlines in Asia will have to make similar tough decisions,” said Jim Eckes, managing director of industry adviser Indoswiss Aviation. “With traffic falling so rapidly, it’s going to be difficult for many airlines to make a profit.”
Traffic for Asia-Pacific carriers sank almost 13 percent in February, the steepest decline since June, according to the International Air Transport Association. Qantas Chief Executive Officer Alan Joyce is examining measures such as passengers tagging their bags or checking in via mobile phone, while Hong Kong’s Cathay Pacific will ask staff to take mandatory unpaid leave, a company official said.
The airline industry globally may lose as much as $4.7 billion this year as the deepening recession wipes out $62 billion of revenue. Carriers in Asia-Pacific are expected to post combined losses of $1.7 billion, the biggest of any region.
“If your top line has fallen off the cliff, then you have to adjust your costs,” said Christopher Wong, a fund manager at Aberdeen Asset Management Asia Ltd. in Singapore, which oversees $20 billion. “Whether it’s cutting headcount or reducing working hours, that’s the only thing airlines can adjust.”
Read more at Bloomberg
Tuesday, April 14, 2009
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