Coronavirus: Cathay Pacific asks staff to take unpaid leave

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Hong Kong’s flagship airline Cathay Pacific has asked staff to take three weeks of unpaid leave to help it cope with the impact of the coronavirus.

The carrier had already been hit by the effect on passenger demand of several months of anti government protests in Hong Kong.

It has offered a voluntary special leave scheme to all employees from 1 March to 30 June.

The airline said that preserving cash was “key to protecting” its business.

On Tuesday, Cathay said it intended to cut services by about 30% over the next two months, including a cut of about 90% in flights to mainland China.

The airline had already been facing difficulties because of several months of anti government protests in Hong Kong, an international financial and travel hub and a key part of its business.

Analysts said the airline had been likely to offer the unpaid leave scheme to staff because of those issues anyway.

In a statement, the airline said: “In view of the Novel Coronavirus outbreak and also significant drop in market demand, we just announced massive capacity cuts yesterday.

“Preserving cash is the key to protecting our business. We have already been taking multiple measures to achieve this.

“Today, we are appealing to all employees to participate in the special leave scheme, which will take effect from 1 March and last until 30 June. All employees will have the option to take three weeks of unpaid leave in this period.”

Cathay chief executive Augustus Tang has sent a video message to employees, according to the Reuters news agency.

In it, he said the airline had also asked its suppliers to cut prices, stopped hiring new staff and postponed some major projects and stopped all non-critical spending.

Cathay plane over Hong Kong

The new coronavirus causes severe acute respiratory infection and symptoms usually start with a fever, followed by a dry cough. The number of cases in China has now exceeded 24,300, with 490 deaths reported.

One potential knock-on effect is that the world’s biggest oil producers may cut output in an effort to bolster prices. Representatives of oil producers’ cartel Opec and its allies are expected to meet this week as calls grow for action to boost oil prices.

The crude oil price has fallen to its lowest level in 12 months, and is down by 20% since its peak in January. The Lunar New Year holiday has been extended in much of China and many factories, offices and shops are shut. As a result, China’s demand for oil has fallen.

The virus is likely to have a particularly large impact on demand for jet fuel as airlines around the world suspend flights to China, and travel restrictions within the country mean far fewer flights.

European aircraft manufacturer Airbus has issued a statement in which it said it was “closely monitoring” the outbreak. It said Airbus China was “observing Chinese government requirements for staff to work from home”.

China’s domestic and worldwide travel restrictions were “posing some logistical challenges,” and it had closed its Tianjin Final Assembly Line facility, it added. “Airbus is constantly evaluating the situation and monitoring any potential knock-on effects to production and deliveries and will try to mitigate via alternative plans where necessary.”

Elsewhere, at least 10 people on board a cruise ship docked in the Japanese port of Yokohama have so far tested positive for the virus, according to health authorities. Hundreds of the 3,700 people on the Diamond Princess are still to be tested, and the number of those infected could rise.

The checks began after an 80-year-old Hong Kong man who had been on the ship last month fell ill with the virus.

Source: BBC