Cathay cuts nearly all flights, Air Canada lays off thousands

The skies are getting even darker for airlines as the coronavirus shuts down travel across the world, leading Hong Kong‘s Cathay Pacific Airways Ltd to slash passenger capacity by 96 percent in April and May while Air Canada temporarily lays off 5,100 employees.

Cathay said it would operate a “bare-skeleton” schedule for passenger flights in the coming months.

“Our ability to maintain even this skeleton schedule will depend on whether more travel restrictions are imposed by governments around the world which will further dampen passenger demand,” the company said in its statement on Friday.

Cathay Pacific will operate three flights per week to 12 destinations: London, Los Angeles, Vancouver, Tokyo, Taipei, New Delhi, Bangkok, Jakarta, Manila, Ho Chi Minh City, Singapore and Sydney. Cathay Dragon will operate three flights a week to Beijing, Shanghai and Kuala Lumpur.

“We need to take difficult but decisive measures as the scale of the challenge facing the global aviation industry is unprecedented,” Chief Customer and Commercial Officer Ronald Lam said in a statement. “Travel restrictions are making it increasingly difficult for our customers to travel and demand has dropped drastically.”

Cathay was already reeling from the effects pro-democracy protests in Hong Kong had on visitor numbers for much of last year. The airline has already asked staff to take unpaid leave and warned that it faces a substantial loss in the first half of this year, with a 2-billion-Hong-Kong-dollar ($257m) loss in February alone.

Hong Kong Express, the budget carrier Cathay acquired last year, said earlier on Friday that it is temporarily shutting down all flight operations to save cash.

On some days in February, Cathay flight bookings fell to as low as 11,000-12,000 from the standard 90,000, Lam said earlier this month. Passenger load factor declined to about 50 percent at the end of February – about a month after airlines began cutting operations because of the coronavirus – and year-on-year yield fell significantly.

“The latest capacity cuts by Cathay Pacific sees them all but shutting down. They are basically hunkering down for as long as necessary, until this nuclear-level event blows over,” said James Teo, Bloomberg Intelligence analyst in Singapore.

Meanwhile, Air Canada will temporarily lay off more than 5,100 employees as it attempts to check the effects of the coronavirus pandemic, Canadian Union of Public Employees (CUPE) said on Friday.

The union, which represents the Canadian airline’s flight attendants said it was “deeply saddened” to learn that airline would temporarily lay off about 3,600 of its members at Air Canada mainline and all 1,549 of its members at Air Canada Rouge.

CUPE said the layoffs were effective until April 30 at the earliest.

Air Canada has initiated discussions with its unions to begin placing employees on temporary, off-duty status, the company told Reuters news agency on Friday.

“Employees would be returned to active duty status when we ramp up our network schedule as conditions allow,” the company said in an emailed statement.

Earlier this week, Air Canada said it would gradually suspend the majority of its international and US trans-border flights by March 31 in response to the coronavirus crisis.

Airline industry executives around the globe have called for state support as travel demand collapses at an unprecedented rate and governments impose restrictions due to the pandemic.

Air Canada has “no choice” but to cut staff, calling the move “difficult but necessary,” CBC News, which first reported the news, quoted the airline’s vice president of in-flight service as saying.

The coronavirus has plunged the aviation industry into an unprecedented crisis, with Sydney-based CAPA Centre for Aviation warning that most carriers will go bankrupt by the end of May without government support.

The International Air Transport Association said the industry needs state aid and bailouts of as much as $200bn to survive, while the Association of Asia Pacific Airlines said the region’s carriers face revenue shortfalls of more than $60bn this year.

Europe’s biggest carrier Deutsche Lufthansa AG will idle 700 aircraft and 95 percent of seats, shrinking its flight schedule to a level last seen in 1955, while American Airlines Group Inc will park 450 aircraft.