Cathay Pacific Airways Limited

FOR IMMEDIATE RELEASE

28th November 2008

Cathay Pacific Airways today announced a series of new measures that will help the airline deal with a serious downturn in business as a result of the global financial crisis. The measures are: cutting back on planned passenger capacity growth in 2009; offering cabin crew and cockpit crew the opportunity to take voluntary unpaid leave; parking two Cathay Pacific freighters; and requesting a deferral on the construction of the Cathay Pacific Cargo Terminal.

• Passenger capacity The airline is paring back its earlier projection of 6-7% growth in capacity in 2009 to less than 1% to reflect the anticipated decline in demand. Services on some routes will be adjusted accordingly though the airline is clear that it plans to keep its network integrity intact and not cut any destinations. The new capacity figure takes into account the airline's previously announced decision to remove five Boeing 777-200 aircraft from its fleet and also covers delays in the deliveries of new aircraft as a result of the recent strike at the Boeing factory in Seattle.
• Voluntary unpaid leave As a result of the reduction in planned passenger capacity growth, the airline will offer a voluntary unpaid leave scheme for its cabin crew and cockpit crew. The 2009 scheme for cabin crew will come into effect on 1 January and will offer periods ranging from two weeks to a maximum of 12 months. The scheme will apply to all ranks of Cathay Pacific's 7,000 cabin crew based in Hong Kong. Unpaid leave is also being offered to all the airline's pilots on a voluntary basis. The airline will ensure it has sufficient crew for operational needs at all times.
• Freighter parking The financial crisis is having a particularly severe impact on Cathay Pacific's airfreight business as several of the world's major economies head into recession. In light of this the airline will park two Boeing 747-400BCF freighters at Victorville, California, for a year with effect from January 2009. Regionally there will be no significant changes to scheduled freighter schedules, though there will be some frequency reductions to Australia, North America and Europe. The airline will receive four more new Boeing 747-400 Extended Range Freighters in 2009 though the delivery of its new Boeing 747-8Fs will now only begin in 2010.
• Cargo terminal deferral The airline has submitted a request to defer construction of the new Cathay Pacific Cargo Terminal at Hong Kong International Airport by up to two years in a move to keep capacity expansion in line with market growth, and to reduce its capital expenditure in 2009 and 2010. Discussions are taking place with the Airport Authority and no further details can be given until these are concluded. Preliminary work has already begun on the HK$4.8 billion facility, which was originally scheduled to begin operation in the second half of 2011. Despite the requested deferral, Cathay Pacific remains committed to building the terminal and to further developing Hong Kong's position as a leading international airfreight hub.

Cathay Pacific Chief Executive Tony Tyler said: "This is a very difficult time for our airline and for the aviation industry as a whole, and we cannot see light at the end of the tunnel at this point. In view of this, and given the impact the current crisis is having on our core business, we have taken a number of measures to help ensure the financial health and long-term well-being of our airline. This is our number-one priority at this time, and we will continue to do all we can to keep our network intact and our team together."

Mr Tyler said the adjustments to the airline's operating plan for next year were "necessary" given the expected global drop in demand. "However, the plan may well have to be revised again depending on how things unfold. Nothing can be set in stone at the moment. Visibility is low and it's hard to predict developments with any real certainty. Flexibility will be the key word in the months ahead."

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