Cathay Pacific Set To Defer Four Airbus Aircraft

Cathay Pacific has had to take drastic action and defer four incoming new Airbus A321neos, as well as retire two other additional aircraft, to help make ends meet. The airline spent a small fortune acquiring a rival and then was rocked by the civil unrest in Hong Kong.

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Hong Kong carrier Cathay Pacific has deferred four aircraft orders. Photo: Cathay Pacific

What are the details?

Cathay Pacific is in a difficult situation. They are a fantastic airline with a big fleet of aircraft and subsidiaries (Cathay Dragon and the newly acquired HK Express) and seem to be going strength to strength. Then right after they purchased HK Express, the Hong Kong civil unrest began.

This plummeted tourist numbers and dropped off business flights to the country. Not to mention protesters physically shutting down the airport, resulted in a massive fall of business for the airline. Whilst other airlines have been affected, only Cathay Pacific flies nearly every route to Hong Kong (as its their hub airport) thus doubling down its problems for every route it has.

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So with the funds spent on that new airline acquisition, and the profits not returning thanks to a turbulent climate, Cathay Pacific has decided to defer four orders from Airbus over the near future, according to the South China Morning Post.

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Cathay Pacific is being crushed by the lack of demand for Hong Kong routes. Photo Cathay Pacific

Is this a good move by the airline?

The way it works is that an airline doesn’t have to pay more than a deposit until the new aircraft are delivered from Boeing or Airbus. Thus they can delay the delivery of this aircraft to save on cash (and presumably, the aircraft under construction gets assigned to another carrier, or another airline gets Cathays slot in the production queue).

Deferring an aircraft because you don’t have the funds right now is a bit of a catch 22 situation.

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Without the aircraft, you can’t run routes. Without the routes, you can’t earn money. Without the money, you can’t pay off the aircraft. Cathay Pacific has taken away a chance for them to start earning some important revenue and hopes that they will be able to get through this trouble to pick them up later.

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Cathay Pacific is retiring one of its Boeing 777 aircraft early. Photo: Cathay Pacific

Cathay Pacific has also decided to speed up the retirement of one of its Boeing 777 aircraft. This will put them at even more of a disadvantage, but will also mean they will save more money that would have been spent on maintenance and fuel.

But it is important to remember that Cathay Pacific’s main source of business is the local Hong Kong population. Dispite the unrest, there are still eight million people in the city who will want to have access to a home-grown carrier. Cathay Pacific will survive this and likely come out of this stronger than ever.

What do you think? Let us know in the comments down below if you think that Cathay Pacific should have deferred the order.

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Anonymous

I think United Airlines should snap up all these differed and retiring aircraft.

Nate Dogg

Why exactly??

Ken

Cathay group of companies was not looking good even before the unrest, after suffering operating losses over several years and low on-time performance especially for regional flights. With the unrest in Hong Kong, Cathay is suffering additional trouble of low load factor, which would further eroding their financial status

Jock

Agree, CX have been struggling for the past few years, far from going from strength to strength… The recent unrest in HK has merely intensified the issues they have been facing.
Changing 777 to 10 abrest, dramatic drop in service and food standards, likely a result of cost cutting, staff morale is not good.
Personally I try to avoid them now, on SIN-HKG route, SQ are competitive in pricing, that’s an easy choice every time..
Hope they can recover, CX were a personal favourite.

Des McMahon

I pray Cathay will continue as it is one of only a few airlines to fly out of Adelaide as Qantas has no international flights out of Adelaide anymore