Hong Kong’s Cathay Pacific Airways asked its 27,000 employees to take three weeks of unpaid leave, saying preserving cash was key for the carrier.

Cathay is also asking suppliers for price reductions, putting in place hiring freezes, postponing major projects and stopping all non-critical spending, Chief Executive Augustus Tang said in a video message to staff seen by Reuters.

On Tuesday, the carrier said it planned to cut about 30% of capacity over the next two months, including about 90% of flights to mainland China.

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What’s going on?

Image: World Health Organisation

Cathay had already experienced a sharp fall in demand since the middle of last year due to widespread, sometimes violent anti-government protests in Hong Kong.

The virus, which has led to a death toll of nearly 500, has led to a further drop in visitors and passengers transiting through Hong Kong’s airport.

“This has been one of the most difficult Chinese New Year holidays we have ever had. We don’t know how long this will last. With such an uncertain outlook preserving our cash is now the key to protecting our business.”

Chief Executive Augustus Tang

A few hours after the video was released, Hong Kong leader Carrie Lam announced any visitors from mainland China would need to undergo a compulsory quarantine for 14 days.

Cathay said in a statement it was appealing to all employees to participate in the unpaid leave scheme that will run from March 1 until June 30.

Tang said it was the first time the company had offered an unpaid leave scheme since 2009, when demand plummeted due to a global financial crisis.

“We had the overwhelming support of our employees,” he said, about the 2009 scheme.

“It made an enormous difference. The situation now is just as grave and I ask for the same commitment to the future from you.”

Chief Executive Augustus Tang

The leave scheme, first reported by the South China Morning Post, is not mandatory but employees are encouraged to take it, a spokeswoman said.

Cathay Pacific has already taken a significant hit from the Hong Kong unrest, so this is double bad news for the airline.

READ: FLIGHTS CANCELLED: Hong Kong travel disrupted as protests continue

In a note to clients, Jefferies analysts estimated the airline would report a loss in the first half of 2020 before returning to a profit in the second half, assuming traffic rebounds as it did with the 2003 SARS epidemic.

Passengers have taken to Twitter to share their frustration with Cathay’s fees and refunds policy around the Coronavirus situation.

(Source: Reuters)