November 14, 2019 / 7:37 AM / a month ago

Hong Kong's Cathay defers delivery of four Airbus planes as demand falls

(Reuters) - Hong Kong’s Cathay Pacific Airways Ltd (0293.HK) said on Thursday it would defer the delivery of four Airbus SE (AIR.PA) narrowbodies in 2020 as it cuts capacity to deal with falling demand due to anti-government protests in its home city.

The company logo of Cathay Pacific Airways is seen on the airlines' new uniform during a news conference in Hong Kong June 22, 2011. REUTERS/Bobby Yip/Files

In addition to delaying the arrival of three A321neos at regional arm Cathay Dragon and one A320neo at budget carrier HK Express, it said it would retire one Boeing Co (BA.N) 777-300ER and one Cathay Dragon A320 earlier than expected.

The airline said on Wednesday the short-term outlook remained “challenging and uncertain” as it lowered its profit guidance for the second time in less than a month. [n

Months-long anti-government protests paralysed parts of Hong Kong again on Thursday, forcing school closures and blocking highways and other transport links amid a marked escalation of violence.

Cathay has said it plans to cut capacity by 6-7% in the short term by reducing flight frequencies rather than taking the costlier step of parking planes.

BOCOM International analyst Luya You, who attended an analyst briefing on Thursday, said management “didn’t rule out more extreme measures - grounding aircraft, severing leases, cancelling orders - if the situation in Hong Kong deteriorates or extends significantly beyond expectations,” she said. “At present they seem fairly confident that short-term cost measures are enough.”

Cathay did not respond immediately to a request for comment about the remarks made by senior executives at the briefing.

Cathay said last week it planned to allocate half its order for 32 A321neo aircraft to HK Express as it looks to grow in the budget market, but made no mention of any changes to the delivery schedule. [nL3N27O2T3]

An Airbus spokesman said delivery schedules change from time to time by mutual agreement with customers, declining to provide further details of the timing.

Cathay said in its Thursday statement that unrest in Hong Kong was expected to lead to a small post-acquisition loss for HK Express, which it bought this year from Chinese conglomerate HNA Group for HK$4.93 billion ($629.7 million). [nL3N21E051]

($1 = 7.8295 Hong Kong dollars)

Reporting by Jamie Freed in Sydney; Editing by Stephen Coates and Edwina Gibbs

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