November 28, 2008 / 9:04 AM / 11 years ago

UPDATE 1-Cathay Pac says in talks to delay Boeing deliveries

(Adds executive quotes and details)

By Joanne Chiu

HONG KONG, Nov 28 (Reuters) - Cathay Pacific (0293.HK) said it plans to delay the delivery of all Boeing (BA.N) aircraft, defer construction of its $619 million new cargo terminal in Hong Kong and ask its cabin crews to take unpaid leave in the face of a global economic downturn.

Under the Hong Kong-based airline’s original schedule, it will take delivery of around 10 Boeing aircraft each year in 2009, 2010 and 2011.

“We are having discussions with them (Boeing) on delaying delivery,” Chief Executive Tony Tyler told reporters on Friday.

According to Boeing’s Website, Cathay has unfilled orders for 10 747-8 Freighters, four 747-ERF Freighters and 21 777-3000ER twin engine passenger jets worth a total of almost $9.5 billion at current average list prices.

As Boeing’s two-month machinists’ strike was resolved earlier this month, Cathay Pacific would take the opportunity to negotiate a delay on delivery with Boeing and that would take 60-90 days to work up the plan, chief operating officer John Slosar said.

“There won’t be a huge change and it will be more a push back and move around a little bit,” he added.

Cathay will also postpone the construction of its HK$4.8 billion ($619 million) new cargo terminal, which will be the third in Hong Kong’s airport, by up to two years. The terminal had its groundbreaking ceremony in September and was originally scheduled to complete construction in the second half of 2011.

But an unprecedented financial market meltdown has slowed demand and seen traffic through the world’s biggest international cargo airport down 9.2 percent in October, following a 7.5 percent decline in September.

Cathay also said earlier this month that its October cargo volume sank 7.4 percent to 144,466 tonnes, an unusual drop in the traditional peak season for air cargo.

Analysts said the delay of the terminal would ease the cash flow problem of Cathay Pacific, which issued a profit warning this month on the back of potential fuel hedging losses of about $361 million.

The airline will also ask its cabin crews to take unpaid leave of between two weeks to 12 months, to sell or retire five planes and reorganise flight schedule to cut costs. ($1=HK$7.752) (Additional reporting by Timm Hepher in PARIS; Writing by Alison Leung; Editing by Lincoln Feast)

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