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Mon, Apr 14, 2003

Cathay: To Fly Or Not To Fly

SARS Is The Question

Cathay Pacific Airways, Hong Kong's de facto flag carrier, could be forced to ground its fleet if passenger numbers continue to fall because of the outbreak of severe acute respiratory syndrome (SARS).

Nick Rhodes, director of flight operations, said in an internal memo that the airline was carrying less than one third of its usual number of passengers of more than 30,000 per day. "We forecast that the number of passengers could fall to less than 6,000 per day in May, in which case we will have to consider grounding the entire passenger fleet," he said.

WHO Warning

On April 2 the World Health Organization warned people to avoid non-essential travel to Hong Kong and the neighboring mainland province of Guangdong because of SARS. Cathay and other regional airlines have been hard-hit.

Cathay, which is usually one of the world's most profitable airlines, last week issued its first profit warning, saying SARS and the Iraq conflict were hitting operations. So far, 40 people have died from SARS in Hong Kong and 1,150 have been infected, nearly one third of the number of cases globally. The death rate remains at about 4 per cent and 223 people in Hong Kong have made a full recovery.

Cathay said on Sunday that 42 per cent of its schedule was cancelled but it was maintaining operations. "Cathay Pacific has no plans as of now to stop operation at any future date," it said. However, Mr Rhodes' memo said the airline was "hemorraging cash" at a rate of $3 million a day.

Cathay Pacific has responded to media reports that it is considering grounding its fleet starting next month, saying it has no plans to cease operations.

"There are absolutely no plans for Cathay Pacific to ground the passenger fleet," Tony Tyler, Cathay's director of corporate development, told reporters. "All the memo intended to do was to communicate ... that times are difficult at the moment," he said.

Cathay Pacific spokeswoman Rosita Ng said the comments and forecasts were Rhodes' interpretations of a briefing conducted by chief executive David Turnbull.

Case History: Frequent Flyer

Government and airline officials are urgently trying to track down passengers who flew on board seven Lufthansa passenger jets with a Hong Kong man who has been diagnosed with SARS.

On March 28, the 48-year-old Hong Kong resident boarded a Lufthansa flight and flew to Europe where he crisscrossed the continent and, authorities fear, possibly passed on SARS to other passengers. According to the government, his journey began with a flight from Hong Kong to Munich, Germany. He then flew on to Barcelona, Spain, where, on March 31, he began showing SARS symptoms, say health officials.

He then flew to Frankfurt, London, back to Munich and on to Frankfurt before returning to Hong Kong. On April 8, he was hospitalized and two days later diagnosed with SARS.

All the flights on his trip were aboard the German carrier Lufthansa.

Entire Aircraft Contaminated? WHO: No

The World Health Organization insists there is no evidence SARS has led to mass contamination of an aircraft. But the agency advises travelers the disease has been spread to some people sitting within three rows of an infected person. As a result of SARS fears, many travelers are canceling trips. And other countries are worried travelers from Hong Kong are spreading SARS around the globe.

To allay these concerns, the Hong Kong government will begin health screenings Monday that will include taking passengers' temperatures so that signs of fever can be detected. Some experts note the panic is reducing congestion at airports and forcing airlines to offer deep discounts. And with modern filtrations systems, the air may be cleaner than ever.

"The air in the plane is extremely good. Compared to an office building, the air inside an airplane is probably 100 per cent cleaner and (of a) higher quality," says Jim Eckes of IndoSwiss Aviation. Still, many people will continue to stay at home as long as fears about SARS linger.

FMI: www.cathaypacific.com

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