Hong Kong carrier Cathay Pacific is in crisis mode this morning after issuing a profit warning and announcing a “critical review of its business”.
Whether this air of crisis has been stage managed might be held to question following its earlier but little reported decision to hire a PR network to handle the airline’s crisis communications around the world.
However the detailed financial reports in the overnight media, like this article in Bloomberg, emphasise the rapidity with which its financial problems have emerged.
Early this month Cathay Pacific took the contradictory step of confirming it would cram more passengers into its longest haul jets in order to protect its premium quality business model.
Whether orchestrated or not, this sequence of disclosures sends signals of lack of direction or strategic purpose to the market. The airline seems to be saying ‘we have a sudden serious problem, but we don’t really know what to do.’
The message from its customers could be ‘we don’t like what you are doing, so we will just go away.’
This is a dilemma that Qantas and Singapore Airlines have solved by having their own low fare brands. It’s reasonable to think that adopting such a strategy is part of the Cathay Pacific crisis review.