SINGAPORE: Several Asian carriers yesterday moved to cut services and slash costs ahead of an expected air travel and cargo slump, but airline shares rose on hopes that a US-led assault on Iraq would be brief.
An overnight buying spree in battered European airline stocks spread to Asia, even as worries over a severe type of pneumonia spread by air travellers deepened amid warnings from various governments against unnecessary visits to mainland China, Hong Kong and Vietnam.
“People’s view, including my view, is that the war is going to be quick and as such the airlines have been discounting quite a lot of uncertainty,” said Philip Wickham, Asia aviation analyst at ING Financial Markets in Hong Kong. “In terms of the flu I don’t think it’s going to be much of an issue.”
As US President George W. Bush gave Iraqi leader Saddam Hussein 48 hours to leave or face war, Australia’s Qantas Airways Ltd said it would axe the equivalent of 1,000 jobs – equal to 3% of its workforce – by forcing staff to take leave as it trimmed expenses ahead of the likely conflict.
Korean Air Co Ltd, the world’s third largest freight carrier, said it was scaling back international routes and had beefed up security.
Nonetheless, Korean Air’s stock gained 14.6% and Qantas rose 4.4%. Shares in Singapore Airlines climbed 3.13%, recovering some of the ground lost on Monday after the airline reported a sharp fall in February traffic. Japan Airlines System Corp, Asia’s largest airline, rose 1.27%, Hong Kong’s Cathay Pacific Airways Ltd gained 2.29%, and Air New Zealand ended 6.1% higher.
Asia’s airlines have generally fared far better than their global counterparts, due to a stable operating environment, stronger balance sheets, and relatively little threat from growing numbers of low-cost carriers. – Reuters
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