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Cathay: No plans to ground fleet

Cathay: 42 percent of flights cancelled due to SARS
Cathay: 42 percent of flights cancelled due to SARS

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HONG KONG, China (CNN) -- Hong Kong carrier Cathay Pacific has responded to media reports that it is considering grounding its fleet from next month in the wake of the SARS outbreak, saying it has no plans to cease operations.

A leaked internal memo from Cathay Pacific's director of flight operations, Nick Rhodes, said passenger numbers "could fall to less than 6,000 per day in May, in which case we will have to consider grounding the entire passenger fleet."

A spokesman for Cathay, Asia's third largest airline by international passenger/mileage, responded to the leak by saying the company had no current plans to stop passenger flights.

"There are absolutely no plans for Cathay Pacific to ground the passenger fleet," Tony Tyler, director of corporate development, told CNN.

" All the memo intended to do was to communicate to a very important segment of the work force -- the air crew, the pilots -- that times are difficult at the moment," he said.

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

So far, Cathay Pacific has cancelled 42 percent of its flights due to travel fears created by the Severe Acute Respiratory Syndrome virus. Passenger levels have dropped from around 33,000 per day to between 10,000 to 13,000.

Ng said the memo appeared on the Cathay Pacific intranet, an in-house version of the Internet, on a site intended to be seen by the flight operations department.

"In simple terms, we have no market," Rhodes said in the memo, which was dated Friday. "A little-known virus and the power of global media, together, have combined to bring a very healthy and proud airline to its knees."

The airline said it has made surgical face masks available to all passengers and crew who wish to use them and posted staff at ticket counters and boarding gates to look for anyone showing SARS symptoms.

But those efforts haven't kept the airline from "literally hemorrhaging cash -- approximately $3 million per day," Rhodes wrote.

Even if all its employees worked without pay, "We would still be losing nearly $2 million per day!" he said in the leaked memo. "The current strategy is to stem the bleeding and buy time."

How much time is needed before the SARS threat diminishes is unclear. The World Health Organization (WHO) issued a health alert about the disease last month, and recommended April 4 that travelers consider postponing all but essential trips to Hong Kong and China's Guangdong Province.

That alert will last for at least 30 days, the WHO has since stated.

WHO reported Saturday it has tallied 2,960 cases of the disease, including 119 deaths. Five more people died of the disease in Hong Kong on Sunday bringing the death toll from SARS in the Chinese territory to 40.

Cathay possesses the financial reserves to survive the downturn, Tyler said.

"We entered this crisis in a strong financial position -- a much stronger position than other airlines around the world enjoy," he said. "This is the sort of crisis many airlines would not be able to survive for more than a few weeks. Cathay Pacific is not in that situation."

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