Cathay denies it plans to ground fleet

The memo reportedly said the passenger fleet could be grounded next month and that the Severe Acute Respiratory Syndrome is costing it $3m a day.

Cathay has denied the reports.

"We have absolutely no plans to do that (cancel all passenger flights)," Tony Tyler, director of corporate development at Cathay, told Reuters.

"Clearly we can't rule out any particular course of action, but we will respond to circumstances," he added.

Cathay's stock hit a 17-month low of HK$8.30 before edging upward slightly, but is down nearly 20% since the outbreak of the virus in Hong Kong a month ago.

Warnings

The World Health Organisation (WHO) has issued a warning against travel to Hong Kong and neighbouring Guangdong province, which has decimated the local travel industry.

"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," said Nick Rhodes, Cathay's Director of Flight Operations.

Local press reported the contents of the memo on Saturday.

Cathay Pacific is carrying only a third of its usual 30,000 daily passengers and has cancelled 42% of its daily flights.

Air travel has spread Sars, which has killed more than 130 people and infected about 3,200, across the globe.

On Friday Cathay issued a profit warning for the first time ever, which sent shares to a 16-month low.