Nov. 28 (Bloomberg) -- Cathay Pacific Airways Ltd., Hong Kong's biggest carrier, slashed growth plans for next year and offered staff unpaid leave as travel demand plunges on a global recession.

Passenger capacity will rise less than 1 percent in 2009, compared with a previous plan for an increase of as much as 7 percent, the airline said in an e-mailed statement today. Cabin crew will be given as much as a year of unpaid leave, it added.

Cathay Pacific has forecast ``disappointing'' earnings this year as the global economic slowdown spreads to China and the rest of Asia, damping demand for cargo and passenger flights. Asia-Pacific airlines' passenger traffic tumbled 6.1 percent last month, the second-biggest decline worldwide, according to the International Air Transport Association.

``The measures may not be enough,'' said Kelvin Lau, an analyst at Daiwa Institute of Research in Hong Kong. ``They should have done this earlier, when they started to see a slowdown.''

Offering staff unpaid leave will likely only reduce operating costs by about 1 percent, he added. The airline, which posted a first-half loss, has already trimmed routes, frozen hiring and put five Boeing Co. 777s up for sale to cut costs.

Delivery Delays

The carrier doesn't plan to axe any routes through the cuts announced today, it said. Most of the planned reductions in growth will come through the sale of the 777s and because of delivery delays caused by a strike at Boeing.

``We have got in quickly to try to plan a revised delivery schedule which Boeing can live with and which suits our desire to defer deliveries given current market conditions,'' Chief Executive Officer Tony Tyler said in an e-mailed response to Bloomberg questions. The deferrals will likely only be for a few months, he added. The carrier was previously due to receive 10 planes next year.

The carrier has also applied to delay construction of an air-cargo terminal in Hong Kong by as much as two years to cut capital expenditure and because of waning freight demand. Work has already begun on the HK$4.8 billion ($619 million) facility, previously due to open in the second-half of 2011, according to the statement. The airline will also park two Boeing 747-400BCF freighters in California for a year.

Cathay Pacific has tumbled 63 percent this year in Hong Kong trading, compared with a 50 percent slump for the benchmark Hang Seng Index. The carrier fell 1.3 percent to HK$7.52 in today before the announcement.

Travel Slowdown

Taiwan's China Airlines and Malaysian Airlines System Bhd. have also asked staff to take unpaid leave to cut costs amid the travel slowdown. Global international air traffic, or the total distance flown by paying passengers, fell 1.3 percent last month, the second decline in a row, IATA said yesterday.

Travel demand has also slowed in China because of the cooling economy. The World Bank this week cut its forecast for China's growth next year to 7.5 percent, the slowest pace since 1990, after the global financial crisis deepened. It forecast 9.2 percent in its previous quarterly report.

Cathay Pacific may also have to revise its plans depending on the economy, according to Tyler.

``Nothing can be set in stone at the moment,'' he said in the statement. ``Visibility is low and it's hard to predict developments with any real certainty. Flexibility will be the key word in the months ahead.''

To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net

Last Updated: November 28, 2008 05:26 EST