Cathay Pacific and its subsidiary Dragonair will cut flight capacities and slash routes starting next month in addition to introducing unpaid leave for its more than 17,000 employees.

Cathay Pacific chief executive Tony Tyler said on April 17 that the current condition of the aviation market is the worst he has seen, and the airline may cut capacity further if the market continues to deteriorate.

"I think it is the worst. In SARS there was a more immediate and dramatic impact on our passenger traffic. But it was driven by a health scare. A health scare does not last forever," he told reporters. "There is no visibility of how long it will last. That makes it more challenging than any other thing that I have personally experienced."

Tyler said the SARS crisis of 2003 did not affect air cargo business, but the current financial storm has pushed the airline to reduce overall cargo capacity by 11 percent to 84 flights from a peak of 124 during 2008.

The airline will cancel 17 round trips to London, seven to Paris, nine to Frankfurt, one flight daily to Sydney, 10 flights weekly to Singapore, four flights weekly to Bangkok, one flight daily to Seoul and cut down flights to Taipei.

Tyler said flights to Taipei are reduced because of the direct-link between Taiwan and the mainland.

"We are losing a lot of traffic," he said.

Its subsidiary Dragonair plans a more drastic cut of passenger capacity of 13 percent.

The airline said services to Bangalore, Busan, Sanya and Shanghai will be reduced from June 1, while all flights to Fukuoka, Dalian, Shenyang, Guilin and Xi'an will be suspended.

Cathay Pacific is negotiating the sale of five of its aircraft and will park two more of its Boeing 747-400BCF freighters. It will also wet-lease another to subsidiary Air Hong Kong.

Chinese University of Hong Kong (CUHK) Aviation Policy and Research Centre associate director Law Cheung-kwok said the reduction will not affect Hong Kong's development as an aviation hub as other countries and regions are also facing the same problem.