How severe are the business challenges at the moment?
The environment is very tough indeed. We have seen more
and more capacity added into the market. Our revenues are
declining and yield is under great pressure. The weakness
of the global economy has led to a reduction in premium
demand, with major companies tightening their belts on
corporate travel. There are other factors too � the decline in
Hong Kong�s inbound tourism, for example, and the impact
of security scares in Europe.

Is this just another short-term problem?
We believe that what we are facing now is the �new normal�.
This is not a short-term crisis but one that will impact us over
the long term � and it will require us to do things differently.
In recent years we have been working hard to increase our
productivity and keep our underlying cost base � that is,
costs without fuel � competitive. We�ve had some success,
but we need to do more.
Other airlines are facing the same external environment as us,
with fuel surcharges gone and revenues weakening, but they are
doing better than we are because they have a leaner cost base.
That�s why we need to get more productive � and fast.

What can we do to turn things around?
We have already begun a critical review of our business
which will look at how we can improve revenues and costs.
We will review every option for improving efficiency and
productivity to help us maintain a strong financial position
and deliver acceptable returns to our investors.
We understand the need to continue to invest in our
businesses and to continuously improve our products and
services. But this is going to require us to do things differently,
so we will review the way in which we are organised, the work
which we do and our cost base. At the same time we are also in
the process of developing our future strategy for the long term

What will the strategy review entail?
This body of work is already underway, led by [Chief Operating
Officer] Rupert Hogg and the directors. The focus will be on
how we can win over the next five to 10 years and the things
we need to do to survive and thrive for another 70 years in an
environment that is experiencing significant change.
As part of this we will need to refocus our organisation on
the things our customers really value, making better use of
data to inform our decision-making, accelerating our digital
capabilities, and looking at new ways to use our brand
reputation to drive revenue premiums. You will be hearing
a lot more about our new strategic focus in the months
ahead.

As part of the business review, will we be reassessing our
fuel hedging position?
Hedging is, and always will be, a core element of our riskmanagement
strategy. Fuel is by far our single biggest cost,
and we hedge to manage volatility and protect ourselves
against severe and sustained fuel-price rises that could
put our entire business in jeopardy. We expect oil prices to
continue to be volatile and so we have taken another look at
our hedging policy and the specifics of how we hedge.
The key point to make is that the trading statement
was not about hedging. The real problem is the continued
deterioration in our revenues, and that�s what we want to
address through this business review.

Will the drive to cut costs affect our customer offering?
It is vital that we continue investing in things that will improve
the travel experience for our customers on the ground and
in the air, spending money on the areas that they truly value.
The challenge is to be able to do things more productively
and efficiently as we deliver a differentiated experience to
our customers.

When do we expect things to improve?
It�s not going to be overnight. It will take a sustained recovery
of the global economy for the market to absorb all the excess
capacity and for premium and corporate demand to recover.
But of course we can�t afford to wait for this to happen, so
we�ll need to focus on rebasing our costs and improving
productivity, while continuing to deliver experiences that our
customers really value.

What should our people do in the face of the current
challenges?
We need our colleagues to understand that what we are
facing is not a short-term challenge but a structural problem
that requires a careful and sustained response. As we
undertake our review we need everyone to ensure their work
continues to have a positive impact on our customers and
performance.
We have an amazing team � passionate and committed
� that has been through many challenging times with us
before. It will take a concerted effort to get through this latest
challenge, but we will keep you all informed of our progress
every step of the way.

How can I find out more?
We will be communicating openly and frequently as we
undertake the business review and begin our strategy work.
The leadership team will be running town hall sessions and
giving updates to their teams. We have already published a
detailed FAQ on the current situation and invited everyone to
give feedback through Slido.