Hong Kong - Hong Kong's flagship airline Cathay Pacific said Wednesday it had seen "significant drops" in first and business class bookings as the global economic crisis deepens.

Companies are shifting their executives from first class to business and from business to economy as the financial crisis deepens, airline staff were told in a newsletter.

Cathay has been hit particularly hard because 16 of its top 20 corporate clients are in the financial sector, the newsletter claimed.

"A lot of companies are now trading down - from First to Business Class, or from Business to Economy - and a number are cutting travel altogether," said James Tong, Cathay's general manager for sales.

"The worst is front-end travel for long-haul flights, with a significant drop compared to last year when there was a lot of IPO activity from mainland China companies."

Leisure travelers were also cutting back with people switching from high-end destinations like Japan to cheaper destinations like Taipei, Tong said.

The airline's chief executive Tony Tyler, writing in the same newsletter, described it as a "very troublesome period."

"We will certainly need to look more carefully at the cost side of the equation and this will be one of the big challenges for our managers who are now in the process of putting together next year's budget," Tyler wrote.

Cathay Pacific warned staff in its September newsletter that high fuel prices and the global economic downturn would lead to cost-cutting.

Cathay Pacific, which in August announced its first quarterly loss in five years, carried 23.5 million passengers and 1.6 million tons of cargo in 2007. It employs more than 27,000 people worldwide. (dpa)