Cathay Pacific axes 8,500 jobs and shuts down Cathay Dragon
HONG Kong's flag carrier Cathay Pacific has confirmed that it will cut 8,500 jobs across the entire group, including 5,300 local staff and 600 based overseas
HONG Kong's flag carrier Cathay Pacific has confirmed that it will cut 8,500 jobs across the entire group, including 5,300 local staff and 600 based overseas.
The remaining 2,600 positions to be eliminated are currently unfilled, owing to cost reduction initiatives in recent months including a hiring freeze and the closure of certain overseas bases.
At the same time, the airline announced in a statement that Cathay Dragon will not be flying anymore as part of, what the airline says, is a corporate restructuring in response to the continued impact of the Covid-19 pandemic on aviation market.
With the grounding of Cathay Dragon, the airline said it will leverage 'the potential of its low-cost carrier, HK Express'.
'It is intended that regulatory approval will be sought for a majority of Cathay Dragon's routes to be operated by Cathay Pacific and HK Express, a wholly owned subsidiary,' Cathay said.
Other measures to cut costs include: Executive pay cuts to continue throughout 2021; a third voluntary special leave scheme for non-flying employees to be introduced for the first half of next year, and no salary increases for 2021 nor the payment of the annual discretionary bonus for 2020 across the board for all employees.
Cathay Pacific CEO Augustus Tang noted that severance packages 'that go beyond statutory requirements' will be offered to those losing their jobs.
'We have taken every possible action to avoid job losses up to this point. We have scaled back capacity to match demand, deferred new aircraft deliveries, suspended non-essential spend, implemented a recruitment freeze, executive pay cuts and two rounds of special leave schemes.'
However in spite of these efforts, Mr Tang said the airline will continue to burn HKD1.5-2 billion (US$193.5 million-$257.3 million) cash per month. 'This is simply unsustainable. The changes announced today will reduce our cash burn by about HKD500 million per month.
'Whilst this is a difficult time, we are a resilient group and a proud Hong Kong brand. I believe in this plan and I know we will prevail. We remain absolutely confident in the long-term future of Cathay Pacific, the Hong Kong aviation hub and the critical role Hong Kong will play in the Greater Bay Area and beyond.'