Major 'right-sizing' afoot, warns Cathay boss in wake of Covid blow
HONG KONG's Cathay Pacific Airways chairman Patrick Healy has warned that 'tough decisions will need to be made' by the fourth quarter of the year as part of 'right-sizing' efforts
HONG KONG's Cathay Pacific Airways chairman Patrick Healy has warned that 'tough decisions will need to be made' by the fourth quarter of the year as part of 'right-sizing' efforts.
He adds that 'nothing is off the table' in the upcoming review of the Cathay Pacific group's business model, but stopped short of saying whether any staff might be laid off as a result.
Mr Healy was speaking at the Cathay's unveiling of a HK$39 billion (US$5 billion) recapitalisation plan, reports London's FlightGlobal. The Hong Kong Government has stepped in with a significant capital injection for the beleaguered carrier, which has been hard hit by collapsed travel demand following the coronavirus outbreak.
Cathay is undertaking a review of its business model. By the fourth quarter of the year, the carrier's senior management team will make recommendations to its board on the 'optimum size and shape' of the group.
Mr Healy said the management team will be spending the next few months evaluating the situation and make an assessment of the medium- and long-term prospects.
'On the future of sister company Cathay Dragon - which recent media reports have suggested might be absorbed into Cathay or low-cost arm HK Express, Mr Healy said: 'We cannot take anything off the table. We do not have any plans around restructuring other than the recapitalisation plan announced.'
'Cathay also announced a fresh round of pay cuts for management team, as well as a second round of voluntary special leave scheme for its employees.
'The reality is that, given the extent of the global pandemic and its impact on the aviation industry worldwide, commercial debt markets are effectively closed to airlines who do not have extensive government and shareholder support,' he said.
Cathay earlier disclosed that it had been burning cash at a rate of around HK$2.5 billion to HK$3 billion a month since February. It began the year with around HK$20 billion in liquidity.