Cathay to Cut Over 5,000 Hong Kong Jobs; Close Dragon Brand

Cornelia Mascio
Ottobre 21, 2020

Hong Kong's Cathay Pacific Airways said on Monday (Oct 19) it expects to operate less than 50 per cent of its pre-pandemic passenger flight capacity in 2021 as it nears completion of a strategic review that could lead to major job losses.

The Hong Kong-based airline also said Dragon's operations will cease from Wednesday; regulatory approval will be sought for the majority of its routes to be operated by Cathay and Hong Kong Express Airways Ltd. The entire reduction of some 8,500 positions amounts to about 24% of Cathay's headcount, one of the largest hits in the aviation sector globally since the outbreak started.

The biggest losses will be felt locally, where 5300 Hong Kong-based employees are expected to be made redundant.

"We must fundamentally restructure the group to survive. and meet our responsibilities to the Hong Kong aviation hub".

"Among the multiple scenarios studied, this one is already the most optimistic that we can responsibly adopt at this moment", said Mr Lam.

But Cathay CEO Tang said the airline was burning through up to HK$2 billion ($260 million) in cash each month during the pandemic.

Executive pay cuts will also continue throughout 2021 and there will be no pay increments for 2021 nor bonuses for this year for all Hong Kong employees, Cathay Pacific said.

Dragonair's inaugural flight at Hong Kong's Kai Tak airport in 1985
Covid: Cathay Pacific to run at half capacity next year

The travel downturn has been particularly hard for airlines such as Cathay Pacific and Singapore Air, which do not have domestic routes to soften the blow of global travel bans.

The restructuring plan will cost about 2.2 billion Hong Kong dollars ($283.8 million), the company said.

Cathay Pacific Chairman Patrick Healey.

Executive pay cuts will continue into 2021 and a third voluntary leave plan for ground staff will be introduced in the first half of next year, Cathay said. He said the airline's management realised the anxiety and distress the firings would cause and said he was "truly sorry" for the need to cut staff. Severance packages for those laid off are well in excess of statutory requirements, Healy said. "They should all be proud of everything they have accomplished with Cathay, and nothing would give us greater pleasure then to be able to hire back the people we are losing today when we return to growth in the future". It carried just 1,568 daily passengers on average for the month.

Cathay Dragon, once known as Dragonair, operated most of the group's flights to and from mainland China and had been hit by falling demand before the pandemic due to widespread anti-government protests in Hong Kong that deterred mainland travellers.

"What we need to do is focus our efforts on a single premium full-service carrier brand, which will be Cathay Pacific, complemented by a single low-priced leisure brand in Hong Kong express", said Cathay Pacific Chairman Patrick Healy.

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