Cathay Pacific Airways will cut 5,900 jobs, close Cathay Dragon brand

Cathay Pacific Airways will cut 5,900 jobs, close Cathay Dragon brand
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Cathay Pacific Airways announced that it will cut 5,900 jobs and close the Cathay Dragon brand due to the damage brought by the pandemic.

The Hong Kong airline is also expecting changes in conditions enclosed in its contracts with cabin crew and pilots as part of a restructuring that would cost $283.9 million.

Cathay Pacific Airways will eliminate 8,500 positions or 24% of its usual headcount. However, the company says this includes 2,600 roles that are unfilled due to cost reduction programs.

“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive,” Cathay Chief Executive Augustus Tang said in a statement.

Cathay was able to store around 40% of its fleet outside Hong Kong, but it would only operate less than 50% of its pre-pandemic capacity in 2021.

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Cathay received a $5 billion rescue package from the Hong Kong government in June. It has been holding a strategic review that analysts think would lead to major job losses. The airline announced it was bleeding HK$1.5 billion to HK$2 billion of cash a month.

BOCOM International analyst Luya You said she expects a more strategic plan for the airline’s fleet plans and route network as part of the restructuring.

“Had they revealed more on fleet planning for 2021-22, we would get a much better sense of their outlook,” she said.

In February, Cathay Pacific announced its plans to reduce its services by around 30% over the next two months, including a cut of about 90% in flights to mainland China.

In a statement, the airline said: “In view of the Novel Coronavirus outbreak and also significant drop in market demand, we just announced massive capacity cuts yesterday. Preserving cash is the key to protecting our business. We have already been taking multiple measures to achieve this.”

“Today, we are appealing to all employees to participate in the special leave scheme, which will take effect from 1 March and last until 30 June. All employees will have the option to take three weeks of unpaid leave in this period,” the statement added.

According to the Reuters news agency, Cathay Pacific chief executive officer (CEO) Augustus Tang has sent a video message to employees discussing that the airline has asked its suppliers to cut prices, stopped hiring new staff, postponed some major projects, and stopped all non-critical spending.

Ending Cathay Dragon

Meanwhile, Cathay Dragon, which oversaw most of the group’s flights to and from mainland China, experienced low demand even before the pandemic due to anti-government protests in Hong Kong.

“Now that Cathay has decided on staff count and the elimination of the Dragon brand it knows the size of the airline and the structure going forward and can complete its new fleet and network plan,” said Brendan Sobie, an independent aviation analyst.

Prior to the outbreak, the flagship carrier had already been affected by the decline of passenger demand due to several months of anti-government protests in Hong Kong. The territory is considered an international financial and travel hub and is an integral part of its business.

According to analysts, the airline was already expected to offer the unpaid leave scheme just for those issues anyway.

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