Cathay Pacific to cut 5,900 jobs, close Cathay Dragon as Covid hurts
26 Oct 2020
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Hong Kong’s Cathay Pacific Airways today announced a corporate restructuring, involving the closing of its subsidiary Cathay Dragon, in response to the continued impact of Covid-19 on the aviation market.
The airline said it would cut 5,900 jobs and end its regional Cathay Dragon brand as it grapples with a plunge in demand from the coronavirus pandemic. Overall, it would affect 8,500 positions, or 24 per cent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives, Cathay said.
The restructuring will cost HK$2.2 billion ($283.9 million) and the airline will also seek changes in conditions in its contracts with cabin crew and pilots, the airline stated in a stock exchange filing.
“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.
The airline also on Wednesday offered alternative flights for those booked with Cathay Dragon or cash backs if those arrangements do not suit the passenger.
“We would like to assure all affected customers holding Cathay Pacific or Cathay Dragon tickets involving one or more Cathay Dragon flights that you will be looked after. Depending on where you are travelling, you will either receive a refund for any unused part of your ticket or be rebooked onto alternative Cathay Pacific flights,” the airline informed customers in a website notice.
Cathay Pacific has sought details from passengers travelling to/from Beijing, Shanghai, Taipei or Denpasar (Bali) for whom it would offer alternative travel arrangements on Cathay Pacific operated flights (Shanghai passengers travelling to/from both Pudong and Hongqiao airports will be rebooked onto Cathay Pacific’s Pudong flights). For passengers who have booked with us directly via cathaypacific.com or its call centre, over the next 7 days.
In case the alternative arrangements are not convenient, passengers can choose refund or swap any unused part of your ticket into Cathay Credits for future travel on Cathay Pacific.
Passengers who have booked with a travel agent have been asked to approach the concerned agent directly for assistance.
Cathay, which has around 40 per cent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 per cent of its pre-pandemic capacity in 2021.
After receiving a $5 billion rescue package led by the Hong Kong government in June, it had been conducting a strategic review that analysts expected would result in major job losses.
The airline said it was losing HK$1.5 billion to HK$2 billion each month and the restructuring would stem the outflow by HK$500 million a month in 2021, with executive pay cuts continuing throughout next year.
Singapore Airlines and Australia’s Qantas Airways have already announced similarly large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.
