Hong Kong’s Cathay Pacific Airways slashes jobs, kills Dragon

Hong Kong’s Cathay Pacific Airways Ltd said on Wednesday it would slash 5,900 jobs and end its regional Cathay Dragon brand, joining peers in cutting costs as it grapples with a plunge in demand due to the coronavirus pandemic.

The airline would also seek changes in conditions in its contracts with cabin crew and pilots as part of a restructuring that would cost 2.2 billion Hong Kong dollars ($283.9m), it told the stock exchange.

Overall, it will cut 8,500 positions or 24 percent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives, Cathay said.

“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 Officer Augustus Tang said in a statement.

“The future remains highly uncertain and it is clear that recovery is slow,” Cathay said in Wednesday’s statement. “The management team has concluded that the most optimistic scenario it can responsibly adopt is one in which, for the year 2021, the company will be operating at well under 50 percent of the passenger capacity it operated in 2019.”

Cathay’s announcement came a day after Hong Kong said its unemployment rate rose to 6.4 percent for the July-September period, its highest level in almost 16 years, from 6.1 percent from June to August.

The coronavirus has had a devastating effect on aviation. As many as 46 million jobs are at risk, and airlines alone face about $420bn in lost revenue this year.

Singapore Airlines Ltd and Australia’s Qantas Airways Ltd have also announced large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.

Cathay was struggling with losses before the pandemic as anti-government protests in Hong Kong led to a sharp reduction in traffic last year and a change in management. The pandemic pushed the carrier into survival mode, forcing it to cut capacity and offer its staff voluntary no-pay leave.

The airline, which has stored about 40 percent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 percent of its pre-pandemic capacity in 2021.

The coronavirus has had a devastating effect on aviation. As many as 46 million jobs are at risk, and airlines alone face about $420bn in lost revenue this year.

Singapore Airlines Ltd and Australia’s Qantas Airways Ltd have also announced large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.

Cathay was struggling with losses before the pandemic as anti-government protests in Hong Kong led to a sharp reduction in traffic last year and a change in management. The pandemic pushed the carrier into survival mode, forcing it to cut capacity and offer its staff voluntary no-pay leave.

The airline, which has stored about 40 percent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 percent of its pre-pandemic capacity in 2021.

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