Cathay Dragon Ceases Operations; Cathay Pacific to Layoff 6,000 Staff

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Cathay Pacific Airbus A350 in the foreground with a Cathay Pacific Cargo Boeing 747F in the background. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.


Cathay Pacific today confirmed that it will reduce
its workforce by
approximately 8,500 employees and shutdown Cathay Dragon as part
of a major restructure.

Major elements of the restructuring include:

Reducing approximately 8,500 positions across the
entire group, which accounts for around 24% of its established
headcount. Through a recruitment freeze and natural attrition, the
group has been able to reduce this to 5,900 actual jobs (or 17% of
its established headcount). This means some 5,300 Hong Kong-based
employees being made redundant, and approximately 600 employees
based outside of Hong Kong also possibly being affected subject to
local regulatory requirements.


Cathay Dragon, the group’s wholly owned regional
subsidiary, will cease operations with immediate effect. It is
intended that regulatory approval will be sought for a majority of
Cathay Dragon’s routes to be operated by Cathay Pacific and HK
Express, a wholly-owned subsidiary.

Hong Kong-based cabin and cockpit crew members of
Cathay Pacific will be asked to agree to changes in their
conditions of service which are designed to match remuneration
more closely to productivity and to enhance market
competitiveness.

Executive pay cuts will continue throughout 2021
and a third voluntary Special Leave Scheme for non-flying
employees will be introduced for the first half of next year.
There will be no salary increases for 2021 nor the payment of the
annual discretionary bonus for 2020 across the board for all
employees. Outport colleagues will be subject to local
arrangements.

Cathay Pacific Chief Executive Officer Augustus
Tang 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. We have to do this to protect as
many jobs as possible, and meet our responsibilities to the Hong
Kong aviation hub and our customers.

“Our immediate priority is to support those
affected by today’s announcement. We are deeply saddened to part
ways with our talented and respected colleagues, and I want to
thank them for their hard work, achievements and dedication.”

Cathay Pacific will be offering severance packages
and
extending medical benefits and staff travel entitlements, as well
as providing counselling and job transition support services.
There will be no offset against pension contributions.

Mr Tang said: “We have taken every possible action
to avoid job losses up to this point. We have scaled back capacity
to match demand, deferred new aircraft deliveries, suspended
non-essential spend, implemented a recruitment freeze, executive
pay cuts and two rounds of Special Leave Schemes.

“But in spite of these efforts, we continue to
burn HK$1.5-2 billion cash per month. This is simply
unsustainable. The changes announced today will reduce our cash
burn by about HK$500 million per month.

“We have studied multiple scenarios and have
adopted the most responsible approach to retain as many jobs as
possible. Even so, it is quite clear now recovery is going to be
slow. We expect to operate well under 25% of 2019 passenger
capacity in the first half of 2021 and below 50% for the entire
year.”

On Cathay Dragon, Mr Tang said, “Over its 35
years, Cathay Dragon has earned a well-deserved reputation for
excellence, thanks to its outstanding service and distinct
hospitality, delivered by a remarkable team.

“Whilst this is a difficult time, we are a
resilient group and a proud Hong Kong brand. I believe in this
plan and I know we will prevail. We remain absolutely confident in
the long-term future of Cathay Pacific, the Hong Kong aviation hub
and the critical role Hong Kong will play in the Greater Bay Area
and beyond.”

Read more: The two
airlines,

Cathay Dragon and Cathay Pacific carried Just 47,061 Pax in
September
.

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