Cathay Pacific cuts 8,500 jobs, shutters regional airline

Darnell Taylor
October 21, 2020

The South China Morning Post reported late yesterday Cathay would eliminate 6,000 positions.

Cathay Pacific announced plans Wednesday to cut its workforce by almost a quarter and close one of its short-haul airlines in an effort to survive the "devastating" impacts of the coronavirus pandemic. The pandemic pushed the carrier into survival mode, forcing it to cut capacity and offer its staff voluntary no-pay leave.

Although there are no surprises, the key question over the restructuring would be the positioning of Cathay Pacific-owned low-priced carrier HK Express, which will be given some unnamed Cathay Dragon routes, Mr Lee said.

Cathay took over Hong Kong Dragon Airlines Ltd., now known as Cathay Dragon, in 2006 for HK$8.22 billion, allowing the marquee airline to expand in China. It will monitor the situation and adopt measures to survive the pandemic, it said. There will be no salary increases for 2021 and annual bonuses for this year. And we are offering generous severance packages to all those who are leaving us, which are well in excess of the statutory requirements. "Cathay's forecast moving forward is very optimistic".

Cathay had already raised HK$39 billion through a recapitalization plan earlier this year, which gave the Hong Kong government a 6.08% stake in the company, and deferred delivery of aircraft to save funds.

"The future remains highly uncertain and it is clear that recovery is slow", Cathay said in Wednesday's statement.

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Manchester United have so far declined to comment, while FIFA , UEFA and Liverpool have been approached for a response. Other clubs believed to be involved include Real Madrid and PSG.

Repeated efforts to reassure passengers that air travel is safe have failed to make much of a difference while government restrictions, including quarantines of up to 14 days for returning passengers, have only added pressure.

A vaccine still could be months away. "The job cuts were inevitable".

"September rounded off what has been an incredibly hard summer, traditionally the peak passenger travel season of the year", said Cathay Pacific Group chief commercial officer Ronald Lam, in the airline's monthly business update. And as you know, Cathay is more heavily impacted than most of our peers, because we are 100 percent reliant on cross-border travel. Although the shares are down since January, they've ticked up in recent months, rising 16% from a low in early August.

The company was struggling with losses before the pandemic as anti-government protests in Hong Kong led to a sharp reduction in traffic a year ago and a change in management.

It also received a US$5bn (£3.9bn) bailout from the Hong Kong government in June.

The group's freight business has not been as badly affected. "Though without the right to vote, the two observers appointed by me to the board have expressed opinions on its plan and reminded the group's management of the need to keep the impact caused to its employees and the society to the minimum".

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