Cathay Pacific Group has announced a major restructuring of the company which includes a massive reduction of its workforce and the closure of its Cathay Dragon subsidiary.
The airline will cut about 8,500 jobs in total amounting to 24% of its workforce and remaining staff, including pilots and cabin crew will have to agree to new pay cuts.
“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive,” said Cathay Pacific CEO Augustus Tang.
“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.”
Cathay Pacific is currently burning up to HK$2 billion ($257 million) of cash every month and hopes the restructuring measures will reduce this to around HK$500 million ($64 million) per month.
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.
“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.”
Cathay Pacific has been operating Cathay Dragon since 2006 after acquiring the carrier for HK$8.22bn. The regional airline mainly operated narrowbody A320s and A321s on short hops to the Chinese mainland. As of 30 June Cathay Dragon had a fleet of 48 aircraft.
Mr Tang added: “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.”