Topline
Cathay Pacific, Hong Kong’s flagship airline, is the latest to announce thousands of job losses, while it is closing down its regional airline arm as the pandemic continues to batter global demand for air travel.
Cathay Pacific employees walk through Hong Kong International Airport on October 21, 2020
Key Facts
Cathay Pacific said Wednesday that it is shedding some 8,500 jobs, including 5,300 workers in Hong Kong, and a further 2,600 unfilled positions as it introduces a hiring freeze.
The total cuts account for 24% of the firm’s workforce.
Its regional airline arm, Cathay Dragon, which operates in countries across Asia, will also be shut down on Wednesday, with its services likely to be taken over by Cathay Pacific and low-cost airline HK Express, which is owned by Cathay Pacific.
Executive pay cuts will continue into next year, the firm said.
Big Number
HK$2.2 billion (US$260 million). That’s how much the firm’s restructuring is estimated to cost, the company said on Wednesday. Cathay Pacific hopes that the measures will reduce the amount the company is losing each month, from up to $258 million, to around $65 million a month.
Crucial Quote
Augustus Tang, CEO of Cathay Pacific, said in a statement: “The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive.”
What To Watch For
The company only expects demand for its services to return to levels seen before the crisis, in 2024, Chairman Patrick Healy said.
Key Background
Cathay Pacific has been on the frontline of the pandemic and the most severe crisis to grip the aviation industry in decades. With no domestic flights from its Hong Kong base, the airline was forced to take drastic measures early as the coronavirus swept through parts of Asia at the start of this year. After cutting 90% of its flights to mainland China during its first wave of drastic lockdowns, the airline encouraged its 27,000 employees to take unpaid leave for three weeks. Cathay Pacific, much like struggling airlines across the world, was bailed out earlier this year by Hong Kong’s government to the tune of $5 billion, but with the airline expecting to operate at just 50% capacity through most of 2021, Healy said, there will likely be more cuts on the way.
Tangent
The International Air Transport Association has revised its estimates for the industry’s total revenue losses this year several times now, and now forecasts that air travel will lose $419 billion in revenue in 2020.
Further Reading
Cathay Pacific Group announces corporate restructuring (Cathay Pacific)
Cathay Pacific Urges Staff To Take Unpaid Leave As Coronavirus Hits Flight Demand (Forbes)
