Published on : Wednesday, October 21, 2020
Cathay Pacific recently confirmed that its regional subsidiary Cathay Dragon will cease operations after three nearly decades of functioning with immediate effect. The decision comes as part of a wider restructuring of the Hong Kong-based carrier in the wake of the COVID-19 shutdown.
Cathay mentioned in a statement that it hoped to continue to operate most of the routes currently offered through Cathay Dragon, mainly using wholly-owned subsidiary HK Express but the action would require regulatory approval. At the same time, the airline has also mentioned that it would cut 8,500 jobs, or around a quarter of its workforce.
The company also mentioned that it has already eliminated 5,900 jobs, with 5,300 going in Hong Kong and a further 600 overseas through a recruitment freeze and natural attrition. Existing cabin and cockpit crew members will also be asked to take a pay cut.
The company also said that it would be offering severance packages that go well-beyond statutory requirements and will also be extending medical benefits and staff travel entitlements, while providing counselling and job transition support services. Augustus Tang, Chief Executive, Cathay Pacific said in a statement that the global pandemic continues to have a devastating impact on aviation and shared that the group should be fundamentally restructured to survive.
He mentioned that the move is required to protect as many jobs as possible, as well as meet the responsibilities to the Hong Kong aviation hub and customers. He also shared that the immediate priority of the company is to support those affected by the latest announcement. He stated that the airline is deeply saddened to part ways with its talented and respected colleagues, and acknowledged them for their hard work, achievements and dedication.
He informed that the company has taken every possible action to avoid job losses, 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. However, he mentioned, that despite the efforts the airline continued to burn billions of cash per month which became simply unsustainable. He added that the latest changes will reduce cash burn per month.