Cathay Pacific to cut workforce by a quarter
October 21, 2020
Hong Kong airline Cathay Pacific on Wednesday announced it would cut 24% of its workforce and shut a regional airline in an effort to survive the drop in business caused by the COVID-19 pandemic.
Some 5,300 employees in Hong Kong and about 600 elsewhere will face redundancy, while 2,600 open positions will not be filled, the company said in a statement.
Its regional subsidiary Cathay Dragon will immediately cease operations. But the company said it would seek approval for most of those routes to be taken over by Cathay Pacific and its budget subsidiary HK Express.
"The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the Group to survive," Cathay Pacific CEO Augustus Tang said. "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."
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Airlines struggling to survive
Travel restrictions and the collapse of passenger air travel in particular during the coronavirus crisis have taken a heavy toll on the aviation industry. A number of major airlines, including Germany's Lufthansa, have slashed jobs as a result.
In a bid to stay afloat, Lufthansa accepted a €9-billion ($10.6 billion) bailout from the German government. It also cut 20% of its leadership positions and 1,000 administrative spots — and is planning to cut 22,000 jobs or more as part of major restructuring. .
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Losing $260 million every month
In June, Cathay Pacific raised 39 billion Hong Kong dollars in a recapitalization plan that gave the city's government a 6% stake in the airline.
But CEO Tang said the company was losing up to 2 billion Hong Kong dollars ($260 million; €219 million) every month because of the pandemic, a situation he said was "simply unsustainable." The restructure, he added, aimed to save around 500 million Hong Kong dollars per month.
Even before the pandemic, Cathay Pacific had been struggling — massive pro-democracy protests in Hong Kong last year had led to a plunge in traffic, particularly from the Chinese mainland.
The airline said it expected to operate well under 50% of its pre-pandemic capacity in 2021.
nm/msh (AFP, AP, dpa)