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Cathay Pacific has confirmed that it will reduce its workforce by approximately 8,500 employees and will close Cathay Dragon as part of a major restructuring.
The main elements of the restructuring include the elimination of approximately 8,500 positions across the group, representing about 24% of its established workforce. Through a hiring freeze and natural churn, the group has been able to reduce this to 5,900 actual jobs (or 17% of its established workforce). This means that some 5,300 Hong Kong-based employees will be laid off, and approximately 600 non-Hong Kong-based employees are also likely to be affected according to local regulatory requirements.
Cathay Dragon, the group’s wholly owned regional subsidiary, will cease operations with immediate effect. Regulatory approval is intended to be sought for the majority of Cathay Dragon routes to be operated by Cathay Pacific and HK Express, a wholly owned subsidiary.
Hong Kong-based Cathay Pacific cabin and cabin crew members will be asked to agree to changes to their terms of service, which are designed to align pay more closely to productivity and improve market competitiveness.
The executive pay cuts will continue throughout 2021 and a third voluntary special leave plan will be introduced for employees who do not travel during the first half of next year.
Augustus Tang, CEO of Cathay Pacific, said: “The global pandemic continues to have a devastating impact on aviation and the harsh truth is that we must fundamentally restructure the group to survive. We have to do this to protect as many jobs as possible and to fulfill our responsibilities to the Hong Kong Aviation Center and our customers. Our immediate priority is to support those affected by this announcement. “
The airline will offer severance packages and extend medical benefits and travel rights for staff, as well as providing counseling and support services for job transition. There will be no compensation with pension contributions.
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