Cathay Pacific to cut 6,000 jobs and close Dragon brand, according to SCMP

Photographer: Roy Liu / Bloomberg

Cathay Pacific Airways Ltd. will cut 6,000 jobs and close its Cathay Dragon brand, the South China Morning Post reported, as part of a strategic review to combat the deep damage caused by the coronavirus pandemic.

The Hong Kong-based airline is expected to officially announce the plan after the market closes on Wednesday, the newspaper said. He initially planned around 8,000 leaveIt’s global, but after government intervention it reduced that to 18% of its total workforce, including some 5,000 jobs in Hong Kong, according to the report.

The company, which posted a loss of HK $ 9.9 billion ($ 1.3 billion) in the first half, has been working for months on the review that management presented to the board on Monday. Cathay said in September that it would not survive unless it adapted its airlines for the “new travel market.” A representative for Cathay did not immediately respond to requests for comment Tuesday.

Cathay’s passenger traffic plummeted as travel restrictions increased and people refrained from flying, with numbers as low as 500 a day in April and May. On October 19, the company said it expected to operate at approximately 10% of pre-pandemic capacity for the remainder of the year and well below a quarter in the first half of 2021. By September, passenger numbers decreased by 98, 1% from the year before.

Cathay carried out a recapitalization of 39 billion Hong Kong dollars The plan was completed in August and left the Hong Kong government with a 6.08% stake in the company and two observer seats on its board. In another effort to cushion the blow of lost passengers, the airline has been renegotiating aircraft deliveries since Airbus SE and Boeing Co.

Cathay already introduced an unpaid leave program for staff at the beginning of the year, as monthly losses amounted to HK $ 3 billion, cutting salaries and shutting down crew bases overseas. President Patrick Healy said in August that those cost control measures would not be enough.

‘Most challenging’ period

The company was struggling with losses before the pandemic, as anti-government protests in Hong Kong led to a sharp reduction in traffic last year and a change of address. Then Covid-19 broke out, pushing the airline into what Healy described as the most challenging period in its history.

Cathay Dragon flies Airbus SE A320, A321 and A330 aircraft to destinations in Asia and more than 20 cities in mainland China, including the lucrative routes of Beijing and Shanghai. The airline had a fleet of 48 aircraft as of June 30 and firm orders for 16 Airbus A321neo aircraft, according to Cathay’s. website.

Combined, Cathay Pacific and Cathay Dragon employ about 21,000 people in Hong Kong. The group as a whole, which includes budget airline HK Express, bought by Cathay last year, and cargo operator AHK Air Hong Kong, has more than 33,000 employees around the world.

The latest development comes when Hong Kong said its The unemployment rate rose to a 15-year high of 6.4% in the July-September period as the economy remained stagnant in recession. That reading was worse than the 6.2% median estimate of economists surveyed by Bloomberg.

Great employer

Travel, hotels, retail stores and restaurants have been hit particularly hard as the government maintains strict social distancing measures in place, including limiting public gatherings to four people. Cathay Pacific is one of the largest employers in the city.