CATHAY PACIFIC CUTS 8,500 JOBS, SHUTS DOWN REGIONAL AIRLINE
Cathay Pacific is eliminating thousands of jobs and shuttering its regional airline Cathay Dragon as the COVID-19 pandemic roils the global travel industry, Sandi Sidhu and Sherisse Pham reported for CNN Business.
The cuts will affect 5,300 employees in Hong Kong, where the company is based. Some 600 workers outside of the Asian financial hub will also be affected, Cathay said in a statement. Cathay Pacific says it remains confident in the business' long-term future but expect to operate well under 25 per cent of 2019 passenger capacity in the first half of 2021 and below 50 per cent for the entire year, Deutsche Presse-Agentur (dpa) reported on the same day.
The company also plans to eliminate additional jobs that remained unfilled, either through a recruitment freeze or natural attrition. All told, Cathay is reducing about 8,500 jobs across the company, accounting for about 24% of its headcount. "We have taken every possible action to avoid job losses up to this point," said Cathay Pacific Group CEO Augustus Tang in a statement. He said the airline has scaled back capacity, deferred new aircraft deliveries, frozen recruitment and cut executive pay, among other measures.
Even so, Tang said the company continues to burn as much as 2 billion Hong Kong dollars ($258 million) per month. The changes will reduce the company's cash burn by about HK$500 ($65 million) per month, he added. Cathay Pacific stock jumped 4% Wednesday in Hong Kong after the news. Like other major airlines, Cathay Pacific has taken drastic steps to shore up its business this year. Earlier this summer, the Hong Kong government agreed to lead a $5 billion bailout of the airline, taking a minority stake.