Cathay Pacific will cease the operations of its regional subsidiary Cathay Dragon after three decades with immediate effect, as part of a wider restructuring in response to the ongoing pandemic travel slump.
The Hong Kong airline said that it plans to seek regulatory approval to continue operating a majority of the routes offered by Cathay Dragon, mainly through its wholly-owned subsidiary HK Express.
At the same time, Cathay will also cut 8,500 jobs, or nearly a quarter of its workforce across the entire group. About 5,300 employees based at its headquarters in Hong Kong and another 600 elsewhere will likely lose their jobs, while 2,600 unfilled positions will also be cut, it said in a statement.
Hong Kong-based cabin and cockpit crew members will be asked to agree to changes in their conditions of service to match remuneration more closely to productivity. Executive pay cuts will continue throughout 2021 and a third voluntary Special Leave Scheme for non-flying employees will be introduced for the first half of next year.
The airline said it will offer severance packages that “go well beyond statutory requirements”. It will also be extending medical benefits and staff travel entitlements, as well as providing counselling and job transition support services.
Cathay Pacific CEO Augustus Tang said: “The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive. 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.
“We have taken every possible action to avoid job losses up to this point. We have 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.
“But in spite of these efforts, we continue to burn HK$1.5-2 billion cash per month. This is simply unsustainable. The changes announced today will reduce our cash burn by about HK$500 million per month.” Nothing that recovery will be slow, Tang said the airline expects to operate below 50 per cent of 2019 passenger capacity for the entire of next year.