Cathay Pacific cuts 8,500 jobs, shutters regional airline due to Covid crisis

Hong Kong airline Cathay Pacific Airways mentioned Wednesday it could minimize 8,500 jobs and shut a regional airline because it grapples with the plunge in air journey because of the pandemic.

About 5,300 staff based mostly in Hong Kong and one other 600 elsewhere will probably lose their jobs, and a pair of,600 unfilled positions will likely be minimize. The cuts are about 24 per cent of the corporate’s workforce, Cathay Pacific mentioned in an announcement.

“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 mentioned in an announcement.

“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,” Tang mentioned.

The firm mentioned it would additionally shut down Cathay Dragon, its regional airline unit, with operations ceasing from Wednesday. It will search regulatory approval for a lot of the routes to be operated by Cathay Pacific and its funds airways subsidiary HK Express.

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The restructuring is geared toward lowering Cathay Pacific’s money burn to 500 million Hong Kong {dollars} (USD 64.5 million) a month, from about 1.5 billion Hong Kong {dollars} (USD 193.5 million) to 2 billion Hong Kong (USD 258 million) {dollars} a month at the moment, the corporate mentioned.

The plan will price about 2.2 billion Hong Kong {dollars} (USD 283.Eight million), it mentioned.

Executive pay cuts will proceed all through 2021 and there will likely be no pay increments for 2021 nor bonuses for this 12 months for all Hong Kong staff, Cathay Pacific mentioned. Ground employees will likely be supplied a voluntary go away plan within the first half of subsequent 12 months.

In a information convention, Cathay Pacific Airways chairman Patrick Healy estimated that passenger ranges will solely return to pre-pandemic ranges in 2024.

“The future remains highly uncertain. This crisis is deeper and the road to recovery slower and more patchy than anyone thought possible just a few short months ago,” he mentioned.

Healy mentioned Cathay Pacific is extra affected than its friends because the airline is “100% reliant on cross-border travel,” a lot of which has stopped as passengers stay cautious of flying amid journey restrictions. Major locations akin to mainland China and different nations like Singapore and Thailand have quickly closed their borders to guests.

Healy estimated that Cathay Pacific will likely be working at lower than 25% of capability for the primary half of 2021, and underneath 50% of capability for the remainder of the 12 months as an entire. That would possibly choose up within the second half of the 12 months as journey constraints will hopefully ease, he mentioned.

In June, Cathay Pacific raised 39 billion Hong Kong {dollars} (USD 5 billion) in a recapitalisation plan that gave town’s authorities a stake of about 6 per cent within the airline.