HONG Kong's flag carrier Cathay Pacific has
confirmed that it will cut 8,500 jobs across the entire group, including 5,300
local staff and 600 based overseas.
The
remaining 2,600 positions to be eliminated are currently unfilled, owing to
cost reduction initiatives in recent months including a hiring freeze and the
closure of certain overseas bases.
At
the same time, the airline announced in a statement that Cathay Dragon will not
be flying anymore as part of, what the airline says, is a corporate
restructuring in response to the continued impact of the Covid-19 pandemic on
aviation market.
With
the grounding of Cathay Dragon, the airline said it will leverage "the
potential of its low-cost carrier, HK Express".
"It
is intended that regulatory approval will be sought for a majority of Cathay
Dragon's routes to be operated by Cathay Pacific and HK Express, a wholly owned
subsidiary," Cathay said.
Other
measures to cut costs include: Executive pay cuts to continue throughout 2021;
a third voluntary special leave scheme for non-flying employees to be
introduced for the first half of next year, and no salary increases for 2021 nor
the payment of the annual discretionary bonus for 2020 across the board for all
employees.
Cathay Pacific CEO Augustus Tang noted that
severance packages "that go beyond statutory requirements" will be
offered to those losing their jobs.
"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."
However
in spite of these efforts, Mr Tang said the airline will continue to burn
HKD1.5-2 billion (US$193.5 million-$257.3 million) cash per month. "This
is simply unsustainable. The changes announced today will reduce our cash burn
by about HKD500 million per month.
"Whilst
this is a difficult time, we are a resilient group and a proud Hong Kong brand.
I believe in this plan and I know we will prevail. We remain absolutely
confident in the long-term future of Cathay Pacific, the Hong Kong aviation hub
and the critical role Hong Kong will play in the Greater Bay Area and
beyond."
Source
: HKSG / Photo : MarketWatch.
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