Cathay Pacific Group has announced a major corporate restructure in response to the continued impact of the COVID-19 pandemic on the aviation sector.
Approximately 8,500 positions are being cut across the entire company, which accounts for around 24 per cent of its established headcount.
Through a recruitment freeze and natural attrition, Cathay Pacific has been able to reduce this to 5,900 actual jobs (or 17 per cent of its established headcount).
This means some 5,300 Hong Kong-based employees being made redundant, and approximately 600 employees based outside of Hong Kong also possibly being affected, subject to local regulatory requirements.
Cathay Dragon, the group’s wholly-owned regional subsidiary, has ceased operations. It is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by Cathay Pacific and the group’s low-cost carrier, HK Express.
Hong Kong-based cabin and cockpit crew members of Cathay Pacific will be asked to agree to changes in their conditions of service, designed to match remuneration more closely to productivity and to enhance market competitiveness, according to the company.
Executive pay cuts will continue throughout 2021, and Cathay Pacific will introduce a third voluntary Special Leave Scheme for non-flying employees for the first half of next year.
There will be no salary increases for 2021, nor the payment of the annual discretionary bonus for 2020 across the board for all of the company’s employees. Cathay Pacific’s outport colleagues will be subject to local arrangements.
“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 said.
“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 said Cathay Pacific’s immediate priority is to support those affected by the restructure.
“We are deeply saddened to part ways with our talented and respected colleagues, and I want to thank them for their hard work, achievements and dedication.
“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 to 2 billion cash per month. This is simply unsustainable.”
Tang said the changes will reduce Cathay Pacific’s cash burn by about HK$500 million per month.
“We have studied multiple scenarios and have adopted the most responsible approach to retain as many jobs as possible,” he said.
“Even so, it is quite clear now recovery is going to be slow. We 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.”
Featured image source: iStock/Kristian1108