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Cathay launches largest business review in two decades
January 20th 2017
Hong Kong’s Cathay Pacific Airways will restructure its workforce to accommodate the changing digital landscape of the airline business as part of its biggest strategic review in 20 years, the company said on Wednesday. The review is necessary in an “increasingly competitive aviation landscape”, said the airline and was necessary to reverse a slump in profit margins and the airline’s share price. Read More »
Cathay said change "will start at the top" and the airline will eliminate some positions by mid-year, but did not elaborate on its future new strategy.
The airline’s shares have declined more than 30% since 2014. In August, the carrier reported an attributable profit of HK$353 million ($45.5 million) for the first six months of 2016, down 82% year-on-year. Yields declined by a damaging 10.1%.
Airline chairman, John Slosar, six months ago talked about “sustained pressure on revenues, reflecting suspension of fuel surcharges, weak currencies in some markets and weak premium class demand, particularly on long-haul routes”.
"The competition is here to stay and the uncertainty is the 'new normal' - we must simply respond," Cathay said in a statement after Wednesday’s leadership conference in Hong Kong. It said it had a “well developed” commercial plan in place, but hinted that better data analytics and digital capabilities present an opportunity to gain customers and “remove inefficiencies and waste” from its day-to-day workings.
Analysts have long said Cathay had to trim fat, particularly at its regional offshoot, Cathay Dragon, which operates at almost the same cost as the parent. Once this restructuring has been achieved, Cathay is expected to shift underperforming routes to its regional sibling.
In January, the airline announced a four times a week seasonal A350 service between Hong Kong and Barcelona from July 2 to October 27. It also said it would increase its B777-300ER frequency between Hong Kong and Toronto from ten weekly to double daily from June 24 to September 4.
