Orient Aviation Daily Digest: Cathay Pacific Group cuts workforce by 24%, shuts down Cathay Dragon and elevates importance of HK Express to the company’s future
Cathay Pacific Group today unveiled a restructuring of the company that included steep job losses and the end of Cathay Dragon, measures CEO, Augustus Tang, said were about ensuring the airline group made it to the other side of the coronavirus pandemic. “The hard truth is we must fundamentally restructure the group to survive,” he said. Read More »
“The group will create a more focused, efficient and competitive business. It will do so by harnessing Cathay Pacific’s strengths and unparalleled customer experience while leveraging the potential of its low-cost carrier, HK Express,” a company statement said today.
Cathay said about 8,500 positions from its workforce of 35,000 staff would be eliminated in the restructuring: about 5,300 Hong Kong-based employees and 600 overseas staff as well as 2,600 positions that are unfilled due to a hiring freeze and the closure of some overseas bases. "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," Tang said.
Hong Kong-based cabin crew and pilots will be "asked to agree to changes in their conditions of service which are designed to match remuneration more closely to productivity and to enhance market competitiveness". Executive pay cuts announced earlier in 2020 would also continue.
The bulk of the job losses will result from the closure of Cathay Dragon as of today, the company said. The 35-year-old regional wing of the Cathay Pacific Group, previously known as Dragonair, would "cease operations with immediate effect", the company said. Cathay will seek regulatory approval for the majority of Cathay Dragon's routes to be operated by Cathay Pacific and its LCC, HK Express. “Over its 35 years, Cathay Dragon has earned a well-deserved reputation for excellence, thanks to its outstanding service and distinct hospitality, delivered by a remarkable team," Tang said.
In a regulatory filing to the Stock Exchange of Hong Kong, the company said the restructuring would cost HK$2.2 billion (US$ 284 million) and be funded from internal resources. The measures were expected to lower Cathay's monthly cash losses of HK$1.5 billion to HK$2 billion by about HK$500 million.
Cathay Pacific chairman, Patrick Healy, said the airline group had considered a range of options to avoid job losses. "The decisions we have announced today will cause great distress and anxiety for a large number of our people and their families and for this we are truly sorry," Healy told reporters today.
"We have thought long and hard over recent months. We have examined diligently all possible ways forward and we have come to the conclusion, reluctantly, that today's decisions must be made to reduce monthly cash losses to sustainable levels and secure the survival of this incredible 74-year-old company that is so central to the future of the Hong Kong aviation hub."
Singapore Airlines (SIA) said yesterday it planned to resume nonstop flights to New York from November 9. The three times a week Singapore-New York JFK service will be flown by A350-900s and represented an important step in the rebuilding of the airline's global network, SIA executive vice president for commercial, Lee Lik Hsin, said in a statement. The Singapore-New York JFK route will be the longest in the world at 8,287 nautical miles. Before the pandemic outbreak, SIA flew nonstop between Singapore and Newark Airport in neighbouring New Jersey.
Embraer said overnight it delivered seven commercial aircraft in the three months to September 30, 2020: six E175s and one E190. The figure was down from 17 commercial aircraft a year ago. Embraer's total deliveries for the first nine months of calendar 2020 stood at 16, compared with 54 at the same point in 2019, Embraer said in a statement. The firm order backlog at September 30, 2020 was 307 aircraft.
South Korean LCC, Jeju Air, has resumed nonstop flights from Seoul to Harbin in China after a seven-month absence on the route. The airline planned to fly between the two cities once a week to cater for business travellers and students, local media reported.
