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Cathay chairman has “every confidence” airline will survive the COVID-19 crisis
October 23rd 2020
Cathay Pacific Group chairman, Patrick Healy, said this week the shutdown of regional wing Cathay Dragon, the loss of 8,500 jobs and lower pay and conditions for many staff remaining with the group would ensure its survival beyond the coronavirus pandemic. Read More »
The measures were the outcome of a months-long review into the optimum size and shape of Cathay Pacific Group in a post-COVID-19 trading environment, the company said.
"We have every confidence of getting through the crisis on the basis of the programs, the forecasts and the initiatives we announced today," Healy told reporters this week.
The majority of the job losses will come from the decision to cease operations of Cathay Dragon, a 35-year-old carrier whose network was focused on destinations in Asia, particularly Mainland China, with a fleet of A320 family aircraft and A330s.
Cathay Pacific said Hong Kong-based cabin crew and pilots would be asked to accept a reduction in base pay and allowances, which Healy said would still be competitive by industry standards.
The South China Morning Post reported pilots have been given a week to decide whether to sign new contracts, which could involve cutting pay and conditions by up to 60%. Those who choose not to sign faced termination rather than being made redundant, the newspaper said.
Unions representing flight attendants expressed disappointment with the decision.
The airline's monthly cash burn had been reduced from HK$2.5-3 billion a month in February to about HK$1.5-2 billion currently. The measures announced this week would cut that by another HK$500 million, Cathay said.
"Cash burn at this level is clearly unsustainable and so the actions we have announced today, however unpalatable, are absolutely necessary to bring monthly cash burn down to more sustainable levels," Healy said.
"The future remains highly uncertain, this crisis is deeper and the road to recovery slower and more patchy than anyone though possible just a few short months ago."
In June, Cathay Pacific undertook a HK$39 billion capital raising that included the participation of the Hong Kong Special Administrative Region (HKSAR) government as well as major shareholders Air China, Swire Pacific and Qatar Airways.
Healy said it was "absolutely not inevitable" the company would require more funding. "The balance sheet at the moment is strong, our liquidity is solid, our gearing is low as a result of the recapitalisation," Healy said.
The chairman also said, in response to a question, there had been no interest from other companies to take over the airline.
Cathay Pacific said recently it expected capacity for the first half of 2021 to be at 25% of levels prior to the onset of the pandemic before a pickup in the second half as travel restrictions were eased.
Capacity for the full 2021 year was expected to be at 50% of pre-COVID-19 levels.
