Cathay Pacific restructuring: Nix Cathay Dragon (KA) & Cut 8,500 Jobs besides pushing back 777X induction

Cathay Pacific as an airline group has been suffering since 2019, first with the Hong Kong political problems which lead to an unruly situation last year, and CoVid-19 causing its own damage. As an airline with no domestic operations of its own, Cathay has depended over the years on connecting passengers via Hong Kong mostly, and bringing in some into the country as well. Needless to say, they were not in the pink of health as an airline. Cathay received USD 5 billion worth of a bailout from the Hong Kong Government in June 2020, as per the BBC, and despite everything they had done so far, they were still losing USD 260 million per month. KA Airline

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This morning, The Cathay Pacific Group announced a corporate restructuring in response to the continued impact of the COVID-19 pandemic on the aviation market. For Cathay Pacific, they have seen a dip of 98.1% of passenger numbers as compared to last year, although they have seen only a dip of 36.6%.

As per Cathay Pacific, “The restructuring will enable the Company to secure its future, so it can protect as many jobs as possible, whilst meeting its responsibilities to the Hong Kong aviation hub and its customers. The Group will create a more focused, efficient and competitive business. It will do this by harnessing Cathay Pacific’s strengths and unparalleled customer experience while leveraging the potential of its low-cost carrier, HK Express.” 

24% reduction in Workforce at Cathay Pacific Group including KA Airline & CX

Reducing approximately 8,500 positions across the entire Group, which accounts for around 24% of its established headcount. Through a recruitment freeze and natural attrition, the Group has been able to reduce this to 5,900 actual jobs (or 17% 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. As per Danny Lee of SCMP, this includes 4,000 Cabin Crew losing jobs, 2000 each from Cathay Pacific and Cathay Dragon and 600 Pilots out of which 500 worked at Cathay Dragon. Apart from this, 700 head office & ground staff have also been let go.

Besides, Hong Kong-based cabin and cockpit crewmembers of Cathay Pacific 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. As per Danny, otherwise, they will be let go.

 

Executive pay cuts will continue throughout 2021, and a third voluntary Special Leave Scheme for non-flying employees will be introduced 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 employees.

Cathay had refrained from major job cuts so far while Singapore Airlines, Qantas and other airlines have already taken these calls.

Cathay Dragon to be closed with immediate effect

Cathay Dragon earlier operated as Dragonair and was renamed as Cathay Dragon under the brand refresh of Cathay Group airlines. Cathay Dragon, the Group’s wholly-owned regional subsidiary, will cease operations with immediate effect. 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. This is especially of impact to India, given many Indian routes were operated by Cathay Dragon and not Cathay Pacific till so far.

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Cathay Pacific expects to save about USD 65 million per month with these cuts. Cathay expects to operate well under 25% of 2019 passenger capacity in the first half of 2021 and below 50% for the entire year.

Cathay Pacific has also delayed the delivery of its Boeing 777-9 jets to “beyond 2025.”

This is the most unfortunate turn of events for the airline as well as its associates. 


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Comments

  1. @Ajay:

    “This is especially of impact to India, given many Indian routes were operated by Cathay Dragon and not Cathay Pacific till so far.”

    I disagree with your comment on the routes. Only HKG-CCU and HKG-BLR were KA routes. The rest 4 to DEL, HYD, MAA and BOM were all CX routes. Also, the CX routes featured reverse herringbone seats for biz, and KA’s fleet had angled business class, which was terrible. They did have ‘first class’ which was just a remodelled CX biz without a premium economy cabin.

    Also their premium economy was a decent product, and offered on all CX India routes back in the day, until they axed them to 2 cabin classes as some routes lost the A330, which is a much better experience in eco than their 777 (777 had more seats in a row).

    If CX replaces all their routes with their 777 fleet, then the business product will be great at least for a ex HKG-BLR flyer like me. I speak from pre-pandemic experience on these routes.

    You can check out some of their older schedules too, because it appears that they’ve already integrated these 6 destinations on the CX where we fly page.

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