Cathay To Cut 8,500 Jobs, Axe Dragon Subsidiary

Struggling Cathay Pacific has announced that its Cathay Dragon regional subsidiary will stop operating from Wednesday, while 8,500 staff roles will be cut – about a quarter of the total across the group – as it struggles to survive the coronavirus pandemic.

In a major restructuring, the group said it would also ask Hong Kong-based cabin and cockpit crew to accept changes to their terms and conditions to "enhance competitiveness". The company will not offer salary increases for next year or pay bonuses for this year and executive pay cuts will stay in place.

“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 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."

The job cuts will see 5,300 Hong Kong-based staff made redundant. A further 600 staff based overseas may also be affected subject to local regulations. The remaining 2,600 jobs are positions that are already vacant.

The company says it will offer severance packages that go "well beyond" statutory requirements and will extend medical and staff travel benefits.

Cathay will ask regulators to allow it to move the "majority" of Cathay Dragon's routes, most of which are to mainland or regional destinations, to Cathay Pacific or its HK Express subsidiary.

Tang said the company was burning through HK$1.5 to HK$2 billion per month, a figure that will be reduced to HK$500 million following the cuts. In an announcement to the stock exchange, Cathay said the restructuring would cost HK$2.2 billion.

Cathay says it expects to operate flights in the first quarter of next year at only a quarter of the level it did in 2019, with about 50 percent capacity for the whole of 2021.