Cathay Expects to Eliminate 5,900 Jobs, Shares Gain 2% over the Restructuring Plan
Cathay Expects to Eliminate 5,900 Jobs as Investors Response Positively with a 2% Gain in Stock Market.
Cathay Pacific Airways announced on Wednesday that it would cut 5,900 jobs and discontinue its regional Cathay Dragon brand for a restructuring plan to fight the impact of the coronavirus pandemic that caused 43 commercial airlines to go bankrupt.
The airline stated in its announcement to the Stock Exchange, saying that it expected to eliminate 8,500 positions across the Cathay Pacific Group (including Cathay Dragon), which accounts for around 24% of the Cathay Pacific Group’s established headcount of 35,000. Of these 8,500 positions, approximately 5,300 Hong Kong-based employees will be made redundant in the coming weeks, with approximately 600 employees based outside of Hong Kong possibly being affected subject to local regulatory requirements.
The remaining 2,600 positions to be eliminated are currently unfilled, owing to cost reduction initiatives in recent months including a hiring freeze and the closure of certain overseas bases.
Moreover, the airline also expected to make a deal with the Hong Kong-based cabin and cockpit crew of Cathay Pacific Airways Limited, which will be asked to agree to changes in their conditions of service which are designed, inter alia, to match remuneration more closely to productivity and to enhance market competitiveness.
In the statement, Cathay said that the airline industry faces significant challenges as a result of the COVID-19 pandemic. The company faced cash losses at HK$1.5 to 2 billion per month, while expecting that the restructuring will lead to a reduction of approximately HK$500 million in monthly cash outlay by the Group in 2021.
The share price of Cathay Pacific Airway rose HKD 0.13 or 2.27% to HKD 5.85 on Wednesday.