As airlines struggle to endure the severe impact that the COVID-19 pandemic is having on the travel industry, a Hong Kong–based airline company has resorted to taking several further measures in order to remain financially afloat.
The Cathay Pacific Group announced on October 21 that it is undergoing corporate restructuring.
The company shut down its regional subsidiary Cathay Dragon (previously known as Dragonair), which operated for 35 years and focused on Asian destinations. The company intends for Cathay Pacific and its low-cost carrier HK Express to take over its routes once approved.
About 8,500 positions are being eliminated—an approximately 24 percent reduction in its workforce. The company has already reduced the number of jobs to about 5,900 positions after a hiring freeze and attrition. About 5,300 employees in Hong Kong and about 600 employees outside Hong Kong have been made redundant.
Executive pay cuts and a freeze on salary increases will continue into and throughout 2021, and no annual discretionary bonuses will be issued for 2020.
Cathay Pacific Chief Executive Officer Augustus Tang stated in a news release that the company is losing HK$1.5- to HK$2-billion (approximately CDN$250- to CDN$300-million) each month. Tang said that these announced measures will reduce their losses by about HK$500-million (about CDN$80-million) per month.
“We have studied multiple scenarios and have adopted the most responsible approach to retain as many jobs as possible,” Tang stated. “Even so, it is quite clear now recovery is going to be slow. We expect to operate well under 25 percent of 2019 passenger capacity in the first half of 2021 and below 50 percent for the entire year.”
In Canada, Montreal-based Air Transat announced that it is laying off a signficant portion of its workforce and temporarily closing its Vancouver base of operations.