Cathay Pacific to cut workforce by 24%, slay Cathay Dragon

Cathay Pacific (CX, Hong Kong Int’l) has announced it will cut 5,900 jobs and halt operations at its full-service regional subsidiary Cathay Dragon (KA, Hong Kong Int’l) with immediate effect. Overall, 8,500 positions will be eliminated, 24% of its normal headcount, including 2,600 roles unfilled due to a covid-era hiring freeze, the company outlined in a stock exchange filing on October 21. Hong Kong Int’l-based pilots and cabin crew will also be asked to agree to changes in conditions in their contracts “to match remuneration more closely to productivity and to enhance market competitiveness,” the carrier said. The restructuring will cost around HKD2.2 billion Hong Kong dollars (USD284 million), it added. The airline is bleeding HKD1.5-2 billion (USD194-258 million) in cash per month, it said, and the restructuring is designed to reduce this by HKD500 million (USD64.5 million) a month in 2021. Other cash preservation measures include the suspension of non-essential spending, the deferral of aircraft deliveries, and executive pay cuts. Even under the most optimistic scenario, Cathay expects to operate in 2021 at “well under 50% of the passenger capacity it operated in 2019” including being “well below 25% capacity in the first half of 2021.” Cathay, which has stored around 40% of its fleet outside Hong Kong, presented no further information as to its fleet and route network adjustment plans. However, in a conference call on October 21, Cathay Pacific chairman Patrick Healy said that the flag carrier had postponed delivery of its B777-9 fleet beyond 2025. It has 21 of them on order, the first of which are due from 2022 onwards. He also clarified that the Cathay Dragon fleet, including A321-200NXs it has on order, will be incorporated into the Cathay Pacific fleet. Cathay Dragon had planned to add two of the type by the end of 2020, four in 2021, and ten in 2022 and beyond. Another sixteen A321neo, though ordered by Cathay Dragon, will be operated by recently acquired low-cost subsidiary HK Express (UO, Hong Kong Int’l) with deliveries due from 2022 and beyond.