CATHAY TO SLASH STAFF COSTS BY 30PC

Car­rier set to cut mid­dle and se­nior man­age­ment roles at HK head­quar­ters

New Straits Times - - Business -

SYD­NEY/SHANGHAI

CATHAY Pa­cific Air­ways Ltd plans to cut the cost of mid­dle and se­nior man­age­ment roles at its Hong Kong head of­fice by 30 per cent, ac­cord­ing to an in­ter­nal memo a day after the air­line re­ported its first an­nual loss since 2008.

The memo, sent by chief ex­ec­u­tive Ivan Chu to staff on Thurs­day, said the firm needed a “sim­pli­fied, more ag­ile and smaller” head of­fice struc­ture and that the “re-or­gan­i­sa­tion will in­evitably re­sult in some roles be­ing made re­dun­dant”.

Shares in Cathay Pa­cific jumped by as much as 2.5 per cent yes­ter­day fol­low­ing the Reuters re­port, with an­a­lysts say­ing the move would help sup­port Cathay’s bot­tom­line in the short term. Its shares have fallen about 18 per cent over the past year.

The Hong Kong flag car­rier ear­lier this week re­ported its first full-year loss since the 2008 global fi­nan­cial cri­sis, dragged down by over­ca­pac­ity, a strong Hong Kong dol­lar and mount­ing com­pe­ti­tion from main­land Chi­nese ri­vals.

“The out­look re­mains chal­leng­ing and we do not ex­pect to see any fun­da­men­tal shift due to the struc­tural is­sues we are faced with,” said the memo.

“Our air­lines have not seen a re­view of the busi­ness or re­struc­tured our teams for over 20 years. We can­not af­ford to stand still.”

A Cathay spokes­woman con­firmed the memo was ac­cu­rate, but said the com­pany would not know the fi­nal number of role changes or staff af­fected by the cuts un­til later in the process.

Chu told staff on Thurs­day there would be no “peo­ple cost re­duc­tions” in cus­tomer fac­ing roles, in­clud­ing pi­lots, cabin crew and cus­tomer ser­vice.

But he said a new head of­fice man­age­ment struc­ture would be an­nounced in June for the com­pany, which has 33,700 em­ploy­ees glob­ally.

The com­pany’s web­site said more than 3,000 of its staff were based in its head of­fice.

The air­line said in its an­nual re­sults that it wanted to re­duce over­all costs, ex­clud­ing that re­lated to fuel, by about two per cent over the next three years, even as it looked to grow its ca­pac­ity by four to five per cent this year.

Its staff costs amounted to HK$19.8 bil­lion (RM16.68 bil­lion) last year, ac­count­ing for just over 30 per cent of its op­er­at­ing ex­penses, ex­clud­ing fuel costs for the year.

An­a­lysts said it would be tough to es­ti­mate how much Cathay would save from the lat­est move as it did not pro­vide a break­down of th­ese costs. Reuters

REUTERS PIC

The Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries will meet on May 25 to de­cide whether to con­tinue its pro­duc­tion cuts.

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