CATHAY TO SLASH STAFF COSTS BY 30PC
Carrier set to cut middle and senior management roles at HK headquarters
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
The Organisation of the Petroleum Exporting Countries will meet on May 25 to decide whether to continue its production cuts.