Cathay Pacific Airways to cut over 5,000 Hong Kong jobs, closes Dragon brand

CATHAY Pacific Airways Ltd. will cut about 5,300 jobs based in Hong Kong and close its Cathay Dragon unit as part of a sweeping overhaul of the city’s flag carrier triggered by the halt in air travel due to the coronavirus pandemic.

Another 600 Cathay workers outside of Hong Kong may also be affected, and 2,600 currently unfilled positions will be eliminated. The entire reduction of some 8,500 positions amounts to around 24% of Cathay’s headcount, one of the largest hits in the aviation sector globally since the outbreak started.

“The future remains highly uncertain and it is clear that recovery is slow,” Cathay said in Wednesday’s statement. “The management team has concluded that the most optimistic scenario it can responsibly adopt is one in which, for the year 2021, the company will be operating at well under 50% of the passenger capacity it operated in 2019.”

COVID-19 has had a devastating impact on aviation. As many as 46 million jobs are at risk, and airlines alone face about $420 billion in lost revenue this year. Carriers with no domestic market to fall back on, like Cathay and Singapore Airlines Ltd., have been hit especially hard as international travel has ground to a halt. Cathay’s job cuts are among the most severe in the industry, outnumbered by only a handful of others such as Germany’s Lufthansa and the two big US carriers, American Airlines Group, Inc. and Delta Air Lines, Inc.

Shares in Cathay, which have tumbled 41% this year, jumped as much as 6.6% on Wednesday morning. The South China Morning Post reported late Tuesday that Cathay would eliminate 6,000 positions.

Cathay’s restructuring is aimed at reducing its monthly cash burn to about HK$500 million ($65 million) from the current HK$1.5 billion to HK$2 billion, the carrier said in Wednesday’s statement. The plan has been approved by the airline’s board and will cost about HK$2.2 billion. —