Business & Economy

Cathay Pacific to lay off 5,900 employees, close low-cost subsidiary

Hong Kong, Oct 21 (efe-epa).- Hong Kong’s flag carrier Cathay Pacific announced Wednesday it would lay off 5,900 employees and close low-cost subsidiary Cathay Dragon following corporate restructuring in response to the coronavirus’s effect on aviation.

“The restructuring will enable the company to secure its future, so it can protect as many jobs as possible, whilst meeting its responsibilities to the Hong Kong aviation hub and its customers,” the carrier said in a statement.

Cathay Pacific said it will reduce its workforce by 24 percent, or some 8,500 jobs, through a recruitment freeze and natural attrition and by laying off 5,900 employees, 5,300 of whom are based in Hong Kong.

The restructuring plan will cost Cathay Pacific around HK$2.2 billion ($284 million.)

“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the Group to survive,” Chief Executive Officer Augustus Tang said.

“We have to do this to protect as many jobs as possible, and meet our responsibilities to the Hong Kong aviation hub and our customers,” he added.

Cathay Dragon, the group’s low-cost regional subsidiary, will cease operations immediately, and regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by Cathay Pacific and HK Express, a wholly-owned subsidiary.

Cathay Pacific, which has stored about 40 percent of its fleet outside Hong Kong, said it plans to operate at less than half its pre-pandemic passenger capacity during 2021.

Hong Kong-based cabin and cockpit crew members of the airlines will also be asked to agree to salary reductions to enhance market competitiveness.

The measures, as well as executive pay cuts and a voluntary Special Leave Scheme for non-flying employees, will reduce the airline’s monthly expenditure by HK$500 million

In June, the carrier announced HK$39 billion in recapitalization financing of which HK$27.3 billion came from the government of the semi-autonomous city.

British-origin Swire Group is the largest shareholder of Cathay Pacific with 45 percent, while Beijing’s state-owned Air China holds 29.99 percent of its shares. EFE-EPA

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