Cathay Pacific has confirmed that it will reduce its workforce by approximately 8,500 employees and shutdown Cathay Dragon as part of a major restructure.
Major elements of the restructuring include axing approximately 8,500 positions across the entire group, which accounts for around 24% of its established headcount. Through a recruitment freeze and natural attrition, the group has been able to reduce this to 5,900 actual jobs (or 17% of its established headcount). This means some 5,300 Hong Kong-based employees being made redundant, and approximately 600 employees based outside of Hong Kong also possibly being affected subject to local regulatory requirements.
Cathay Dragon, the group’s wholly owned regional subsidiary, will cease operations with immediate effect. It is intended that 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.
Hong Kong-based cabin and cockpit crew members of Cathay Pacific will be asked to agree to changes in their conditions of service which are designed to match remuneration more closely to productivity and to enhance market competitiveness.
Cathay Pacific chief executive officer Augustus Tang said: “The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive. 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. Our immediate priority is to support those affected by this announcement.”
Executive pay cuts will continue throughout 2021 and a third voluntary Special Leave Scheme for non-flying employees will be introduced for the first half of next year. The airline will be offering severance packages and extending medical benefits and staff travel entitlements, as well as providing counseling and job transition support services. There will be no offset against pension contributions.