Cathay Pacific is considering a plan which would see pay cuts and redundancies in the coming months. The restructuring comes after months of debate and struggling demand which has seen revenue fall 98%. The final plan could be approved by the board by this week as the Hong Kong flag carrier tries to stay airborne.
Job cuts to come
According to the South China Morning Post, Cathay Pacific is putting forward a plan that will see sharp cost cuts in pay and job cuts. Exact figures remain unknown but estimates suggest as much as 20-30% of the workforce will be made redundant. This estimate is in line with other carriers of Cathay’s size, such as Singapore Airlines and British Airways.
The decision to cut jobs comes after the severe impact of COVID-19 on Cathay Pacific, which has been reduced to carrying only 35,000 passengers in August. The airline was also among the first to be hit by the crisis as it closed mainland China and East Asian routes in late February and early March and the situation has only worsened since.
Cathay’s financial state
The current crisis has undoubtedly put the survival of the Hong Kong flag carrier on the line. The airline lost a massive $1.3 billion (HK$9.6bn) loss in the first half of 2020 as it reeled from the lack of revenue. With no domestic market to serve and international flights all but grounded, the airline knew it would need support to survive.
This support came in the form of government-backed funding of $5bn (HK$39bn), which saw the city’s government take a stake in the airline. However, it also became clear that this recapitalization will have to be accompanied by job cuts and other cost-cutting measures for continued survival.
The lack of a domestic market has compounded Cathay’s financial difficulties. Airlines globally have reshifted focus to domestic destinations as borders remain closes, however, Hong Kong offers no such option. A strong domestic market can help airlines a lot, with Korean Air and Asiana both turning a profit thanks to cargo and domestic flights.
Details to be known soon
According to SCMP, Cathay’s board plans to vote on this long-expected proposal this week. The airline is still trying to reduce job cuts wherever possible as the government pushes Cathay for better layoff benefits. We will likely know if the board accepts the proposal and more details in the coming days.
While the layoffs will affect thousands, a few might find their way back into the industry. A new Hong Kong-based carrier, Greater Bay Airlines, is currently hiring airline staff to plan operations. This is a small positive for some who will be affected by the pending redundancies.
What do you think about Cathay Pacific’s plans? Will the carrier see a swift recovery anytime soon? Let us know your thoughts in the comments!
Credit: Source link