Cathay Pacific to slash workforce, end Cathay Dragon brand due to pandemic

Cathay Pacific will cut 8,500 positions, or 24 percent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives. (AP)
Short Url
Updated 21 October 2020

Cathay Pacific to slash workforce, end Cathay Dragon brand due to pandemic

  • Airline to seek changes in conditions in its contracts with cabin crew and pilot
  • Plans to merge Cathay Dragon into Cathay’s main brand earlier this year hit roadblocks

SYDNEY: Hong Kong’s Cathay Pacific Airways Ltd. said on Wednesday it would slash 5,900 jobs and end its regional Cathay Dragon brand, joining peers in cutting costs as it grapples with a plunge in demand due to the coronavirus pandemic.
The airline would also seek changes in conditions in its contracts with cabin crew and pilots as part of a restructuring that would cost $283.9 million (HK$2.2 billion), it told the stock exchange.
Overall, it will cut 8,500 positions, or 24 percent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives, Cathay 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,” Cathay Chief Executive Augustus Tang said in a statement.
Cathay shares jumped almost 7 percent in early trade and were 4 percent higher at 0430 GMT, with broker Jefferies saying the announcement removed a key overhang on the stock.
Singapore Airlines Ltd. and Australia’s Qantas Airways Ltd. have already announced similarly large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.
Cathay, which has stored around 40 percent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 percent of its pre-pandemic capacity in 2021.
After receiving a $5 billion rescue package led by the Hong Kong government in June, it had been conducting a strategic review that analysts expected would result in major job losses.
The airline said it was bleeding HK$1.5 billion to HK$2 billion of cash a month and the restructuring would stem the outflow by HK$500 million a month in 2021, with executive pay cuts continuing throughout next year.
BOCOM International analyst Luya You said she had expected more strategic insight from the airline on its fleet plans and route network as part of the restructuring.
“Had they revealed more on fleet planning for 2021-22, we would get a much better sense of their outlook,” she said.
The decision to end regional brand Cathay Dragon is in line with rival Singapore Airlines’ pre-pandemic move to fold regional brand Silkair into its main brand.
Cathay Dragon, once known as Dragonair, operated most of the group’s flights to and from mainland China and had been hit by falling demand before the pandemic due to widespread anti-government protests in Hong Kong that deterred mainland travelers.
Plans to merge Cathay Dragon into Cathay’s main brand earlier this year hit roadblocks from China’s aviation regulator because of infractions during last year’s pro-democracy protests, two sources told Reuters in May.
Cathay said the airline would cease operating immediately and it would seek regulatory approval to fold the majority of Cathay Dragon’s routes in Cathay Pacific and low-cost arm HK Express.
In the short-term, the closure of the Cathay Dragon brand will result in it being unable to carry cargo to Fuzhou, Guangzhou, Kuala Lumpur and Fukuoka, and it will only send dedicated freighters to Xiamen, Chengdu and Hanoi, it told cargo customers in a memo, indicating the routes were cut for now.
“The reintroduction of service coverage will differ from port to port,” Cathay said.
Like Singapore Airlines, Cathay lacks a domestic market to cushion it from the fall in international travel due to border closures.
In September, Cathay’s passenger numbers fell by 98.1 percent compared with a year earlier, though cargo carriage was down by a smaller 36.6 percent.


Emirates refunds $1.72 billion to customers hit by coronavirus travel restrictions

Updated 25 November 2020

Emirates refunds $1.72 billion to customers hit by coronavirus travel restrictions

  • Emirates also managed over 130,000 refunds-related queries from customers and travel agency partners

DUBAI: Dubai-based carrier Emirates has refunded $1.72 billion to customers who were unable to take their scheduled flights due to coronavirus travel restrictions the airline announced on Wednesday.
Over the seven-month period from April, the airline processed 1.7 million refund requests and returned about $1.28 billion to passengers who booked tickets directly with Emirates, and the balance reimbursed via travel agencies.
Emirates also managed over 130,000 refunds-related queries from customers and travel agency partners and made status changes to nearly 4 million flight coupons, the statement added.
“In the early months of 2020, COVID-19 massively disrupted travel around the world and led to an unprecedented volume of refunds requests across the aviation and travel industry, including at Emirates,” Tim Clark, President of Emirates, said.
“It was not a situation any airline wanted, particularly while also facing a cash crunch from drastically reduced operations. Through those difficult months, as we dealt with the impact of the pandemic on our business, we’ve never lost sight of our commitment to our customers.”
“Emirates has now cleared our backlog of refunds. We still have higher volumes of refunds and flight coupon change requests compared to pre-pandemic times, but we now have the capability to manage these within a seven-day turnaround,” Clark added.