Major elements of the restructuring are the redundancy of 5,300 Kong-based employees and 600 outside of Hong Kong, Cathay Dragon, the Group’s wholly-owned regional subsidiary, ceasing operations and changes in conditions for Hong Kong-based cabin and cockpit crew.
Also, 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.
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 today’s announcement. We are deeply saddened to part ways with our talented and respected colleagues, and I want to thank them for their hard work, achievements and dedication.”
Cathay Pacific will be offering severance packages that go well beyond statutory requirements. It will also be extending medical benefits and staff travel entitlements, as well as providing counselling and job transition support services. There will be no offset against pension contributions.
“We have taken every possible action to avoid job losses up to this point. We have scaled back capacity to match demand, deferred new aircraft deliveries, suspended non-essential spend, implemented a recruitment freeze, executive pay cuts and two rounds of Special Leave Schemes.
“But in spite of these efforts, we continue to burn HK$1.5-2 billion cash ($273 -$365 million) per month. This is simply unsustainable. The changes announced today will reduce our cash burn by about HK$500 million per month.
“We have studied multiple scenarios and have adopted the most responsible approach to retain as many jobs as possible. Even so, it is quite clear now recovery is going to be slow. We expect to operate well under 25% of 2019 passenger capacity in the first half of 2021 and below 50% for the entire year,” Mr Tang said.