Cathay Pacific, a flag carrier based in Hong Kong, has reportedly announced the closure of Cathay Dragon, its subsidiary, and is planning to lay-off 8,500 jobs. Cathay Dragon is a full-service carrier, with travel routes across China & other Asian destinations.
Cathay Pacific is planning to retain most of the routes of its subsidiary. Apart from this carrier, several other airlines are suffering from an economic downturn, as the COVID-19 pandemic has posed a huge impact on travel and tourism. The decision to close Cathay Dragon is a part of its attempt to cut costs amid travel restrictions imposed by the governments to curb the virus spread.
In addition, the carrier has implemented other strategies to cut costs, such as cutting executive pay, implementing leave schemes, and deferring aircraft deliveries. Additionally, in June, it received a $5 billion (£3.9 billion) bailout from the Hong Kong government. However, it is incurring a loss of over $260 million per month.
As per the statement made by Patrick Healy, Chairman of Cathay Pacific, the company highlights the importance of putting efforts on advancing a single full-service carrier amid the pandemic. Its travel will be complemented by a low-cost leisure brand, HK (Hong Kong) Express.
The airline is targeting to reduce the operating costs by $64 million per month in 2021. Out of the 8,500 jobs that will be furloughed by the company, 5,300 will be from the Hong Kong location and a further 600 from overseas. Moreover, 2,400 jobs are currently unfilled due to the hiring freeze and closure of a few overseas operations.
The recent lay-off plan accounts for over 24% of the carrier’s total staff. It is expected to request the cabin and cockpit in Hong Kong to agree to the changes in the employment conditions, in order to retain sufficient revenue and increase productivity.
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https://www.bbc.com/news/business-54625997