It is understood that since September, Cathay Pacific has held several rounds of meetings with a number of trade unions to discuss the restructuring plan. Trade unions have put forward various salary reduction plans and actively strive to avoid large-scale layoffs.
Cathay Pacific said that of the 8500 jobs that have been laid off this time, about 2600 jobs have been created due to the freezing of recruitment, the closure of overseas bases and the natural loss of some 2600 jobs. In the next few weeks, about 5300 Hong Kong based employees will be actually reduced, and about 600 non resident employees may be affected.
As the leading local airline in Hong Kong, Cathay Pacific is facing unprecedented operational challenges and financial pressure, the financial secretary of Hong Kong, Mr. Chen maobo, said on October 21. The restructuring of Cathay Pacifics business is a commercial decision. Although the two observers appointed by the SAR government did not have the right to vote, they have provided the company with reference on the arrangement and reminded the management of the company to minimize the impact on employees and society.
Cathay Pacific expects the cost of the restructuring plan approved by the board of directors to be HK $2.2 billion. The news boosted Cathay Pacific (00293. HK) shares rebounded 5% in the early trading and narrowed to 2.3% and closed at HK $5.85/share by the end of the 21st. So far this year, Cathay Pacific shares have fallen more than 40%.
Will there be another round of layoffs?
Compared with other international aviation hubs, Hong Kongs aviation industry is highly dependent on international flights. As the largest airline in Asia, the epidemic has brought unprecedented challenges to Cathay Pacifics business, and Cathay Pacific accounts for 57% of the passenger traffic and 41% of the cargo volume of the Hong Kong International Airport.
According to the restructuring plan, Cathay Pacific Hong Kong Dragon Airlines Co., Ltd. will stop operation on October 21. The company plans to seek the approval of regulatory authorities and operate most of the lines of Cathay Pacific Hong Kong Dragon Airlines by the company and its wholly-owned subsidiary, Hong Kong Express Airlines Co., Ltd. Cathay Pacific said all 2500 Hong Kong Dragon employees would be dismissed.
The 35 year old airline has come to an end. Cathay Pacific Dragonair, formerly known as Dragonair, was founded in May 1985 by Cao Guangbiao, Bao Yugang, Huo Yingdong and Chinese funded institutions. It started operation in July of the same year. Cathay Pacific acquired Dragonair wholly in 2006.
Chuang Tai Liang, executive director of the Institute of global economics and finance, Liu zode, Chinese University of Hong Kong, told 21st century economic reporter: if the epidemic situation continues to restrict cross-border tourism, Cathay Pacific believes that there will be another round of layoffs with almost no income. The funds previously injected by the SAR government can only last for about one year. Dragonairs positioning is mainly Hong Kong flights to and from the mainland, while Cathay Pacific focuses on international routes. The merger will help Cathay Pacific save costs.
He admitted that Cathay Pacific had a revenue of HK $100 billion a year before the outbreak of the outbreak. The only way to do so is to restore Hong Kongs entry-exit and entry-exit contacts as soon as possible, relax quarantine conditions and increase the source of passengers for flights in order to truly get out of the predicament.
At present, Cathay Pacific Dragonair has about 46 destinations, mainly connecting the mainland routes, but also including all parts of Asia, such as Chiang Mai, Thailand and Hanoi, Vietnam.
At the same time, Cathay Pacifics low-cost brand, Hong Kong Express, was spared the layoff plan. The predecessor of Hong Kong Express is Hong Kong United Airlines, which was established in 2004. At first, it mainly used passenger transport between second tier cities such as Ningbo in Zhejiang Province and Hong Kong. However, since around 2013, it has greatly expanded Northeast Asian routes such as Japan and South Korea, which is the first and the only low-cost airline in Hong Kong. Cathay Pacific pointed out in its interim report that the Hong Kong Express had a loss of HK $779 million from March 23 to August 1. The last straw was founded in 1946 and has been monopolized in Hong Kongs aviation industry for many years. Cathay Pacific once enjoyed a great reputation. In more years, it was named the worlds best airline by Skytrax. Source: Chen Hequn, editor in charge of economic report in the 21st century_ NB12679
At the same time, Cathay Pacifics low-cost brand, Hong Kong Express, was spared the layoff plan. The predecessor of Hong Kong Express is Hong Kong United Airlines, which was established in 2004. At first, it mainly used passenger transport between second tier cities such as Ningbo in Zhejiang Province and Hong Kong. However, since around 2013, it has greatly expanded Northeast Asian routes such as Japan and South Korea, which is the first and the only low-cost airline in Hong Kong. Cathay Pacific pointed out in its interim report that the Hong Kong Express had a loss of HK $779 million from March 23 to August 1.
Founded in 1946, Cathay Pacific has been monopolized in the aviation industry of Hong Kong for many years. Cathay Pacific has been honored as the worlds best airline by Skytrax in more years.