Cathay Pacific corporate restructuring

Image credit: Anthony Wallace via Getty Images
Image credit: Anthony Wallace / AFP via Getty Images.
On 21st October, Cathay Pacific Airways announced a corporate restructuring to create a more focused, efficient and competitive business in response to the unprecedented downturn in the aviation market caused by the global COVID-19 pandemic.

Major elements of the restructuring include:
  • Reduction of approximately 8,500 positions across the entire Group, accounting for around 24% of its established headcount. Through a recruitment freeze and natural attrition, the Group has been able to reduce redundancies to 5,900 actual jobs (or 17% of its established headcount), including around 5,300 Hong Kong-based employees and approximately 600 employees based outside Hong Kong who will possibly be affected subject to local regulatory requirements.
  • Cathay Dragon, the Group's wholly owned regional subsidiary, has ceased operations. Regulatory approval is to be sought for a majority of Cathay Dragon's routes to be operated by Cathay Pacific and its wholly owned subsidiary, HK Express.
  • Cathay Pacific's Hong Kong-based cabin and cockpit crew have been asked to agree to changes in their conditions of service that are designed to match remuneration more closely to productivity and to enhance market competitiveness. Following the end of the consent period, 2,613 pilots and 7,346 cabin crew have signed the new conditions of service, representing 98.5% of pilots and 91.6% of the cabin crew who were asked to agree to the new contracts.
  • Executive pay cuts will continue through 2021 and a third voluntary Special Leave Scheme for non-flying employees will be introduced for the first half of this year. There will be no salary increases for 2021 and no annual discretionary bonus for 2020 across the board for all employees. Outport staff will be subject to local arrangements.

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."

Overall, the restructuring reduces the Group's operating cash burn by about HK$500 million per month, bringing it down to HK$1.0-1.5 billion per month.
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