By Jamie Freed SYDNEY, Oct 21 (Reuters) - Hong Kong's Catha
By Jamie Freed
SYDNEY, Oct 21 (Reuters) – Hong Kong’s Cathay Pacific Airways Ltd 0293.HK mentioned on Wednesday it will minimize 5,900 jobs and finish its regional Cathay Dragon model because it grapples with a plunge in demand from the coronavirus pandemic.
The restructuring will value HK$2.2 billion ($283.9 million) and the airline may even search adjustments in circumstances in its contracts with cabin crew and pilots, it informed the inventory trade.
General, it’ll minimize 8,500 positions, or 24% of its regular headcount, however that features 2,600 roles presently unfilled resulting from value discount initiatives, Cathay mentioned.
“The worldwide pandemic continues to have a devastating influence on aviation and the arduous fact is we should basically restructure the group to outlive,” Cathay Chief Govt Augustus Tang mentioned in an announcement.
The Worldwide Air Transport Affiliation expects it’ll take till 2024 for passenger visitors to recuperate to pre-COVID-levels.
The airline, which has saved round 40% of its fleet exterior Hong Kong, mentioned on Monday it deliberate to function lower than 50% of its pre-pandemic capability in 2021.
After receiving a $5 billion rescue bundle led by the Hong Kong authorities in June, it had been conducting a strategic evaluation that analysts anticipated would lead to main job losses as a result of it has been bleeding HK$1.5 billion to HK$2 billion of money a month.
The restructuring will stem the money burn by HK$500 million a month in 2021, the airline mentioned, including government pay cuts would proceed all through subsequent yr.
The choice to finish regional model Cathay Dragon is in step with rival Singapore Airways Ltd’s SIAL.SI pre-pandemic transfer to fold regional model Silkair into its principal model.
Cathay Dragon, as soon as often called Dragonair, operated many of the group’s flights to and from mainland China and had been hit by falling demand earlier than the pandemic resulting from widespread anti-government protests in Hong Kong that deterred mainland travellers.
Plans to finish the model earlier this yr hit roadblocks from China’s aviation regulator due to infractions throughout final yr’s pro-democracy protests, two sources informed Reuters in Could.
Cathay mentioned it will search regulatory approval to fold nearly all of Cathay Dragon’s routes in Cathay Pacific and low-cost arm HK Specific.
Like Singapore Airways, Cathay lacks a home market to cushion it from the autumn in worldwide journey resulting from border closures.
In September, Cathay’s passenger numbers fell by 98.1% in contrast with a yr earlier, although cargo carriage was down by a smaller 36.6%.
Cathay had till now shunned main job cuts however Singapore Airways introduced plans to chop round 20% of positions, whereas Australia’s Qantas Airways Ltd QAN.AX has mentioned it’ll minimize practically 30% of its pre-pandemic employees.
Cathay shares have fallen 43% for the reason that begin of January. In July, it reached settlement with Airbus SE AIR.PA to delay the supply of A350s and A321neos and mentioned it was in superior talks with Boeing Co BA.N about deferring its 777-9 orders.
($1 = 7.7500 Hong Kong {dollars})
(Reporting by Jamie Freed; Enhancing by Stephen Coates)
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