On October 20, Hong Kong’s South China Morning Post cited sources familiar with the matter as saying that Hong Kong’s Cathay Pacific will lay off approximately 6,000 employees. This figure accounts for about 18% of its total workforce.
At the same time, it is reported that Hong Kong Cathay Pacific Airways will also close its regional brand and wholly-owned subsidiary Cathay Dragon to cope with the huge dilemma caused by the new crown pneumonia epidemic.
According to people familiar with the matter, the specific layoff plan may be announced this Wednesday (21st), and the number of layoffs of about 6,000 employees is nearly a quarter less than the original plan. It is also lower than the current industry average (20% to 30%).
According to reports, the original Hong Kong Cathay Pacific Airways planned to lay off about 8,000 employees worldwide. However, after the “government intervention”, the proportion of layoffs fell to about 18% of the company’s total labor force, of which about 5,000 people will be laid off in Hong Kong.
People familiar with the matter also disclosed that due to the severe impact of the epidemic, Hong Kong Cathay Pacific had to reorganize to rescue its flagship airline, Cathay Pacific. Therefore, its regional brand and wholly-owned subsidiary Cathay Dragon Airlines will be “cut off.” Although Cathay Dragon, which has more than 3,000 employees, will be “sacrificed”, its employees and resources will be merged with Cathay Pacific.
“In view of the severe financial situation, it is not necessary to keep these two brands (Cathay Pacific and Cathay Dragon) at the same time. But Cathay Pacific will not give up flights to mainland destinations.” A person familiar with the matter said that Cathay Pacific will not Abandon the mainland market and maintain its important role in the regional aviation hub.
Another person familiar with the matter said that the company will retain as many Cathay Dragon pilots as possible. Because most of them are specially trained locals and are regarded as talents in Hong Kong.
According to news from the Hong Kong Economic Times on October 20, regarding the retention and abandonment of the Dragonair brand, Liang Peiyun, vice chairman of the Cathay Dragon Air Crew Association, said that when the union asked the management about the layoff plan, the management said it was only a rumor. Cathay Dragon still has value. But at the same time, the union hopes that employers and employees will have room for communication, but they fail to see the willingness of the employers to actively discuss.
Liang Peiyun said that the labor union has held meetings with the management on the company’s restructuring plan three times, indicating that most of the employees of Cathay Pacific Dragon are willing to cut some benefits in exchange for the company not to lay off employees. But the management has never expressed its position, only that it understands the opinions of the employees.
According to the South China Morning Post, Hong Kong Cathay Pacific currently has approximately 33,000 employees worldwide. About 26,500 employees work for Cathay Pacific and Cathay Dragon Services. Once they are laid off, their resignation benefits will be more generous than the labor laws and regulations.
According to reports, Hong Kong’s Cathay Pacific Airways said on Monday (19th) that compared with the industry’s pre-crisis level, next year’s capacity will be less than half of the pre-crisis capacity. This situation highlights the slow pace of the industry’s recovery. If the forecast is really accurate, then the recovery may not arrive until 2024.
“South China Morning Post” pointed out that according to statistics, Hong Kong’s Cathay Pacific Airways lost a record 9.87 billion Hong Kong dollars (about 1.27 billion US dollars) in the first half of this year. And it continues to spend 2 billion Hong Kong dollars a month, but this number has fallen from the 3 billion Hong Kong dollars at the beginning of the pandemic.
The report also emphasized that if the pandemic is still not under control afterward, it is still possible that Hong Kong Cathay Pacific Airways will lay off workers in the future.