Cathay Pacific Cut Off Regional Carrier Airline and 8,500 Jobs
International Premium Airline to Function At 50% Capacity till Next Year
Due to the major economic instability caused by the coronavirus pandemic this year, the major East Asian airline Cathay Pacific has recently announced to completely shut down its subsidiary airline called Cathay Dragon, along with removing 8,500 jobs from their parent airline.
The Cathay Dragon, formerly known as Dragonair, is a regional airline mainly operating in various parts of China, Hong Kong, and other Asian countries located in the region. Cathay Pacific, the Hong Kong-based international airline, stated that they hope to retain most of the routes followed by Cathay Dragon after the regional airline’s elimination.
Shut down of Cathay Dragon
The Dragonair was initially started with the financial help of both mainland Chinese and Hong Kong investors. The initial routes followed by the regional carrier were charter flights to and from China and with some other major cities located in East Asia. In the year 1990, 5 years after the regional airline’s formation, Cathay Pacific acquired the stakes in the airline and, later in 2006, bought the complete shares for Dragonair, naming it to Cathay Dragon.
Multiple other airlines across the world have suffered from major financial instability due to the coronavirus pandemic, which caused shut down of the international borders of numerous countries across the world to prevent further transmission of infection.
Several cutbacks have been made by the Cathay Pacific in an attempt to reduce the escalating cost of travel amid the restrictive travel measures applied globally by the respective nation’s governments.
According to the Cathay Pacific, they have already tried to reduce major costs by postponing the deliveries of aircraft, by implementation of exceptional leave strategies, and removing executive payments. Cathay Pacific was also able to receive a handsome payment of US$5 billion assistance from the government of Hong Kong in the month of June.
Even after the bailout and some stability of the economic status of Hong Kong, Cathay Pacific is still losing around $260 million per month due to which the international airline decided to shut down its regional carrier flyer Cathay Dragon.
The parent international airline business Cathay Pacific along with their budget airline Hong Kong Express will now take over the routes which were previously used by the Cathay Dragon across East Asia.
The firm’s Chairman gave a public statement in which they stated that the firm will now currently focus on one single airline, which is their premium full-service carrier airline, Cathay Pacific, along with their single low-cost leisure brand Hong Kong Express.
Cutback on Jobs
Although the entire reconstruction cost would be around $284 million, Cathay Pacific stated that it would eventually reduce the monthly cost by $64 million in the upcoming year of 2021.
A total number of 8,500 jobs would be removed from the international airline, most of which will be from their headquarters located in Hong Kong, from which 5,300 working staff would be sent home, and further 600 individuals would be removed from their positions in overseas office locations.
2,400 job spaces are currently unfulfilled due to the hiring freeze by the airline and shutdown of some of the operations located overseas. The upcoming job losses will account for about 24% of the total working staff of the Cathay Pacific airline.
The premium international airline will also be asking the working cockpit crew and cabin crew staff to be in agreement with the multiple changes being done in their terms and conditions for employment, which will match the remuneration much more strictly to efficiency and productivity.
Cathay Pacific said this week that they are expected to function their airline at 50% capacity through the next year due to the financial unsteadiness caused by the coronavirus pandemic. The crisis for the international airline is massive, and the recovery phase for it would be time-consuming and over a long duration, and is not what was being expected previous few months ago.