Hong Kong's Cathay lays off 600 as it faces rising pressure
- Author: Zachary Reyes May 22, 2017,
May 22, 2017, 13:06
"To survive, Cathay will have to create more business demand", which tends to be a stabler and more lucrative source of revenue, says Shinya Hanaoka, associate professor at Tokyo Institute of Technology and an expert on air transportation.
Despite booming demand for air travel in Asia, Cathay Pacific and Singapore Airlines Ltd. are among premium carriers in the region reeling under intense competition from low-priced carriers, Chinese mainland rivals and Middle-Eastern operators such as Emirates. The airline said it would look for greater efficiencies and productivity improvements in the rest of the workforce.
The carrier is seeking to bolster its bottom line after posting its first annual net loss in eight years in March, amid rising competition from mainland Chinese rivals, as well as fewer premium class passengers.
Cathay employs 19,000 people based in Hong Kong.
Commenting on the most dramatic change at the airline in several years, Cathay CEO Rupert Hogg said: "We greatly appreciate and respect our people's dedication, hard work and achievements".
The company will also offer redundant employees job search support and interview training. The commercial and planning functions will report into the Director Commercial and Cargo, and be overseen by the Chief Customer and Commercial Officer.
Cathay unveiled its plans to make cuts earlier this year as part of a broader plan to turnaround the now loss-making airline.
In a company statement Monday, the airline said it would shed 190 management roles as well as 400 non-managerial positions at its Hong Kong head office.
"They haven't really touched the frontline - pilots, cabin crew, customer service - so at least this part hopefully will reduce the possibility of compromising the product".
Hong Kong's flagship airline - comprising Cathay Pacific and Cathay Dragon - has been haemorrhaging cash in recent years and lost HK$3 billion in the past year alone. "It is the first step in the transformation of our business". "That's what Cathay needs to urgently address by sharpening their competitiveness externally".
Employees who lose their jobs will receive a severance package including up to 12 months' salary, extended medical benefits such as counselling and support, and additional and extended travel benefits.