Hong Kong: Hong Kong’s flagship carrier Cathay Pacific on Wednesday announced it will be closing its subsidiary Cathay Dragon and slashing 8,500 jobs.
Cathay Dragon was a full service regional carrier which flew mainly to mainland China and other Asian destinations.
However, the airline said in a statement that Cathay Pacific and its budget carrier Hong Kong Express hope to retain most of Cathay Dragon’s routes by taking over them.
These cutbacks are part of the airline group’s attempt to reduce costs during travel restrictions that governments have imposed to contain the pandemic.
Cathay said it has already tried to cut costs by deferring aircraft deliveries, implementing special leave schemes and cutting executive pay, a BBC report said.
It also received a US$5bn (£3.9bn) bailout from the Hong Kong government in June.
But despite the stimulus package the airline group is still losing as much as $260m a month.
Although the restructure will itself cost $284m, the airline said it will reduce costs by $64m a month in 2021.
Of the 8,500 positions that will be eliminated, 5,300 jobs will be from Hong Kong and a further 600 from overseas, with some 2,400 of positions currently unfilled because of a hiring freeze and the closure of some overseas operations.
These job losses account for around 24% of the Cathay Pacific’s total staff.
The airline will also ask Hong Kong-based cabin and cockpit crew to agree to changes in their employment conditions “to match remuneration more closely to productivity”.
Cathay said this week that it expects to run at half capacity through next year.