The Cathay Pacific Group has announced a corporate restructuring in response to the continued impact of the COVID-19 pandemic on the aviation market. The restructuring will enable the company to secure its future whilst meeting its responsibilities to the Hong Kong aviation hub and its customers. It plans to create a more focused, efficient and competitive business, in part by leveraging the potential of its low-cost carrier, HK Express.
Major elements of the restructuring include:
Cathay Pacific will be offering severance packages that go beyond statutory requirements. It will also be extending medical benefits and staff travel entitlements, as well as providing counselling and job transition support services. There will be no offset against pension contributions.
Cathay Pacific Chief Executive Officer, Augustus Tang said, “We have taken every possible action to avoid job losses up to this point. We have scaled back capacity to match demand, deferred new aircraft deliveries, suspended non-essential spend, implemented a recruitment freeze, executive pay cuts and two rounds of Special Leave Schemes. But in spite of these efforts, we continue to burn HK$*1.5-2bn cash per month. This is simply unsustainable. The changes announced today will reduce our cash burn by about HK$500m per month. We have studied multiple scenarios and have adopted the most responsible approach to retain as many jobs as possible. Even so, it is quite clear now recovery is going to be slow. We expect to operate well under 25% of 2019 passenger capacity in the first half of 2021 and below 50% for the entire year.”
Source: Cathay Pacific Cargo
*HK$ = $0.13/€0.11
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