Covid: Cathay Pacific to run at half capacity next year

Cathay Dragon plane flying

Cathay Dragon plane flying

Hong Kong's Cathay Pacific Airways Ltd. will slash more than 5,000 jobs and close a regional carrier, the latest airline to enact a sweeping restructuring as the virus's resurgence in the USA and Europe and the lack of a vaccine underscore the ongoing uncertainty in global aviation.

Although there are no surprises, the key question over the restructuring would be the positioning of Cathay Pacific-owned low-priced carrier HK Express, which will be given some unnamed Cathay Dragon routes, Mr Lee said.

Cathay initially planned about 8,000 layoffs globally, but after government intervention reduced that to 18pc of its workforce, including some 5,000 jobs in Hong Kong, the report said.

"We must fundamentally restructure the group to survive. and meet our responsibilities to the Hong Kong aviation hub".

"Among the multiple scenarios studied, this one is already the most optimistic that we can responsibly adopt at this moment", Cathay said in the release of its monthly traffic figures to the stock exchange.

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 Pacific Airways Ltd. hopes a recovery in travel demand will allow it to operate closer to 50% of its pre-pandemic capacity later next year, provided there's an effective Covid-19 vaccine widely adopted in its key markets. It will seek regulatory approval for most of the routes to be operated by Cathay Pacific and its budget airlines subsidiary HK Express. Ground staff will also be offered a voluntary leave plan in the first half of next year.

Dragonair's inaugural flight at Hong Kong's Kai Tak airport in 1985

"Parting ways with such a large number of our outstanding colleagues is a heart-wrenching decision and we are truly sorry for the anxiety and distress this will cause among those impacted and their families", Healy said. Severance packages for those laid off are well in excess of statutory requirements, Healy said. These departures are in no way a reflection on the people impacted. It carried just 1,568 daily passengers on average for the month.

Jefferies maintained "hold" on Cathay Pacific with an unchanged target price of HK$6.30 - based on trough 0.6-time price-to-book value, with passenger recovery dependent on Hong Kong's ATB with 11 other countries.

"The future remains highly uncertain".

Repeated efforts to reassure passengers that air travel is safe have failed to make much of a difference while government restrictions, including quarantines of up to 14 days for returning passengers, have only added pressure.

The Hong Kong government on Wednesday requested Cathay take full account of its potential impact on the city's status as an global aviation hub.

Cathay shares have fallen 43 percent since the start of January.

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