Cathay Pacific’s Biggest Revamp in Two Decades to Affect 600 Jobs

May 23, 20171:43 pm677 views

Hong Kong’s flagship carrier Cathay Pacific is undergoing one of its biggest restructuring in the past two decades to slash 600 jobs. This will include 190 management positions and 400 non-management staff working at its headquarters in Hong Kong.

Earlier in March, the airline said it would save 30 percent on its employee costs, after having witnessed the first annual loss in eight years, BBC News reports. These cuts are a part of three-year programme to turn around the losses.

According to a statement by the airline, the job cuts will be complete by the end of next year, and affected employees will be informed on Monday and over the next month. With Rupert Hogg, now as the CEO of Cathay Pacific, replacing Ivan Chu Kwok-leung earlier this month, Hogg said, “these are tough but necessary decisions for the future of our business and our customers.”

Citing challenging business outlook and increasing competition from the Chinese and Middle Eastern airlines that have expanded rapidly in the Asia Pacific region adding luxury touch to their offerings. The revenues of Cathay Pacific have been impacted largely by new carriers foraying into the region, thus denting profits.

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Cathay Pacific clearly stated that no frontline employees, pilots or cabin crew would be affected by this decision, but they would be asked to deliver greater efficiencies and productivity improvements, Channel News Asia reports.

To overcome the net loss of HK$575m ($74m; £60.1m) suffered by the airline for 2016, this move is initiated by the airline to take immediate control of the situation. This was only the third time that the air carrier posted a full-year loss in its 70 year history. The airlines will also restructure its cargo department by removing the role of a cargo director.

Rupert Hogg was quoted by Bloomberg, “We will have a new structure that will make us leaner, faster and more responsive to customers’ needs. It is the first step in the transformation of our business.”

All employees whose roles will become redundant in the new structure will receive a severance package including up to 12 months’ salary, extended medical benefits including counseling and support, and additional and extended travel benefits.

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