HONG KONG • Cathay Pacific is set to cut around 600 staff in its largest round of layoffs since the 1998 Asian Financial Crisis, reported the South China Morning Post yesterday, citing sources.
Some 190 employees in management are poised to be told today to go immediately, while another 400 non-management staff will be let go by the middle of next month, said The Post.
The airline was considering cutting as many as 800 jobs as recently as last week, sources told the paper. This comes amid a review of Cathay's staffing costs, productivity and efficiency across all levels.
The flagship Hong Kong carrier, comprising Cathay Pacific and Cathay Dragon, has been bleeding cash, losing HK$3 billion (S$530 million) in the past year alone.
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It has been hit by competition from Middle Eastern and state-owned Chinese airlines, as well as by a drop in business-class passengers. It has also continued to pay high fuel prices after failing to anticipate a collapse in oil prices.
And unlike Singapore Airlines, which has beefed up its budget offshoots, Tigerair and Scoot, Cathay has yet to embrace discount aviation, said a Bloomberg analysis.
Across the globe, airlines have run into turbulence because of a slowing global economy and factors such as a ban on laptops. Emirates airline from Dubai, for instance, reported a 82 per cent year-on-year fall in profit earlier this month, as a result of the laptop ban on flights departing from the Middle East to the United States.
The job cuts are expected to save Cathay hundreds of millions of dollars. The carrier is in the early part of a three-year scheme to turn things around, and hopes to save HK$4 billion in costs over the period, including HK$2 billion this year and HK$1 billion in each of the following two years, said The Post.
Not since 1998 has Cathay cut so many jobs at one go. That year, it laid off some 2,000 employees. The airline currently has 19,000 staff based in Hong Kong.