HONG KONG (BLOOMBERG) - Cathay Pacific Airways, which reported its first annual loss since 2008 this week, has set a target of 30 per cent savings in staff costs at its Hong Kong head office as part of the biggest revamp in two decades.
The savings will come from changes to middle- to senior-management levels in the city, and the results of this phase of the restructuring will be announced by June, Asia's biggest international carrier said in an e-mail on Friday (March 17). The transition will occur over the summer, Cathay said. The Hong Kong Economic Times reported on the plan earlier.
The details shed more light on the "critical review" plan that Cathay announced in October, when it scrapped its profit outlook amid rising competition from Chinese rivals and budget carriers. The carrier has given little information on its three-year transformation program so far, apart from saying changes would "start at the top" and it would eliminate some positions.
"It is clear that there is a need for an organisational structure that will allow the Cathay Pacific Group to succeed," the airline said in the e-mail. "We need a leaner, simpler structure that is driven by real insights into our customers and their needs, one that will allow us to respond quickly to change."
Shares of the company have slid 19 per cent in the past year, versus a gain of 19 per cent in the benchmark Hang Seng Index. The stock gained 2 per cent to HK$11.34 (S$2.04) as of 9.33 am in Hong Kong on Friday.
Cathay, which expects the operating environment in 2017 to remain challenging, has been widening its discounts to premium offerings in a bid to fill seats as it competes against rivals such as China Eastern Airlines. Swire Group is the parent of Cathay, while Air China holds almost 30 per cent.