Cathay Pacific axes regional carrier and 8,500 jobs

Cathay Dragon was a full service regional carrier flying mainly to mainland China and other Asian destinations.

Hong Kong-based Cathay Pacific says it hopes to retain most of Cathay Dragon’s routes.

Many other airlines are on the brink of survival as the Covid-19 pandemic batters travel and tourism.

The cutbacks at Cathay Pacific are part of the airline group’s attempt to reduce costs during travel restrictions that governments have imposed to limit the pandemic.

Cathay says it has already tried to cut costs by deferring aircraft deliveries, implementing special leave schemes and cutting executive pay.

It also received a US$5bn (£3.9bn) bailout from the Hong Kong government in June.

But the airline group is still losing as much as $260m a month.

Cathay Pacific and its budget carrier Hong Kong Express will take over Cathay Dragon’s routes.

“What we need to do is focus our efforts on a single premium full-service carrier brand, which will be Cathay Pacific, complemented by a single low-cost leisure brand in Hong Kong express,” said Cathay Pacific Chairman Patrick Healy.

Staff cutbacks
Although the restructure will itself cost $284m, the airline said it will reduce costs by $64m a month in 2021.

Of the 8,500 positions that will be eliminated, 5,300 jobs will be from Hong Kong and a further 600 from overseas.

A total of 2,400 of positions are currently unfilled because of a hiring freeze and the closure of some overseas operations.

The job losses account for around 24% of the Cathay Pacific’s total staff.

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 said this week that it expects to run at half capacity through next year.

“This crisis is deeper, and the road to recovery slower and more patchy than anyone thought possible just a few months ago,” said Mr Healy.

Dragon down
Cathay Dragon, originally operated as Dragonair, when it was established in 1985. It had the financial backing of both Hong Kong and mainland Chinese investors.

Initially it operated charter flights to China and also flew to a handful of cities in South East Asia.

After adding new routes to its network, Cathay Pacific acquired a stake in the airline in 1990, and then bought it outright in 2006.

Cathay Pacific changed the brand name to Cathay Dragon in 2016.