Amid various setbacks during the pandemic, the aviation Industry takes another hit. The Cathay Pacific Airways has announced the discontinuation of its Cathay Dragon and job cuts to curb losses.
The pandemic is moving towards another year with no sign of recovery in the tourism industry, Cathay Pacific is planning to cut thousands from its workforce and discontinue Cathay Dragon flights, which operates from Hong Kong.
Cathay Dragon, which is a regional endeavor, provides more than 5,300 jobs in Hong Kong and about 600 across the globe will be terminated soon.
The airline is also planning to freeze positions that were yet to be filled and were under the recruitment process. In total, there will be about 8,500 job cuts effectively reducing the current workforce to 76% in comparison to the total strength before the pandemic.
According to Augustus Tang, CEO of Cathay Pacific Group, they implemented various measures including no new recruitments; pay cuts were made among the executives, lowering its working capacities before this job cut decision was made.
He further added:
“We have taken every possible action to avoid job losses up to this point. The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive.”
Mr Tang estimates that the company is incurring losses of about $258 million every month, the recent decision will reduce the losses to $65 million per month. There will be an additional $283 million of expenses as the company will renegotiate its contracts with the employees.
The aviation industry has been hit hard due to the pandemic and similar steps are being taken around the world. Australia’s Qantas Airways, as well as Singapore Airlines, made similar announcements recently.
Cathay Airways operates mostly on international routes and lacks a domestic customer base due to which the pandemic’s blow to its revenues was difficult to cushion. In September, the airline had just 1.9% of its business as compared to last year during the same time.
According to the predictions made by the International Air Transport Association (IATA), the aviation industry will have to wait till 2024 to gather momentum similar to the one before the pandemic started.