BUSINESS

Cathay Pacific shares in Hong Kong jumps 2.27% after mass layoff announcement

Headquartered in Chek Lap Kok, Hong Kong, Cathay Pacific Airways has decided to cut 5,900 jobs amid the new coronavirus (COVID-19) pandemic. The airline’s regional brand Cathay Dragon has also ceased to operate.

After the announcement, Cathay Pacific’s shares in Hong Kong had a 2.27 percent increase. On the CNBC show “Streets Signs Asia,” Daiwa Capital Markets auto, transportation and industrial head Kelvin Lau said, “I think the cost cutting is massive.”

According to Lau, Cathay Pacific is set to have a “leaner cost structure going forward.” He acknowledged the restructuring costs and other impairments faced by the airline in the near future.

In June 2020, Cathay Pacific received a $5 billion rescue package led by the Hong Kong government. On October 19, 2020, the airline planned to operate less than 50 percent of its pre-pandemic capacity in 2021, CNBC has learned.

 

The Cathay Pacific pilots and cabin crew who were not fired will be moved onto cheaper contracts. In response, the Hong Kong Aircrew Officers Association (HKAOA) asked its 2,200 members based in Hong Kong not to sign new employment contracts that involve reduced salary.

According to the HKAOA, it has obtained legal advice on its members’ contractual rights and protections pursuant to their conditions of service (COS). The union asked its members to refrain from making a commitment until more substantive legal guidance was received.

“Based on our current forecasts, we believe we are right-sized but if headcount reductions are needed in the future, we will take decisions at the appropriate time, bearing in mind operational needs and taking into account the interest of our pilots,” South China Morning Post quoted Cathay Pacific flight operations director Chris Kempis as saying. On October 22, 2020, he warned pilots that the official reason for their termination would be the “absence of consent to the new terms offered” if they declined to accept the contracts.

Categories: BUSINESS, China, East Asia, Hong Kong

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