14th May 2020 – (Hong Kong) There were rumours that Cathay Pacific was about to announce restructuring plans to further reduce costs. According to the latest disclosure from sources close to Cathay Pacific, the company plans to announce a salary reduction for all employees as soon as tomorrow (15th), with a salary reduction ranging from 20% to over 30%.
According to sources close to Cathay Pacific, the Cathay Pacific Group intends to reduce the salary of all employees. The salary reduction depends on seniority. The salary reduction ranges from 20% to 30%. The higher the position, the higher the salary reduction. The source said that the salary reduction plan will involve all employees of the group. However, employees at the lowest ranks may have the opportunity to take additional unpaid leave for 4 weeks instead of salary reductions, which may apply to Cathay Pacific’s internal rank C or above, that is, employees at the middle and upper ranks. The group is expected to announce the details tomorrow (15th).
Cathay Pacific reiterated that it would not respond to the rumours and once again stated that in view of the rapidly changing situation, the Group cannot exclude any measures to ensure that its aviation business can survive the crisis to become stronger and more competitive. Cathay Pacific pointed out that the COVID-19 epidemic has brought unprecedented severe challenges to society and business, and airlines have been particularly hit hard. Due to travel restrictions around the world, business and leisure travel needs will continue to be severely pressured for some time.
According to Cathay Pacific ’s annual report last year, Cathay Pacific employs more than 34,000 employees globally, and Hong Kong office employs approximately 28,000 employees. Overall staff expenses accounted for 19% of the group’s operating expenses. The group announced the closure of all outstations in Vancouver and the United States in March and April this year, respectively, involving the reduction of 433 crew members. Although COVID-19 has severely hit the passenger transportation business, Cathay Pacific ’s cost reduction measures for all employees are currently limited to the unpaid leave plan announced in February this year.
Employees are required to take three weeks of unpaid leave from March to June. According to internal employees, individual departments have recently received notice that unpaid leave needs to be taken before the end of May in order to cope with the increase in flights in late June. In addition, the senior management of the Group took the lead in reducing salary from April to the end of this year. The Chief Executive Officer and Chairman of the group reduced their salary by 30%, and executive directors reduced their salary by 25%. When Cathay Pacific announced last year ’s annual results in March of this year, it pointed out that the Group ’s unrestricted use of working capital is HK$20 billion. The available funding will enable the Group to continue its operations.