The Labour Department on October 21 has announced it has set up a dedicated employment services hotline for staff members of the Cathay Pacific Group, following the carrier’s announcement of a pandemic-fuelled restructuring that would impact some 8,500 of its employees globally.
The struggling airline announced on Wednesday that its regional subsidiary Cathay Dragon will cease operations and that some 5,300 Hong Kong-based employees would be made redundant. An estimated 600 employees overseas would also be affected “subject to local regulatory requirements”.
In a statement on October 21, Cathay Pacific Chief Executive Officer Augustus Tang said that the global pandemic “continues to have a devastating impact on aviation” and that the restructuring was fundamental for the airline to survive.
“Our immediate priority is to support those affected by today’s announcement. We are deeply saddened to part ways with our talented and respected colleagues, and I want to thank them for their hard work, achievements and dedication.”
Tang said that they have taken “every possible action” to avoid job losses, such as scaling back capacity to match demand, suspending non-essential spend, implementing a recruitment freeze, as well as two rounds of Special Leave Schemes, among others. Executive pay cuts will continue throughout 2021 with another round of voluntary Special Leave Scheme for non-flying employees to be introduced in the first half of next year.
“But in spite of these efforts, we continue to burn HK$1.5 to 2 billion cash per month. This is simply unsustainable. The changes announced today will reduce our cash burn by about HK$500 million per month.”
Cathay Pacific said it will be offering severance packages that “go well beyond statutory requirements”. It will also be extending medical benefits and staff travel entitlements, as well as providing counselling and job transition support services, and that there will be no offset against pension contributions.
Its Hong Kong-based cabin and cockpit crew will be asked to agree to changes in their conditions of service.
Meanwhile, a spokesperson for the Labour Department urged Cathay Pacific to maintain effective communication with its employees over termination matters with appropriate arrangements as failing to do so “may constitute unreasonable variation of the employment contractual terms”.
“The LD stands ready to render assistance to affected employees, who may call the LD’s dedicated hotlines (3580 1442 and 3580 1443) for enquiries on their employment rights and benefits under the EO. They may also approach the LD’s Relations Division offices (www.labour.gov.hk/eng/tele/
Special service counters have also been set up at the Labour Department’s 13 job centres (www.labour.gov.hk/eng/tele/