Cathay Pacific sheds 8,500 jobs, shuts down Cathay Dragon

Cathay Pacific Airways confirmed in an announcement today it will eliminate about 8,500 jobs across the group, including 5,300 staff in Hong Kong, and that Cathay Dragon, which largely served mainland destinations, will not be flying anymore.

The job losses in the coming weeks, account for about 24 percent of the Cathay Pacific Group's total staff count of 35,000. About 600 employees overseas could be affected, too. The remaining 2,600 positions to be eliminated are currently unfilled, owing to cost reductions initiatives in recent months including a hiring freeze and the closure of certain overseas bases, Cathay Pacific said.  Cathay Pacific held a 17.8 per cent stake in Dragonair at the time.

The restructuring will cost about HK$2.2 billion, the airline owned by Swire Pacific, announced. Swire Pacific  holds 45 percent of the shares in Cathay Pacific.

“The future remains highly uncertain and it is clear that recovery is slow,” Cathay Pacific said in today's statement.

Cathay Pacific purchased its rival Dragonair in June 2006 for HK$8.22 billion at a time when Cathay Pacific operated just two passenger routes between Hong Kong and the mainland. It took over 23 Dragonair routes.

Cathay Pacific said then that the purchase “will produce far-reaching benefits across the board for customers, shareholders, employees and the Hong Kong economy.''

The deal, it said will enable Cathay Pacific to connect its international network with Dragonair’s short-haul services to mainland China and secondary regional destinations.

Ithe airline said it will “produce efficiencies and operational streamlining that will result in a wider network for the two airlines, more destinations, wider choice and greater convenience for customers,'' and that the alliance will “reinforce Hong Kong’s position as the premier aviation hub in the Asia Pacific and provide a platform for the growth and expansion for Hong Kong’s home carriers into the mainland and the region.''

Cathay Pacific also said the purchase will “deliver more jobs and career opportunities in the aviation sector and related industries in Hong Kong over a long-term period of growth.''

"The acquisition will be a boost for the consumer. Hong Kong will benefit from an aviation industry better able to compete in a global marketplace. Hong Kong people will share the benefits of such growth,'' the airline promised.

Cathay Pacific partly owned and managed Dragonair between 1990 and 1996.