Dragon drawing its last breath to spare Cathay

Cathay Pacific is expected to ax its regional sister airline Cathay Dragon and announce layoffs of around 6,000 employees of the two airlines worldwide as soon as today.

Axing Cathay Dragon means that its routes will have to be filled by Cathay Pacific. However, Cathay Pacific will have to negotiate routes with the Civil Aviation Department in Hong Kong and its counterparts in the mainland over air rights.

The arrangements are part of the flagship carrier's restructuring as it reels from the effect of the pandemic on air travel in and out of Hong Kong.

Cathay Pacific and Cathay Dragon carried 47,061 passengers in September - a 98.1 percent drop in passenger traffic from the same period last year.

Cathay Pacific secured a HK$39 billion bailout from the government earlier this year before the pandemic subsided.

To deploy more manpower to Cathay Dragon's existing routes, some of its pilots will be able to move to Cathay Pacific, sources said.

Of the 6,000 employees to be sacked, around 70 percent of them are Hong Kong cabin crew.

As of June, Cathay Pacific had 33,000 employees worldwide, of which 27,600 were Hongkongers.

As for the employees that will stay behind, some will have a pay cut in accordance with the class of their positions, while those without a pay cut will be furloughed next year.

Sources said further layoffs were possible for Cathay Pacific due to the pandemic.

Connie Leung Pui-wan, vice president of Hong Kong Dragon Airlines Flight Attendants Association, said on a radio program that when the association reached out to airline management, the response was that "it was a rumor."

Asked about the speculation that all Dragon employees will be sacked, Leung said the association could not confirm this so far, adding that Dragon's value is in its experience flying short routes and mainland flights.

The association has met management three times over the revamp plan, saying staff are willing to see cuts to benefits in return for no layoffs.

But the management had not given a clear stance so far, Leung said.

Leung also said that employees understood that the aviation industry had entered a "harsh winter," but hoped that both sides would keep talking.

Ronald Lam Siu-por, Cathay Pacific's group chief customer and commercial officer, reiterated that the carrier's operating power reached only 9 percent of its typical capacity in September.

Lam said passenger traffic at the end of the year would just reach 10 percent of pre-pandemic levels, with the most optimistic forecast for next year's passenger traffic less than 50 percent of typical passenger traffic.

The operating power of the first six months next year is expected to be less than a quarter of its typical operating power.

He also hoped that the carrier's business would resume gradually, but that would be based on the assumption that coronavirus vaccines will be available in Hong Kong before next summer.

Founded in 1985, Dragonair was acquired by Cathay in 2006 and renamed Cathay Dragon in 2016.

Meanwhile, the Hong Kong Federation of Trade Unions is working on offering 4,200 food packs to needy jobless workers, including those in aviation-related industries and security officers.

erin.chan@singtaonewscorp.com