Cathay Pacific: 8500 people will be laid off. Dragonair will stop operating.

The financial website101October 2 1 Cathay Pacific's board of directors has passed the reorganization plan submitted by the management ("reorganization"), which includes:

1. Dragonair Limited ("Cathay Pacific Dragonair"), a wholly-owned subsidiary of the Company, will cease operation today. The company intends to seek the approval of the regulatory authorities, and the company and its wholly-owned subsidiary, Hong Kong Express Airlines Limited, will operate most routes of Cathay Dragonair.

2. Cathay Pacific Airways Group (including Cathay Dragonair) will cut about 8,500 positions as a whole, accounting for about 84% of the total 35,000 positions of Cathay Pacific Airways Group. Of these 8,500 jobs, about 5,300 Hong Kong employees will be laid off in the next few weeks, and about 600 non-Hong Kong employees may be affected, depending on the regulatory requirements of relevant regions. The remaining 2,600 positions are now vacant due to measures such as freezing recruitment and closing some overseas bases in recent months.

Cathay Pacific Airways Limited will ask flight attendants and pilots in Hong Kong to agree to change their conditions of service, so as to achieve the goals including making wages closer to productivity and improving market competitiveness.

The restructuring cost is about HK$ 2.2 billion, which will be funded by the company's internal resources. The company will accrue impairment of deferred income tax assets of HK$ 654.38+RMB 300 million for restructuring. Other impairments and expenses will be considered when preparing the audited financial statements of Cathay Pacific Airways Group for the years up to 202012,31. Although Cathay Dragon ceased to operate, the company will ensure that Cathay Dragon has sufficient funds to fulfill its commitments and responsibilities.

The 20 19 coronavirus epidemic has brought severe challenges to the aviation industry, and the company's management team has been very flexible in dealing with this extremely difficult situation. The company has begun to implement the capital reorganization plan mentioned in the announcement, and implemented a number of cash preservation measures, including suspending unnecessary expenses, delaying the delivery of aircraft, launching a special vacation plan, and reducing the salary of senior managers. Even after many efforts, the company still loses HK$ 65.438+0.5 billion to HK$ 2 billion in cash every month. It is estimated that this reorganization (the main contents listed above) will reduce the monthly cash expenditure of the Group in 20021year by about HK$ 500 million.

The future prospects are still very uncertain, and the pace of recovery is obviously quite slow. According to the forecast of the International Air Transport Association, air passenger traffic will not return to the pre-epidemic level until 2024. Therefore, the management team believes that the most optimistic plan that the company can take in a responsible manner is to reduce the company's passenger capacity to 50% far below 20 19.

Assuming that the vaccine currently developed is effective and can be successfully marketed in the world in the summer of 20021year, the company predicts that the passenger capacity will be much lower than 25% in the first half of 20021year, but it is expected that the passenger capacity will gradually pick up in the second half of 20021year. The company will continue to pay attention to the relevant development of the aviation industry and take corresponding measures to ensure that the company can survive the epidemic crisis and become an airline with clearer goals, higher efficiency and stronger competitiveness.