Cathay Pacific Airways Ltd (國泰航空), Asia’s biggest international airline, said it would eliminate some positions after conducting a critical review of its business in a bid to arrest a decline in earnings.
“The competition is here to stay and the uncertainty is the ‘new normal’ — we must simply respond,” the Hong Kong-based carrier said in a statement yesterday after a leadership conference. “This change will create opportunities, but some jobs will no longer be needed. Some new jobs will be created and other jobs may be redefined.”
The carrier did not provide details on how many positions would be affected.
The airline is looking at ways to pare costs as mounting competition from Chinese and Middle Eastern carriers have eaten into its premium long-haul customer base, dampening its yields.
Adjustments to the way the company is organized will start at the top, and it plans to implement the changes by the middle of the year, it said in the statement.
“Something of this scale hasn’t happened in for more than 20 years,” the airline said.
Cathay Pacific posted its smallest half-year profit since 2014 for the six months that ended in June last year and is reviewing its business amid wage disputes with air crew and limited capacity at Hong Kong’s airport.
Cathay Pacific shares fell 2 percent to HK$10.82 in Hong Kong trading yesterday before the announcement. They have dropped 30 percent since Ivan Chu (朱國樑) was appointed chief executive officer on March 14, 2014, while the Hang Seng Index has advanced 6.2 percent in the same period, according to data compiled by Bloomberg.
Cathay Pacific on Oct. 12 last year said that its second-half result was “no longer expected” to be better than that in the first half.
In August last year, the airline reported an 82 percent plunge in net income in the first six months of the year and warned that premium travel was slumping.
Jefferies Group LLC expects the carrier to report losses in the second half of last year and this year, analyst Andrew Lee wrote in a report in November.
A second-half loss would be Cathay Pacific’s first six-month loss in four years, data compiled by Bloomberg show.
“2017 is going to be a year of significant change and opportunity to better align our business with the increasingly competitive aviation landscape,” the carrier said in the statement.
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