Singapore-based UOB Kay Hian analyst K. Ajith said these were the largest job cuts at Cathay since the 1998 Asian financial crisis and should save it at least HK$500 million ($64 million) annually, or around 6 percent of total staff costs, adding that the airline should also consider reducing routes flown.
“It’s not just Cathay that has to do it but other carriers as well,” he said.
“We have to see global capacity additions come down and airlines would have to mothball aircraft, instead of trying to still utilize and cover some of the costs associated with that.”
In addition to job cuts, the airline has said it will consider shifting more routes to its short-haul arm, Cathay Dragon.
The appointment of Hogg, who was promoted from chief operating officer to chief executive this month, underscores the urgent restructuring task facing the airline amid aggressive expansions by rivals, analysts have said.
China’s Hainan Airlines on Monday said it would spend $4.2 billion on new planes as it expanded its fleet to take advantage of strong demand from Chinese travelers.
Cathay Pacific said no frontline employees, cabin crew or pilots would be affected by the job cuts announced on Monday because the airline was still growing, but staff in those positions would be asked to deliver productivity improvements.
