Cathay Pacific

Cathay Pacific eliminates 17 jobs from its IT department amid continuing slowdown in passenger traffic

The airline faces ongoing challenges as airport fees set to rise, and newly-opened Shanghai Disneyland lures tourists further north

PUBLISHED : Thursday, 16 June, 2016, 8:50pm
UPDATED : Thursday, 16 June, 2016, 11:15pm

Cathay Pacific Airways has laid off the head of its information technology department and 16 other staff, a week after chairman John Slosar said there were no plans for staff cutbacks in a cost-cutting campaign involving a hiring freeze announced last month.

In an emailed response to the Post, Cathay confirmed it had laid off director of information technology Joe Locandro and 16 other IT staff on Monday, saying it was a “realignment” of its IT organisation aimed at raising productivity.

“This is not a cost-control exercise and there is no plan for redundancy,” it said. “There are more than 700 staff in the IT department and the realignment involved changes in 17 jobs.”

A spokeswoman said the changes were part of a wider realignment. An internal notice said as “a result of the restructuring, IT will now report into the portfolio of director corporate development Paul Loo”, who would be assisted by three new general managers.

Meanwhile, the airline said passenger traffic last month fell 1.3 per cent from a year ago, deepening a contraction from April, with the outlook facing continued challenges as passenger and aircraft fees are set to rise. In April, passenger traffic declined 0.1 per cent.

Cathay and its subsidiary Hong Kong Dragon Airlines yesterday reported combined traffic results showing passenger loads fell 1.9 percentage points to 84 per cent last month. Business as measured by revenue passenger kilometres declined in all markets except Southeast Asia.

Cathay said the weaker results were owing to seasonal factors, strong competition and weaker-than-expected demand for its premium cabins.

“May is traditionally one of the slower months for travel and we saw a further weakening in passenger demand last month,” said General Manager Revenue Management Patricia Hwang.

“Year to date our load factor and yield have both been below expectation,” she said, referring to the measure of unit profitability.

Cathay Pacific shares lost ground prior to the monthly traffic report, and came under additional pressure in the afternoon, ending the session 3.2 per cent lower at HK$11.50.

The Airport Authority is set to gazette a new scheme of charges on Friday where the landing and parking fees for aircraft would rise by around 15 to 20 per cent. It is also going to start charging travellers an airport construction fee of between HK$70 to HK$180 per flight from August 1 in order to fund the Third Runway.

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Industry insiders say they fear Hong Kong’s appeal as a tourist destination and transportation hub could drop further with the fee hike, with visitation numbers already declining.

“Cathay’s year-on-year drop is not surprising as it had a high base last year. I don’t expect its traffic for the first half to contract, but full year will depend on how the summer months turn out,” Bocom International analyst Geoffrey Cheng said. “The new Shanghai Disneyland would direct away some traffic. The last quarter would be challenging.”

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Cathay carried 2.8 per cent more passengers in the first five months of the year, lagging a 4.4 per cent increase in capacity.

Shanghai-based China Eastern Airlines also reported May traffic on Thursday, showing a 5.6 per cent rise in number and 13.4 per cent jump in revenue passenger kilometres.