Cathay Pacific looks set to cut overseas jobs, as internal memo tells staff to prepare for restructuring

Cathay Pacific Airways has issued its clearest warning yet that it will shed jobs in its overseas operations, as it presses on with restructuring efforts to claw its way back into profitability.

A source familiar with the airline’s plans said there would be changes involving the “consolidation” of overseas sales, marketing, cargo and airport-based operations.

Cathay Pacific has about 7,600 employees based in 100 locations outside Hong Kong, but the carrier declined to reveal how many would be affected or which markets they were from.

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It would only confirm that it sent an internal memo to employees based outside the city last week.

An airline spokeswoman said: “An internal memo has been shared with the employees of the Cathay Pacific Group as our regional and country teams start to communicate and, where necessary, consult their local teams on the restructuring.

“This work will continue over the coming months.”

Cathay’s move comes about one year after it said in its company magazine, The Journey, that it was “starting a comprehensive review of our outports – how they work with [our headquarters], which will have an impact on their own organisational structures”.

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This January, its human resources head Tom Owen said in the same magazine that he was aware it was “an unsettling time for outport people and we do expect to see some changes to the structure during 2018”.

Trimming the workforce is part of the airline’s efforts to slash HK$4 billion from its books to reverse two years of back-to-back losses.

About HK$1 billion is expected to come from scaling back pilots’ benefits and allowances, but the airline has yet to reach a deal with aircrew.

Last May, Cathay slashed 600 head office jobs as a first step in a three-year exercise and spent HK$224 million on restructuring.

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Chief Financial Officer Martin Murray, during a results briefing last August, said the impact of further job cuts “won’t be anything like a material number” on the company’s balance sheet, suggesting redundancies would not be on the same scale as those in the head office.

A source said the coming job cuts would likely affect markets with the largest number of staff – such as Australia, the United States and Britain, where some employees confirmed they had been briefed by the head office.

The source said some members of staff in one country had already been shown a chart of what the restructuring would entail, but with no details given on who would fill specific roles.

“Restructurings and redundancies are inevitably lumpy and not perfect. Some departments will end up with a shortage while others could still be trimmed. There’s usually smoothing out in the medium-term,” said Will Horton, a Hong Kong-based airline analyst at CAPA Centre for Aviation.

The CAPA analyst said the savings on staff costs was one benefit but the airline would see “bigger gains” by having a more efficient business.

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Cathay Pacific lost HK$1.25 billion last year and HK$575 million in 2016, largely brought about by intense competition from mainland Chinese rivals and budget airlines and poor long-term speculative bets on which way fuel prices would go.

Last year, after the job cuts, it capped staff costs to HK$19.9 billion – 20 per cent of its operating expenses and one percentage point lower than the previous year.

However, the airline said last month it would hire 1,200 people this year, mostly frontline staff like cabin crew and pilots to fuel its further expansion.