Coronavirus: Hong Kong Airlines to slash hundreds more jobs, focus on cargo in bid to survive pandemic

The struggling carrier, long beset by cash-flow problems, will temporarily fly only eight Airbus A330 jets, with an emphasis on air freight
The looming redundancies are just the latest in a series of cutbacks that have dramatically reduced the number of employees

Coronavirus pandemic

Danny Lee

Published: 12:41pm, 7 Jun 2021

Why you can trust SCMP

Hong Kong Airlines is preparing to cut hundreds of more jobs and temporarily carry only cargo on its passenger planes under its latest pandemic-survival plan, the Post has learned.

The new blueprint drawn up by the embattled all-Airbus airline calls for grounding its entire fleet of A320s with only eight A330 jets flying in the interim and prioritising cargo over passengers, according to two sources familiar with the plan.

Once positioned to challenge Cathay Pacific Airways, the airline has long been in the grips of a cash crisis that has engulfed both the company and its controlling shareholder, the now-bankrupt mainland China conglomerate HNA Group.

The fresh cuts represent a further blow for anxious and weary staff, who have endured pay reductions of up to 60 per cent during the Covid-19 crisis. In December last year, the carrier cut 250 flight attendant jobs after culling 400 across various departments in February.

Hong Kong Airlines will be flying just eight of its jets as it attempts to weather the coronavirus pandemic. Photo: Nora Tam

This April, it offered exit packages to pilots, warning there was no guarantee their work visas would be renewed.

About 120 pilots were expected to be retained to operate revenue-generating air freight flights, sources said. At the airline’s peak, it employed about 650 pilots.

It is unclear how many flight attendants will be retained or how consequential the impact of downsizing will be on ground and office staff, and associated businesses.

The latest reshuffle means the ailing carrier will be operating a fleet 80 per cent smaller than before the pandemic began.

A source at the airline said the existing situation had made further cuts inevitable, as there was no immediate recovery foreseen in international travel, upon which it wholly relied.

The airline issued a notice to staff on Monday, saying internal restructuring was necessary to help achieve a more effective organisation. Departments could be merged and job responsibilities consolidated, subject to review by the staff’s department head, while more information would be made public once details were finalised, it said.

“As we work through the new operational and manpower requirements internally, we ask that you remain calm and refrain from speculation until we communicate our plans in the coming days,” the notice said.

The company said it had been severely affected by the pandemic and the airline had tried to stabilise business twice but failed.

The cost-saving measures it adopted were not sustainable in the long run as the organisation was too large to support a smaller operation, the notice said.

Hong Kong Airlines slapped with second lawsuit in a week over alleged non-payment of dues

The airline industry has been one of the hardest hit by the pandemic, with strict health and quarantine requirements triggering a collapse in demand for travel.

The Asia-focused airline operates in a region with the most restrictive travel rules in the world, and low vaccination rates and fresh Covid-19 variant flare-ups have made a recovery harder to plan for in key markets such as Japan and Thailand.

At the start of 2020, before going through multiple redundancy exercises, Hong Kong Airlines employed 3,481 people and operated 39 planes. As of December, the airline’s workforce stood at 2,300, down 34 per cent from its peak.

Airbus fleet data as of April shows the airline operates a dozen short-haul A320s, two A350 aircraft for long-haul operations – currently impounded by Hong Kong’s airport operator over non-payment of fees – and 16 A330 planes.

Hong Kong Airlines to cut 250 flight attendants in carrier’s latest redundancies

The Post has contacted the airline and the Transport and Housing Bureau seeking comment.

Cathay Pacific, Hong Kong’s largest airline, culled 5,900 jobs last October and shut down regional carrier Cathay Dragon. The group has survived largely due to a government-led bailout worth HK$39 billion (US$5 billion).

Hong Kong Airlines’ bailout pleas were snubbed due to its pre-existing financial concerns that had been on the radar of the government since December 2018.

In December 2019, the government forced the airline to raise more cash in a matter of days, which it did, to avoid having its operating licence suspended or even revoked.

The airline is currently connected to two lawsuits involving alleged non-payments tied to the HK$1.8 billion Hong Kong Airlines Aviation Training Centre. Hip Hing Construction Company last month lodged a claim in the High Court totalling HK$300 million with interest.

Meanwhile, it emerged last week that 67,400 creditors were chasing 1.2 trillion yuan (US$187 billion) from bankrupt HNA, according to Reuters, which cited a person who attended the conglomerate’s online meeting for creditors on Friday.

This article appeared in the South China Morning Post print edition as: Hong Kong Airlines to slash more jobs and focus on cargo