Cuts will not affect Cathay Pacific’s aviation safety and services, says chief executive

The chief executive of Hong Kong carrier Cathay Pacific Airways has pledged that aviation safety and services will not be compromised as the airline aims to cut 30 per cent in management staff costs in a bid to revive its ailing business.

While admitting that some layoffs will be “unavoidable” in what he described as the airline’s biggest restructuring in 20 years, Ivan Chu Kwok-leung said those who have performed well would be retained.

Cockpit and cabin crew are expected to be spared the axe, with Chu saying the airline will in fact recruit more of such employees as it explores new destinations and increases frequencies of flights on popular routes.

“We definitely will not cut any costs that concern aviation safety and customer services. In fact, we have plans to improve our in-flight food and beverage services, especially for the business class,” Chu said in a Metro Broadcast radio programme yesterday.

“We will be increasing the flight frequencies on many routes. That is very important for our competitiveness.”

Chu did not make clear how many management employees would be laid off, and how many would see smaller pay cheques.

Cathay Pacific reported a loss of HK$575 million for last year, with revenue falling 9 per cent to HK$92.75 billion. It posted HK$13 billion in fuel hedging losses over the 18 months to June 30 last year.

The airline unveiled a three-year plan in January to revive its business, investing in technology and a fuel-efficient fleet to save costs, and redeploying its staff.

Chu said that cargo and passenger demands had been weak, as a result of the economic situation on the mainland as well as the depreciation of the yuan.

Additionally, more mainland airlines are now flying to foreign destinations such as Europe and the US, Chu said, making the competition tougher. Cathay had already been forced to reduce its fares, he added.

The airline would explore adding more direct flights to different destinations, he said, as passengers would be willing to pay more to avoid the hassles from transit. He said he is optimistic about cargo demands in the future, but passenger demands will be “grim”.

According to Dora Lai Yuk-sim, chairwoman of the Cathay Pacific Airways Flight Attendants Union, airline management said in a recent town hall meeting with staff that management personnel would be sacked first.

She said that the management would let go of non-management level office staff if the first move was not sufficient to cut costs.