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Cathay Pacific
This Week in AsiaOpinion
Neil Newman
Neil Newman

Abacus | Cathay Pacific’s staff cut won’t be the deepest for Hong Kong

  • The first cut isn’t the deepest; job losses at the airline will provide cover for even bigger employers to make similar moves
  • While Cathay is a big name, its staffing numbers are dwarfed by other Hong Kong names such as HSBC, Swire and CK Hutchison

Reading Time:2 minutes
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Cathay employees at the Hong Kong International Airport. Photo: K. Y. Cheng
Neil Newman
One of the many reasons that Hong Kong is attractive to big international businesses – and Tokyo isn’t – is that you can easily fire people during a downturn. As the French banks found after the Global Financial Crisis and the Tohoku earthquake and tsunami, moving their bloated operations from Tokyo to Hong Kong with a view to downsizing was cheaper than trying to do it in Japan.
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It was no surprise then that Cathay Pacific was able to start laying off swathes of its staff as the airline industry globally faces its greatest ever challenge to recover from the crisis caused by the coronavirus. Air travel will never be the same again, in terms of both ease of movement and cheap ticket prices. Gone are the days of flying to Tokyo for the weekend at less than the price of a Friday night bar bill in Lan Kwai Fong.

Strategically, Cathay Dragon was a cut that was waiting to happen as it was incorporated in China. With Cathay incorporated in Hong Kong, it could not be consolidated without it being viewed internationally as a cross-border takeover.

The Cathay Pacific job losses hit Hong Kong morale very hard on Wednesday even though it was well anticipated and certainly in terms of its share price, it appears to have been discounted.

03:43

Cathay Pacific Airways announces its largest job cuts in history

Cathay Pacific Airways announces its largest job cuts in history

However, it wasn’t the first employer to fire staff in 2020 and it certainly won’t be the last. The city should be bracing itself for bigger job losses. No high profile employer wants to be first to go to the press announcing deep cuts, but once it has happened mass redundancies become less newsworthy. Expect others to follow suit.

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