Asia’s largest international airline Cathay Pacific (CPCAY) is set to shed 600 jobs as it undergoes its largest shakeup in decades.
Cathay’s 2016 figures, posted March, showed the first loss in eight years for the Hong Kong-based carrier, in part on the back of an ill judged fuel-hedging bet, Bloomberg reports. CEO Rupert Hogg, who Cathay promoted to the position on May 1, described the job cuts as the first step in “the transformation of our business.”
“We’ve had to make tough but necessary decisions for the future of our business and our customers,” Hogg said in the statement. “We will have a new structure that will make us leaner, faster and more responsive to our customers’ needs.”
Pilots, cabin crew and other frontline staff will be spared from the cull, according to Cathay, which employs around 30,000 people. Some 190 management positions—or about a quarter of the airline’s managerial contingent—have been slated for the ax.
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Cathay, Singapore Airlines (SINGY) and other premium Asia-Pacific carriers face intense pressure to adapt in the face of competition from low cost rivals, and from carriers from the Chinese Mainland and Middle East. Like Cathay, Singapore Air announced “a wide-ranging review” of its operations in the wake of publication of surprise losses last week.
Cathay stocks rallied as much as 3.7% on Monday at news of the restructuring. Andrew Lee, an analyst at the Hong Kong office of investment bank Jefferies told Bloomberg: “Everyone is becoming more and more cost conscious. To be able to survive, they need to control costs. I think it is a start.”