- Hong Kong Airlines is expected to officially announce the plan after the close on Wednesday
- The company lost HK$9.9 billion ($1.3 billion) in the first half of the year
- The Swedish government restricted the usage of Chinese telecommunications equipment manufacturers Huawei and ZTE
The South China Morning Post reported that Cathay Pacific will lay off 6,000 employees and end its Cathay Dragon brand as part of a strategic assessment to deal with the unprecedented damage caused by the new coronavirus pandemic. The SCMP said the Hong Kong airline is expected to officially announce the plan after the close on Wednesday.
According to the report, the company initially planned to lay off about 8,000 employees worldwide, but after government intervention, the layoff rate fell to 18% of the total number of employees, including about 5,000 jobs in Hong Kong.
The company lost HK$9.9 billion ($1.3 billion) in the first half of the year, and has been working on the assessment that management presented to the board on Monday.
Cathay Pacific said in September that unless it can adapt to the new travel market, it will not survive. On Tuesday, a Cathay Pacific representative did not immediately respond to an interview request.
Due to the escalation of travel restrictions, people are reluctant to fly, and Cathay Pacific’s passenger traffic has plummeted, with a minimum of 500 passengers per day in April and May.
The company said on October 19 that it will only operate 10% of its pre-epidemic passenger capacity by the end of this year, and it is expected to operate much less than 25% of its passenger capacity in the first half of 2021.
Cathay Pacific implemented a HK$39 billion capital restructuring plan and completed the plan in August, allowing the Hong Kong government to hold 6.08% of its shares and set up two observer seats on the board of directors. In an attempt to alleviate the impact of the loss of passengers, the company is still renegotiating with Airbus and Boeing.
Earlier this year, as the monthly loss increased to as much as HK$3 billion, Cathay Pacific implemented an unpaid leave program, while cutting salaries and closing its overseas employee bases.
Company chairman Patrick Healy said in August that these cost control measures were not enough. Cathay Pacific’s share price in Hong Kong has fallen 43% this year and fell 1.4% on Tuesday.
Sweden Bans Huawei and ZTE in 5G Network
In order to build 5G networks for safety purposes, the Swedish government restricted the usage of Chinese telecommunications equipment manufacturers Huawei and ZTE.
After the armed forces and the security service analyzed China as one of the greatest risks to Sweden, the authorities said that a such decision was made.
The Chinese Embassy responded that some people in Sweden have hyped up the equipment of Chinese companies, such as Huawei and ZTE, and constituted a “national security threat” argument. China firmly opposes the abuse of the concept of “national security.”
“We are . . . firmly opposed to the exclusion of specific companies from specific countries, and to the suppression of Chinese companies on groundless charges,” an embassy spokesperson said in a statement.