Cathay Pacific declines ESS subsidy, leading to layoffs speculation

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The global pandemic has hit businesses hard, but perhaps none has been harder hit than the airline sector.

Hong Kong’s flagship carrier, Cathay Pacific, has not escaped the brutal impact of COVID-19 and the way it has virtually put a halt to international travel. There has been an estimated drop of 99% to its air passenger traffic.

Most recently, the airline has declined to take advantage of the second tranche of the government’s Employment Support Scheme (ESS) – leading to speculating that it is actively considering layoffs.

One of the conditions of an organisation accepting the ESS is that it must not retrench staff for that specified timeframe.

The parent company’s decision to decline the government assistance opens the door for retrenchments as early as next month for both Cathay Pacific and Cathay Dragon.

However some of the group’s subsidiaries, such as HK Express, Air Hong Kong, Cargo Terminal, the Hong Kong Airport Service and Cathay Pacific Catering Services will be applying for the second round of coronavirus relief.

“After careful consideration, we have decided that Cathay Pacific and Cathay Dragon will not submit applications to the scheme,” Andy Wong, the airline’s general manager of corporate affairs was reported as saying in the SCMP.

“Different industries and businesses have been affected to varying extents by Covid-19, with aviation and hospitality being some of the most severely impacted. The Cathay Pacific Group is no exception to this, which is why some subsidiaries will be applying to the scheme,” he added.

Cathay Pacific and its subsidiaries – including catering and those involved in its frequent flyer programme – employ around 33,000 in total.

“We continue to make decisions based on the long-term interests of the company and the Hong Kong aviation hub, to protect our future and as many people as possible. We will share more details on our plans when available,” Wong said.

Last Thursday, Singapore Airlines announced it is cutting around 4300 across its airlines. Taking into account a recruitment freeze, natural attrition, and the take up of voluntary departure schemes, the potential number of staff impacted will be reduced to about 2400 in Singapore and in overseas stations.

Also read: SIA Group to reduce headcount by 4300

While in other parts of APAC, Australia’s flagship carrier Qantas announced in August that 8500 jobs – 30% of its pre-COVID workforce – would be cut and one-third of Virgin Australia’s 9000 jobs will be axed. It’s a similarly grim picture for most airlines worldwide.

Earlier this month, Cathay Pacific parked dozens of its aircraft in Alice Springs in central Australia, signalling its attention to ground most of its 180-strong fleet for the foreseeable future.