[Cathay Capital Injection] Cathay Pacific intends to push the top salary reduction and employee voluntary unpaid leave plan

Financial News

Written by: Huang Haolin

2020-06-09 13:42

Cathay Pacific (0293) suspended trading and announced a 39 billion yuan capital restructuring proposal. In addition, it also announced a short-term plan to implement a new round of senior salary cuts and a second round of voluntary unpaid leave plans for employees.

According to the company, in the long run, all aspects of the business model will also be reassessed, and the management team will recommend the best size and form of the group to the board of directors by the fourth quarter of 2020 to meet Hong Kong’s air travel needs while maintaining Cathay Pacific’s financial position is at a sound level and fulfills its responsibilities to shareholders. Cathay Pacific said that after considering the market prospect and cost structure, it will inevitably optimize the capacity planned for the future compared with the pre-crisis plan.

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Cathay Pacific: the most serious challenge ever

Cathay Pacific also cited the latest report from the International Air Transport Association (IATA) that the new coronavirus crisis will lead to a sharp decline in global air passenger revenue of US$314 billion in 2020, a 55% decrease from 2019; Most notably, as high as US$113 billion, passenger demand fell by 50% year-on-year. Industry analysts generally expect that the pace of recovery will be very slow and the recovery period will be long. The International Air Transport Association predicts that the demand for international passenger transport will not return to pre-crisis levels until 2023 at the earliest.

Cathay Pacific said that overall, tourism demand is not expected to recover substantially for a long time, and the aviation industry is facing the toughest challenge ever witnessed by the company.

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