Cathay moves forward on layoffs as economy slows

The recent turbulence at Cathay Pacific may have implications for airfreight, as Asia’s biggest cargo carrier announces layoffs and cost-cutting actions to accommodate what it’s CEO, Ivan Chu, termed the “new normal.”

Following a meeting of the carrier’s leadership, the Hong Kong-based carrier made an announcement that, “some jobs will no longer be needed.” By way of explanation, Chu added that “the competition is here to stay.”

Changes at Cathay have been anticipated since late 2016, when weak sales prompted Chu to concede that “very tough” conditions necessitated changes in strategy. He noted that the weak global economy from earlier in the year had forced firms to cut spending. Cathay has benefitted from China’s precipitous growth in recent decades, but changes in supply chains and a slowing mainland economy are now playing out in aviation.

Compounding economic malaise, low-cost carriers and competition from the Gulf have Cathay on its heels. Also, ultra-long-haul jets, such as the 787 and A350, have opened up longer routes that threaten to eliminate the old hub model that had kept Cathay in the black.

“This is not a short-term crisis, but one that will impact us over the long term – and it will require us to do things differently,” Chu told the publication Cathay Inside. “In recent years, we have been working hard to increase our productivity and keep our underlying cost base – that is, costs without fuel – competitive. We’ve had some success, but we need to do more.”

Key changes are expected to be implemented by mid-year, he added.

Those interested in learning more about the changing air freight landscape in Asia should join us at Cargo Facts Asia in Shanghai, 25 – 26 April, where a session will be devoted to the topic.  To register, or for more information, go to CargoFactsAsia.com.