Cargo downgraded at Cathay, Singapore
LOSS-MAKING Cathay Pacific has markedly downgraded its cargo business whilst also axing 600 jobs at its Hong Kong head-office, writes Nigel Tomkins.
The announcement comes as Singapore International Airlines Cargo (SIA Cargo) has also decided to consign its cargo division back to the control of the parent organisation.
In Hong Kong, under a tough new recovery scheme, the iconic Cathay airline group has decided to relegate its cargo division – dispensing with the role of cargo director – and making airfreight answerable instead to ‘general management’.
In a parallel development, SIA Cargo will in future be under the control of the mother business, the company admits.
Cargo jobs will be axed in Singapore and in Hong Kong, although no details have yet been released.
SIA Cargo’s already reduced seven B747-400 freighter fleet will remain and the freight department will continue to manage the passenger division’s aircraft belly space for SIA, as well as for Silk Air and low-cost airline Scoot, the company admits.
SIA Cargo famously became a separate division of SIA in 2001 when it was strategically disengaged from the passenger business into a ‘stand-alone’ company within the Group and became a world leader and trendsetter in the enhanced role.
Structural changes lead to downgraded status for cargo
But current structural changes in the airfreight and airline business are responsible for the dramatic re-think says SIA’s management.
In Hong Kong, which has seen large chunks of traffic migrating to mainland Chinese rivals, the airline business – which comprises the Cathay Pacific and Cathay Dragon group of companies – has been haemorrhaging cash, losing up to US$0.39 billion in the past year.
The Hong Kong cull is part of a major transformation designed to make Cathay more effective “by improving the speed and quality of decision-making and putting a greater focus on its customers”, asserts a Cathay Group company statement.
The Cathay cuts are the first step in a three-year programme, announced earlier this year, which is aimed at turning around losses and are the first major task of new chief executive Rupert Hogg, who replaced Ivan Chu Kwok-leung earlier this month.
The Cathay head-office redundancies will mostly affect senior, middle management and non-managerial roles at the group’s Hong Kong base. Around 190 managers and 400 non-managerial roles will go, representing 25 per cent of management and 18 per cent of non-managerial positions respectively, the statement adds.
“The majority of affected employees will be informed of changes or a cessation of their roles over the coming weeks, with most of the restructuring completed by the end of 2017,” Cathay adds.
No frontline employees, pilots or cabin crew are directly affected by the cuts, but they will be asked to deliver greater efficiencies and productivity improvements.
Hogg states: “Changes in people’s travel habits and what they expect from us, evolving competition, and a challenging business outlook have created the need for significant change.”
He believes the company will have a new structure “that will make us leaner, faster and more responsive to our customers’ needs.”
All Cathay employees whose roles will become redundant in the new structure are to receive a severance package including up to 12 months’ salary, extended medical benefits including counselling and support, and additional and extended travel benefits.
Cathay will also offer all outgoing employees job search support, job application support and interview training.
The company statement admits that, in line with its head-office reorganisation, Cathay is dramatically restructuring its cargo department, starting with the removal of the role of cargo director.
Instead, the commercial and planning cargo functions will now report to the head-office-based director of what is described as the ‘commercial and cargo’ department and will be overseen by the company’s chief ‘customer and commercial officer’. The cargo services function will report to the company’s director of service delivery.