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Cathay pledges to slash staff costs after loss
[HONG KONG] Hong Kong's troubled flagship airline Cathay Pacific said Friday it would slash staff costs by 30 per cent as part of a major overhaul as it struggles to repair its bottom line.
The announcement came two days after the firm posted its first annual net loss in eight years, saying it had been hit by intense competition and a drop in demand from business travellers.
Cathay had already revealed its biggest shake-up in 20 years in January, saying some jobs would go but providing little detail.
Analysts had said the company needed to reveal more about its restructuring plans to encourage investor confidence.
Its stock in Hong Kong closed up 1.44 per cent Friday after the latest news.
Cathay said middle and senior management at its Hong Kong head office would be targeted, although it gave no further indication of how many jobs could be axed.
"It is clear that there is a need for an organisational structure that will allow the Cathay Pacific Group to succeed," it said in a statement.
The firm added that it was seeking to create a "leaner, simpler structure" and that management changes would be announced in June.
The move is part of a three-year "transformation programme" designed to breathe new life into the airline.
Cathay has been struggling despite an expansion of international air travel in the region as lower cost carriers, particularly from mainland China, eat into its market share.
The airline is also losing premium travellers as it comes under pressure from Middle East rivals that are expanding into Asia and offering more luxury touches.
That has led to promotional prices for Cathay's top tickets as they are sold to leisure travellers.
Its US$74 million net loss in 2016 reversed a US$773 million profit in the previous year, with chairman John Slosar warning 2017 would be similarly "challenging".
It was the firm's first annual loss since 2008 at the height of the financial crisis.