Hong Kong hub puts Cathay in tighter corner than Singapore Air
They are both critically important to their domestic economies, highly regarded by customers and totally reliant on international travel. They are also in deep financial strife and shedding thousands of jobs because of the coronavirus crisis. Cathay Pacific and Singapore Airlines have stood out for over half a century as aviation powerhouses, prestigious brands atop a lucrative market fueled by Asia’s economic boom. The pandemic has severely hurt the pair, but Cathay is likely in a tougher spot, analysts say. Cathay announced Wednesday that it is laying off nearly 6,000 people and eliminating 2,600 vacant positions, which combined amount to about 24% of its total workforce. “In these straitened times, we must focus on a single world-leading premium travel brand -- Cathay Pacific -- complemented by a single low cost leisure travel brand -- HK Express,” Cathay Chairman Patrick Healy said Wednesday, referring to the budget carrier the company acquired last year. Cathay’s cull follows Singapore Airlines saying in September that it was cutting 20% of its workforce, or 4,300 positions, not long after it raised US$8b from a rights issue and loans. Cathay also raised billions of dollars in a restructuring in June that, among other things, resulted in the Hong Kong government getting a stake and two observer seats on its board. Investors welcomed Cathay’s announcement Wednesday. “The worst could be over for Cathay with this restructuring,” said K. Ajith, an analyst at UOB Kay Hian Pte in Singapore. Yet the outlook remains challenging at best, with Cathay warning that it will be operating at well under 50% of pre-pandemic passenger capacity next year. And that’s its most optimistic scenario. Singapore Airlines is in a better position because its staff costs are about 20% lower than Cathay’s, said Ajith. “We’re expecting Singapore Airlines’ earnings to show some improvement in the fiscal year second-quarter, while for Cathay it will be in the first half,” he said. “This improvement in earnings for Cathay will be driven by its cargo business.” Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-10-22/star/hong-kong-hub-puts-cathay-in-tighter-corner-than-singapore-air
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Hong Kong hub puts Cathay in tighter corner than Singapore Air
They are both critically important to their domestic economies, highly regarded by customers and totally reliant on international travel. They are also in deep financial strife and shedding thousands of jobs because of the coronavirus crisis. Cathay Pacific and Singapore Airlines have stood out for over half a century as aviation powerhouses, prestigious brands atop a lucrative market fueled by Asia’s economic boom. The pandemic has severely hurt the pair, but Cathay is likely in a tougher spot, analysts say. Cathay announced Wednesday that it is laying off nearly 6,000 people and eliminating 2,600 vacant positions, which combined amount to about 24% of its total workforce. “In these straitened times, we must focus on a single world-leading premium travel brand -- Cathay Pacific -- complemented by a single low cost leisure travel brand -- HK Express,” Cathay Chairman Patrick Healy said Wednesday, referring to the budget carrier the company acquired last year. Cathay’s cull follows Singapore Airlines saying in September that it was cutting 20% of its workforce, or 4,300 positions, not long after it raised US$8b from a rights issue and loans. Cathay also raised billions of dollars in a restructuring in June that, among other things, resulted in the Hong Kong government getting a stake and two observer seats on its board. Investors welcomed Cathay’s announcement Wednesday. “The worst could be over for Cathay with this restructuring,” said K. Ajith, an analyst at UOB Kay Hian Pte in Singapore. Yet the outlook remains challenging at best, with Cathay warning that it will be operating at well under 50% of pre-pandemic passenger capacity next year. And that’s its most optimistic scenario. Singapore Airlines is in a better position because its staff costs are about 20% lower than Cathay’s, said Ajith. “We’re expecting Singapore Airlines’ earnings to show some improvement in the fiscal year second-quarter, while for Cathay it will be in the first half,” he said. “This improvement in earnings for Cathay will be driven by its cargo business.” Story has more.<br/>
