Cathay Pacific Group will cut 8,500 jobs, in a HK$2.2 billion ($284 million) restructuring exercise that will also see the Cathay Dragon brand cease operations effective immediately. As part of restructuring efforts, the group will eliminate 8,500 positions, or about 24% of its existing headcount. Of these, 2,600 are currently unfilled, owing to cost reduction initiatives in recent months including a hiring freeze and the closure of certain overseas bases. The majority of the staff — more than 5,000 — to be axed will be Hong Kong-based employees. Cathay did not disclose which jobs were affected. As for the closure of Cathay Dragon, Cathay states it intends to take over the majority of the carrier’s routes, together with its low-cost arm HK Express. Data shows that Cathay Dragon only operates five routes now, the majority of which are to mainland China. Before the coronavirus outbreak affected its network, the carrier — which began life as Dragonair — flew a network of more than 50 points across mainland China and Asia, including to Japan, the Philippines, India as well as Malaysia. News of Cathay Dragon’s closure ends months of speculation about the carrier’s fate. As recent as June, the group was mum about whether or not the carrier might be absorbed into either Cathay or HK Express’ operations. The restructuring announcement caps off a business model review that began in June, shortly after the carrier unveiled a HK$39 billion recapitalisation plan. The carrier said then that by the fourth quarter of the year, its senior management team will make recommendations to its board on the “optimum size and shape” of the group. Cathay Pacific Group reported a staggering operating loss of HK$8.7 billion for its half-year financial results, amid plunging travel demand amid the coronavirus outbreak. It has since parked about 40% of its fleet in long-term storage overseas as well as deferred delivery of its Airbus aircraft. Cathay also recently said it only expects to operate at half capacity in the coming year, given that recovery will be slower than expected.

Source: Cirium

Wizz Air chief executive Jozsef Varadi sees a "major opportunity" for his carrier to expand into the vacuum left by retrenching competitors amid the Covid-19 crisis. During an online broadcast by the UK's Aviation Club, Varadi said Wizz had been "waiting for a crisis" to emerge since the financial crash of 2008/9, given the role of recessions in shaking out weaker players. "Of course we didn't know it would be Covid," he adds, "but we knew any crisis would be an opportunity… It sorts winners from losers." Varadi's confidence that Wizz will emerge as the former appears bulletproof. "This is a commodity business, and the lowest cost prevails," he says, opining that his airline can offer the lowest fares in Europe – an advantage he expects the pandemic to only accentuate. This is on the basis that, in contrast with many carriers, Wizz has continued to accept new aircraft throughout the crisis, taking 12 Airbus jets since March, and with a further 40 due for delivery over the next 15 months. This will continue to bring down the age of the fleet and reduce costs. Many airlines have meanwhile been slashing aircraft deliveries as they look to cut all but essential spending. "Not only are we using our unit cost [advantage] versus the industry, but the industry is going to increase its unit cost with an ageing fleet," says Varadi. A younger, more efficient fleet has, he notes, the double benefit of bolstering the carrier's environmental credentials, something of growing importance to passengers. Continued market diversification is another of Wizz's core strengths, Varadi contends. Whereas some airlines have withdrawn to their key routes, Wizz is flying to 85-90% of its usual destinations, axing flights only when government restrictions make operations effectively impossible – "and we will be resuming the balance when we can, from a restrictions point of view". Wizz's capacity is at about 45% of last year's levels, but it has launched more than 200 new routes in the past five months, and opened 12 bases."Some of our competitors are contracting in a big way and leaving a market vacuum behind them – of course we make sure that we take advantage of that," says Varadi. In addition, the carrier's Abu Dhabi unit, a joint venture with the city-state's government, has recently received its air operator's certificate and is preparing for the start of operations. Securing financing has been a challenge for many carriers, but, again, Varadi believes Wizz has in this area been able to plot a smooth course amid the crisis. Other than securing one support loan from the Bank of England, something he describes as "more like testifying our standing in the market", the carrier has not taken any significant liquidity measures. This "shows the resilience of business model", Varadi argues, adding: "We didn't need to raise equity or borrow money."
Again, he draws a contrast with competitors. Many, Varadi suggests, will not make it to the other side of the crisis. Although some will be able to access government support, this is not available to the majority. "There will be less players in the industry," Varadi predicts. "This is not rocket science. Out of 3,000 or so flying around the globe, not 3,000 are going to survive."

Source: Cirium

British Airways' new chief executive Sean Doyle is pressing the UK government for a rapid rollout of pre-flight Covid-19 testing at airports as a means of eliminating the requirement for passengers to quarantine. "We think pre-departure testing is the way forward," he said during the Airlines 2050 conference today. "There is a risk we will not see beyond this crisis if we do not get people flying again." Highlighting evidence that quarantine of just one week is enough to deter passengers from taking flights, BA is focused on removing them altogether. To this end, the IAG-owned airline is urging the establishment of a pre-flight testing pilot scheme which can then be rolled out on a wider scale – but complains of being left in the dark as to the authorities' strategy. "At the moment we are not getting any support or action, and we are not hearing from government what they're thinking," says Doyle. BA is particularly keen to reduce the need for quarantines on transatlantic routes, but this will require an agreement between the US and UK governments. The carrier's US network has shrunk from 30 cities pre-pandemic to less than half that now, Doyle notes, while its 12 daily flights to New York have reduced to just two, often carrying fewer than 200 passengers pay day. Doyle replaced Alex Cruz as BA chief last month, having previously headed up Irish IAG stablemate Aer Lingus. Speaking as part of the same event, following Doyle, UK transport secretary Grant Shapps outlined his hopes that a test-and-release scheme would be ready in around six weeks' time. This would involve Covid-19 testing of self-quarantined passengers one week after their arrival back in the UK. He dismisses the viability of pre-flight testing because it "may wrongly tell people they are not bringing Covid back with them". Launched last year, Airlines 2050 is hosted by FlightGlobal in partnership with industry groups Airlines UK, BAR UK and IATA.

Source: Cirium