(Jan 9): Cathay Pacific Airways Ltd aims to cut administrative costs by 20% by the end of 2030, according to people familiar with the plan, as the Asian carrier seeks to protect profitability in the face of increased competition and the rise of artificial intelligence.
Chief executive officer Ronald Lam informed his leadership group and managers this week about his savings goal tackling costs at the headquarter and back offices over the next half-decade, said the people, who asked not to be identified talking about confidential information.
In particular, Lam has asked all departments to identify savings and efficiencies of 5% for this year as Cathay prepares for a slower rate of growth for 2026. The cost reductions will impact non-operational staff, tackling head-office expenses in areas like marketing and administration, in part to make room for investments such as AI, the people also said.
As part of the process, some departments and jobs are being merged, while other employees are being redeployed. A limited number of job cuts for Hong Kong and overseas staff will occur, some of the people said. Cathay has said it plans to hire 3,000 people this year, pushing headcount beyond the 34,000 at the end of 2025.
The Hong Kong flagship carrier’s focus on cost comes as the airline expects to pull back growth this year to single-digits for the first time since the pandemic, even as management seeks to maintain solid profit in the face of rising competition.
Lam said in an interview late last year that the airline was entering a period of “more normalised” growth, and he reiterated at an event earlier this week that the airline would be less aggressive on expansion.
See also: Airlines face US$4 bil equipment charge as spectrum sale looms
Cathay spokesman Andy Wong said on Thursday that the airline is “dedicated to continuously assessing and refining our operations and organisation to ensure optimal delivery of our long-term strategic goals.”
That reset comes after a year of rapid expansion, including the launch of 20 new destinations. Analysts expect Cathay, which includes its main brand plus low-cost HK Express, to grow capacity by 7.7% this year.
Efficiencies that the airline has already implemented include merging its daily and planning operations teams, and restructured in areas like sales. Last year, the airline combined regional responsibilities such as Southeast Asia and Australia, and relocated its Americas headquarters from San Francisco to Vancouver.
See also: Flights to resume across Caribbean after US raid in Venezuela
Cathay’s efficiency drive comes as employee numbers approach the level last seen at the end of 2019, even as capacity hasn’t fully returned to the pre-Covid rate. Unit costs per available seat kilometre also remain higher than before the pandemic.
Cathay Group said at the end of last year that it expects 2025 annual profit to be higher than the HK$9.88 billion (US$1.3 billion or $1.7 billion) from a year earlier, which would mark the first year-on-year growth in a decade. In contrast, rival Singapore Airlines Ltd has seen its profit erode on intensifying competition and mounting losses at Air India Ltd, in which it has a 25.1% stake.
“Cost discipline will be critical for Cathay to sustain profitability as capacity growth slows,” Eric Zhu, a Bloomberg Intelligence analyst, said. “The group must also manage spending proactively to offset further pressure from declining passenger yields amid rising competition as foreign carriers add capacity.”
The consolidation has also seen personnel redeployed within Cathay’s businesses and at controlling-parent Swire Pacific Ltd, which took the rare step of cutting dozens of jobs late last year.
Uploaded by Magessan Varatharaja
