Cathay to cut HQ costs by 30 pct after annual loss - memo

Jamie Freed

SYDNEY, March 16 (Reuters) - Cathay Pacific Airways Ltd

plans to cut the cost of middle and senior management

roles at its Hong Kong head office by 30 percent, according to

an internal memo seen by Reuters, a day after the airline

reported its first annual loss since 2008.

The memo, sent by chief executive Ivan Chu to staff on

Thursday, said the firm needed a "simplified, more agile and

smaller" head office structure, and that the "re-organisation

will inevitably result in some roles being made redundant."

Cathay Pacific reported its first full-year loss on

Wednesday since the 2008 global financial crisis, dragged down

by overcapacity, a strong Hong Kong dollar and mounting

competition from mainland Chinese carriers.

"The outlook remains challenging and we do not expect to see

any fundamental shift due to the structural issues we are faced

with," the memo said. "Our airlines have not seen a review of

the business or restructured our teams for over 20 years. We

cannot afford to stand still."

A Cathay spokeswoman confirmed the memo was accurate, but

said the company would not know the final number of role changes

or staff affected by the 30 percent cut in the cost of middle

and senior management roles until later in the process.

Cathay on Wednesday said it would grow its capacity by 4 to

5 percent this year despite the weak operating environment.

Chu on Thursday told staff there would be no "people cost

reductions" in customer facing roles including pilots, cabin

crew and customer service.

But he said a new head office management structure would be

announced in June for the company, which has 33,700 employees

globally. The company's website said more than 3,000 of its

staff are based in its head office.

The airline in January said it would cut jobs and consider

shifting some flights to its short-haul arm, Cathay Dragon,

after completing a strategic review. But it did not outline the

extent of the job cuts or other strategic initiatives, such as

increasing ancillary revenue at the time, to the disappointment

of analysts who had expected more detail.

(Reporting by Jamie Freed; Additional reporting by Brenda Goh

in SHANGHAI; Editing by Elaine Hardcastle)