Cathay Pacific Group has closed its regional subsidiary brand, Cathay Dragon, as part of a wider restructuring to secure the Hong Kong-based airline's future, amid the severe impact of Covid-19-related restrictions on air travel.
In a news release this morning (October 21), the airline announced Cathay Dragon will cease operations immediately, noting "it is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by Cathay Pacific and HK Express, a wholly-owned subsidiary."
The Cathay Dragon website and online offerings have already been integrated with Cathay Pacific's.
The new restructuring measures include cutting roughly 8,500 positions, or 24% of the Group's headcount. This equates to 5,900 actual jobs (5,300 in Hong Kong and 600 globally) with the rest eliminated through a recruitment freeze and natural attrition.
Other elements include changes to service conditions and remuneration for cockpit and cabin staff, continued executive pay cuts throughout 2021, a freeze on salary increases and no discretionary bonuses for all employees.
All these changes are expected to reduce the airline's cash burn by approximately HKD$500 million (US $64.5 million) per month, as passenger traffic has collapsed by more than 98%. In June, the Hong Kong government introduced an HKD$39 billion (US $5 billion) bailout package for the airline, which continued to burn between HKD$ 1.5 billion (US $193.5 million) and HKD$2 billion (US $258 million) per month.
Cathay Pacific chief executive Augustus Tang said: “The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the Group to survive. We have to do this to protect as many jobs as possible, and meet our responsibilities to the Hong Kong aviation hub and our customers."
Goodbye Cathay Dragon
Tang also paid tribute to the Cathay Dragon brand, stating that over 35 years it "has earned a well-deserved reputation for excellence, thanks to its outstanding service and distinct hospitality, delivered by a remarkable team."
He continued: “Whilst this is a difficult time, we are a resilient Group and a proud Hong Kong brand. I believe in this plan and I know we will prevail. We remain absolutely confident in the long-term future of Cathay Pacific."
While 'Cathay Dragon' itself is only four years old, it originally began as Dragonair in 1985 and for part of its history came into direct competition with Cathay. By the early 2000s, as Cathay began securing more routes in China, Dragonair aggressively ramped up its marketing (with help from DDB, it's agency at the time) to highlight its in-flight services and fleet upgrades.
When Cathay acquired Dragonair in 2006, it let go Dragonair's marketing team in favour of a Cathay-led group and moved the Dragonair brand over to its own incumbent creative (McCann) and media (UM) agencies at the time.
Eventually in 2016, Cathay rebranded Dragon as "Cathay Dragon", marked by an interesting wedding campaign that featured real Chinese couples getting married on board at 35,000 feet, to symbolise the closer ties between the two airlines.
Cathay Pacific's brand and marketing chief declined to comment for this article on future marketing impact or initiatives.