Struggling Cathay Pacific to Lay Off Staff; Rumors About New CEO Surface

Hong Kong's flag carrier Cathay Pacific will slash its workforce as it tries to grapple with disappointing profits.

The struggling airline is also considering shifting flights to Cathay Dragon as discussed in its two-decade business review sent to its 33,700 employees. The restructuring will "start at the top" and take effect by mid-year, wrote Bloomberg, citing a statement from the airline.

Cathay's lower-than-projected earnings are blamed on the growing rivalry against other premium airlines, as well as the weakening role of Hong Kong as a gateway to and from China. This has been the problem since chief executive officer Ivan Chu took the lead in March 2004. With this, rumors are swirling that Chu might be replaced in the near future.

"If the statement is any indication, it could well be that he may not be there for long," Shukor Yusof, founder of aviation consulting firm Endau Analytics, said in a phone interview with Bloomberg.

"They haven't embraced the changes. They've lacked the vision to grow the company and that has been one of the main reasons for the decline in the company's performance and profit."

A company spokeswoman declined to comment on the matter when asked by Bloomberg.

Despite plans of cutting several job posts, Cathay said that it will also create new positions and redefine existing ones.

"This change will create opportunities, but some jobs will no longer be needed," the airline said in a statement. "Some new jobs will be created and other jobs may be redefined."

The airline is looking to reorganize into seven portfolios, namely operational, commercial, people, customer, finance and strategy, IT, and cargo, wrote Reuters.

Cathay's share price rose 2.6 percent after Reuters reported last week that the business overhaul was close at hand.

Meanwhile, the company will add new flights to Tel Aviv and Barcelona and see the delivery of a dozen Airbus A350 planes.