(Yicai Global) Oct. 21 -- Cathay Pacific Airways said it will close its regional carrier Cathay Dragon, with the loss of about 8,500 jobs, or about a quarter of Cathay Pacific’s total headcount. The company’s shares rose.

Cathay Pacific's board of directors has approved the unit’s closure, the Hong Kong-based company saidin a stock exchange filing today.

The move is part of Cathay Pacific’s cost-cutting efforts after it and other airlines took a hit as a result of global travel restrictions and a loss of consumer confidence amid the coronavirus pandemic. The firm lost HKD9.9 billion (USD1.28 billion) in the first half after revenue almost halved to HKD27.7 billion.

“The Covid-19 pandemic has brought severe challenges to the aviation industry,” Cathay Pacific said. “The company’s management team has been flexibly responding to this extremely difficult situation.”

Shares of Cathay Pacific [HKG: 0293] jumped as much as 6.6 percent today before closing 2.3 percent higher at HKD5.85 (75 US cents).

Cathay Pacific and its subsidiary Hong Kong Express Airways will take over most of Cathay Dragon's routes as the latter ceases operations today.

More than 60 percent of the jobs to go are based in Hong Kong. Most are cabin crew. Those remaining face salary cuts to be decided as early as this week, according to local news reports.

The cost of the restructuring is about USD284 million, but it should trim Cathay Pacific's monthly cash outlays by about HKD500 million (USD64.5 million) next year.

Cathay Pacific has suspended non-essential expenditure, postponed aircraft delivery, as well as introduced a special vacation plan and senior management salary cuts to reduce costs. But the company still loses from HKD1.5 billion to HKD2 billion (up to USD258 million) in cash every month.

Editor: Emmi Laine