Cathay Pacific Airways hires McKinsey to advise on transformation plan

08 January 2018

Troubled Cathay Pacific Airways has hired McKinsey & Co consultants in order to advise on a transformation plan, drawing on turnarounds at regional rivals such as Qantas and Japan Airlines. The Asian airliner has come into increased competition, and faces a spell of stringent job-cuts in its near future, as the group struggles to survive.

Airliners across the globe experienced continual turbulence through 2017. Battered by competition from Chinese and Middle Eastern airlines, and hobbled by missteps in fuel hedging, Cathay completed a strategic review in January, and later announced its biggest job cuts in almost two decades. The group cut 25% of its management staff in May, as around 600 people lost their roles with the organisation.

Now, it has been revealed that the beleaguered carrier has sought the help of McKinsey consultants. Following McKinsey’s recently reported input, Greg Hughes, Cathay’s Chief Operations and Service Delivery Officer, said that more than 740 initiatives had been identified to cut costs, boost productivity and improve customer service, including easier access to higher ‘frequent flyer’ status, more economy-class seats on Boeing 777 airliners, and on-demand dining for business-class fliers. The cuts were part of a three-year transformation programme outlined by the consulting firm, earmarking over £380 million in savings.

Cathay Pacific Airways hires McKinsey to advise on transformation plan

When explaining the reason why McKinsey had been contacted, Hughes told Reuters, “We were very keen on learning from them the best way to go about a transformation. They have done thousands of them, and we haven‘t.”

Supporters of the scheme say it brings a fresh eye and diverse experience to the job, and helps succession planning. However, critics claim that it is a costly, two-tiered relic that leads to short-term and conservative plan, which will serve to demotivate middle-managers, excluded from the scheme. Cathay declined to say whether McKinsey had examined its rotation system, but said that it planned to keep it in place as part of its transformation programme.

Steve Saxon, McKinsey’s aviation expert partner in Shanghai, said the firm’s policy is to decline to comment on client work.

As competition ramps up in the global aviation industry, consultants have been called in to restructure a number of high profile airlines in recent times. Troubled airline Alitalia still faces a tumultuous future, having recently filed for bankruptcy proceedings after a turn-around plan, crafted by Roland Berger in consultation with the company’s executives, caused staff to strike against job losses.

Big Four firm KPMG, meanwhile, were appointed as administrators for Monarch, after the airline became the largest ever in Britain to enter administration. Administrators and unions said they hoped that many could be taken on by other airlines that are interested in buying up parts of Monarch’s business, although KPMG announced a raft of lay-offs over the coming days.


Managing the demand for change in project management

16 April 2019

The forward-looking nature of project management means that regardless of the type of project, thorough planning and risk assessment are essential to ensure it is delivered on time, on budget, and in line with the client’s requirements – while delivering the expected results. Consultants Eman Al-Hillawi and Peter Marsden elaborate in the article below. 

However, it is important to recognise that in this fast-moving working environment, and with projects increasing in scale and complexity, a degree of change is inevitable. Putting the right mitigation strategies in place early on can provide project managers with much-needed agility, allowing them to respond quickly to any new issues that arise.

When the goalposts move or project managers are issued with an unexpected client request, adopting a holistic approach is essential to ensure that changes are implemented successfully the first time around, reducing the risk of any problems arising in the future. Rather than considering the demand for change in one area of a project in isolation, it is important to conduct a full impact assessment, taking into account any knock-on effects on people, processes, systems and infrastructure. For example, a sudden need to digitalise a key HR process may have implications for recruitment, or the need to upskill existing staff through new training programmes, or both. 

Implementing a Portfolio Management Office (PMO) can also enhance project managers’ ability to spot interdependencies and better manage unforeseen changes. Where a number of projects or programmes are being undertaken simultaneously, this function is particularly useful, providing stakeholders with increased visibility and driving intelligent decision-making. For example, spotting an unexpected delay to a particular project could enable resources to be reallocated across the portfolio at an early stage, helping to drive efficiencies within the business and keeping budgets on track. 

Managing the demand for change in project management

As part of their efforts to make the most of available resources while keeping costs under control, project managers should consider using blended teams wherever possible. By combining the organisation’s existing employees with different skills and experienced project managers, it is easier to ensure that the correct levels of skills and resources are utilised at each stage of a project. Furthermore, this method can provide the additional flexibility needed to respond quickly to new developments without unnecessarily prolonging project timelines or increasing costs. 

It is worth bearing in mind that introducing some mitigation strategies may require an initial cost outlay and, as such, effective communication with stakeholders from the very beginning of a project is key. One example is to allocate a contingency budget to the project. This helps to facilitate the project manager’s ability to address key issues that require unplanned spend, without the need to undergo a time-consuming budget approval process. By educating all involved parties about the inevitability of change during projects, it is possible to put buffers in place, both financially and in terms of the project timeline. Over the course of a project, this should enable project managers to react quickly to change and take effective action without compromising on the timescales and delivery of client objectives. 

Likewise, where project delivery is reliant upon large and diverse teams, clearly communicating the impact of unexpected changes, and the required response, is also vital to ensure everyone is on the same page and disruption to day-to-day processes is kept to a minimum. When curveballs to project delivery occur, a failure to brief the team on how these should be addressed could also have a significant impact on levels of motivation and morale, which in turn has the potential to have a negative impact on productivity across a project. 

While meticulous forward planning will always be an essential element of project management, it’s equally important to recognise that to a certain extent, change is unavoidable. The ability to respond effectively to new developments as they occur is therefore vital. By making change a central part of discussions with stakeholders and clearly communicating with all parties on a programme, project managers can take new issues in their stride while continuing to deliver exceptional results for clients. 

Eman Al-Hillawi and Peter Marsden are principal consultants at business change consultancy Entec Si.