Cathay Pacific Airways, one of the most profitable Asian carriers, said Sep. 28 that it would fire about 5 percent of Hong Kong Dragon Airlines' work force after it completed the takeover of the smaller airline.

Most of the 174 jobs to be cut will be in Hong Kong, with 17 overseas staff also being fired, Cathay Pacific said in an e-mailed statement.

Cathay Pacific will transfer other Dragonair staff to its own operations and create 46 more jobs by ending a hiring freeze, it added. No Cathay staff will be fired.

Cathay Pacific paid 8.22 billion Hong Kong dollars, or $1.1 billion, to buy the shares it did not already own in Dragonair to expand in China, as part of a wider deal that also included spending 4.07 billion dollars to raise its stake in Air China, based in Beijing.

Dragonair, which posted a loss in the first half, will operate as a separate unit within Cathay Pacific.

"Serious surgery" is needed to turn Dragonair around, said Peter Hilton, an analyst at Credit Suisse.

"There would be some overlaps they would be able to reduce" through job cuts, he added.

Cathay Pacific is offering affected employees "a package that is well in excess of legal requirements" as well as access to an outplacement service, the company said.

Shares of the carrier fell 26 Hong Kong cents to 16 dollars in late Hong Kong trading on Sep. 28.

The stock has risen 18 percent this year, matching the city's benchmark Hang Seng index.