Flight attendants and ground crew for Hong Kong’s de facto flagship carrier will receive a 1 per cent pay rise next year while most of its staff will get a one-month bonus, the loss-making airline said on Thursday.
Cathay Pacific Airways quietly reached a deal with its flight attendants union, which had asked for a 3.5 per cent pay rise.
The pay rise is below the city’s inflation rate for the first 10 months of this year, which averaged 1.4 per cent, according to the latest figures from the Census and Statistics Department. The rise compared with a 2 per cent increase for all non-managerial staff for 2017.
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A Cathay Pacific spokeswoman said junior and middle-level staff would receive a 13th month bonus payment, which means around 97 per cent of staff would be eligible for it. But the amount would be capped at HK$35,000.
Despite earlier demanding a 3.5 per cent pay rise for all staff, the union accepted the more modest deal benefiting 80 per cent of staff, citing the airline’s restructuring and financial difficulties.
Some 16,000 Cathay Pacific staff are based in Hong Kong.
The pay rise benefits junior cabin crew, check-in staff, ground crew and office staff.
“We feel a bit disappointed,” union vice-chairwoman Dora Lai Yuk-sim said. “However, thinking about the whole package and the situation with Cathay, we would like to take a step forward to go through the tough times with the company.”
The union added it expected the carrier to make a turnaround next year following the restructuring.
In an internal memo sent to staff and seen by the Post, Cathay Pacific CEO Rupert Hogg reiterated the airline’s difficult financial position vis-à-vis the pay rise decision.
“Our cost base continues to be too high and so our focus remains on getting more productive across all areas of the business,” Hogg said.
“Whilst we wish we could do more, we must return the company to a sustainable financial position first.”
Corrine Png, CEO of independent transport research firm Crucial Perspective, believed Cathay Pacific got the better deal but had to delicately balance between saving costs and maintaining staff morale.
“Ideally, Cathay Pacific would have preferred to freeze wages, but the airline also needs to manage the frontline staff’s morale carefully or service standards will drop,” she said.
“This will result in even higher costs and lost revenue opportunity for Cathay Pacific as it is likely to lead to more customer complaints and market share loss.”
Cathay Pacific recorded a HK$2.05 billion loss (US$262 million) for the first half of this year and is on track to remain deep in the red by the end of 2017. The airline lost HK$575 million (US$73.5 million) last year.
Part of the airline’s turnaround plans included laying off about 600 staff. The first 400 were cut in June – the carrier’s biggest job cuts in two decades – while the rest were expected to be cut by the end of this year.
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Only frontline staff such as pilots and cabin crew would be spared the axe.
The lay-offs were part of plans to save the company HK$4 billion over the next three years, with HK$2 billion targeted for this year.
Cathay Pacific also slashed housing packages for pilots, affecting 43 per cent of the airline’s Hong Kong-based cockpit crew.
The carrier was also looking to cut pilot salaries, but negotiations have yet to produce an agreement.