Cathay Pacific

Cathay crew uneasy at early retirement plan

Staff fear they will lose long-service payments if they volunteer for cost-cutting measure

PUBLISHED : Tuesday, 22 January, 2013, 12:00am
UPDATED : Tuesday, 22 January, 2013, 4:09am

Cathay Pacific is introducing an early retirement scheme for cabin crew as part of "cost management measures".

But staff fear a clause in the application form could mean they will lose the long-service payments they are normally entitled to when they reach the retirement age of 55.

The long-service payment was introduced for staff who joined the airline before September 1, 1996, when the airline switched from a fixed monthly salary to an hourly wage.

The announcement of the Voluntary Early Retirement Scheme was made in a newsletter posted on the airline's intranet yesterday. "This is a purely voluntary scheme, designed both as a means of contributing to our ongoing cost management efforts and as a means of facilitating the lifestyle aspirations of some of our cabin crew," it said.

The scheme is open to cabin crew who joined Cathay before September 1, 1996. Those who join the voluntary plan will be entitled to a payment calculated in two ways, whichever is lower.

In the first method, the amount is calculated by multiplying a crew member's last monthly salary by their years of service, then dividing it by 15, and then multiplying it by the years remaining before they reach 55.

The second method is simpler: 20 months of salary.

One clause in the application form has puzzled cabin crew. It says: "I will not be entitled to any payment in respect of notice or any additional severance or long service payment arising from the cessation of my employment other than as set out under the terms of the VER Scheme."

According to Becky Kwan Siu-wa, a former chairwoman of the Cathay Pacific Airways Flight Attendants Union, this clause did not exist when the airline introduced a voluntary retirement scheme in 2006.

People who volunteered then received their long-service payment - calculated by multiplying monthly salary by two and then multiplying it again by years of service - plus the early retirement payout. She calculated that, in general, a cabin crew member can get about HK$1 million in long-service payment if they retire after working for 20 years.

But if the members choose to join this latest scheme, she suspected they would not get the long-service payment.

"There is something really wrong about this form," she said.

A Cathay spokeswoman did not answer when asked if members who volunteered for the scheme would still be entitled to the long-service payment.

Other crew members also said they were puzzled by that particular clause and hoped the airline could elaborate.

Cathay recorded a HK$935 million loss for the first half of 2012. Patrick Xu, aviation analyst at Barclays in Hong Kong, forecast a 90 per cent drop in profit to HK$563 million for the full year.

Cathay's chief executive, John Slosar, said in November that the airline had experienced a "difficult year", with higher fuel and other operating costs, and lower passenger and cargo yields.