China Southern cuts executive pay 10pc to help save 1.3b yuan

China Southern Airlines, the world's fourth-largest airline by passenger numbers, will cut management salaries by 10 per cent as part of its plans to reduce costs by 1.3 billion yuan (HK$1.49 billion) this year amid rising fuel expenses and slowing demand.

Several hundred executives including chairman Liu Shaoyong would be affected, a China Southern spokesman said. The pay cut will take effect in the second half of this year.

'The payroll of the company can be trimmed down by not more than 100 million yuan,' said the spokesman.

To cope with increasing costs, airlines around the world have levied surcharges, imposed checked baggage fees, and reduced in-flight services.

Mainland airlines were cleared to raise fuel surcharges last month, but the move is not enough to offset the increase in jet fuel prices by the government.

China Southern, China Eastern Airlines and Air China, the mainland's big three carriers, have moved to reduce capacity on some international routes and to fly their planes at higher altitudes to save on fuel.

Daiwa Institute of Research transport analyst Kelvin Lau said: 'When these measures are not enough to combat soaring jet fuel costs, airlines will have to rely on more aggressive measures such as salary cuts.'