Cathay Pacific

Cathay Pacific to slash housing packages for pilots as part of ongoing cost-cutting drive

The proposals affect 43 per cent of Cathay Pacific’s 2,500 Hong Kong-based cockpit crew

PUBLISHED : Saturday, 30 September, 2017, 7:00pm
UPDATED : Saturday, 30 September, 2017, 11:30pm

Cathay Pacific Airways pilots have been told that their million-dollar housing packages will be slashed as part of the airline’s ongoing drive to reduce costs in the face of big losses.

Hong Kong-based pilots were told on Friday evening of changes to their accommodation perks, each worth up to HK$1.2 million annually, according to an internal memo seen by the Post.

The airline said it was giving three months’ notice to pilots who benefit from the Accommodation and Rental Assistance Policy Agreement, which cost more than HK$900 million last year for the more than 1,000 eligible cockpit crew. The airline said “significant savings” could be made.

Cuts to pilots’ housing benefits will be part of the targeted pay freeze, pension changes and productivity savings worth HK$1 billion sought by Hong Kong’s flagship airline.

“This is simply not feasible in the current economic environment,” the airline’s flight operations director Anna Thompson said in a memo to pilots on Friday night. The company said it had “no choice” as it was “faced with tough decisions”.

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The proposals affect 43 per cent of Cathay Pacific’s 2,500 locally-based pilots. The rest of the aircrew receive housing allowances up to HK$500,000 a year.

The Hong Kong Aircrew Officers’ Association, which historically has been swift in considering industrial action, has made no mention so far of any such plans.

On the airline’s request for changes, the union said its legal advice showed the company could not unilaterally change employment contracts.

The airline and pilots’ union are currently in broader negotiations, though the memo indicated the talks were not making sufficient progress.

“Despite ongoing efforts from both sides, we are not yet at a point where we have reached an agreement,” Thompson said.

The union said it was rethinking its approach to talks with the company, but remained “committed” to finding a resolution.

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An affected Cathay Pacific captain, who has flown for the airline for 20 years warned: “Recruiters will be lapping at our door [and] many will leave. And then the problems will be exacerbated.”

In 1999, a row over forced pay cuts and sacking threats saw pilots take industrial action causing cancellations and disruption to hundreds of flights.

“The lessons from that era remind us that goodwill, while vital, simply cannot be legislated by force,” the union warned members. “We have a mutual vested interest in the success of our company. But, it is also critical that management recognises the value of the contributions we make to our airline.”

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A 2016 Jones Lang LaSalle’s expatriate real estate survey found that those with housing packages worth HK$100,000 a month or more was just 7 per cent of clients, down from 31 per cent in 2012, which the airline used to justify the proposed changes. The survey also found more than half of its clients received up to HK$30,000 in housing benefits last year.

A Cathay Pacific spokeswoman confirmed a notice had been sent to pilots, adding that its salary and benefits remained “competitive” to attract and retain pilots.

“We will continue to work in a collaborative manner with an aim to come to an agreeable solution,” a spokeswoman added.

Overall, pilot costs totalled almost half of the company’s HK$19.7 billion spending on employees last year, who represent 14.6 per cent of the 26,670-strong workforce. Some 600 jobs have been cut to stem the losses, including a HK$2.05 billion deficit in the first six months of 2017.