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Cathay Pacific

Cathay Pacific close to sealing deal to end four-year dispute with pilots over pay, allowances and roster, staff told in internal memo

Optimism expressed in message to employees, but union sources pour cold water on claim and say rift over many issues remains

PUBLISHED : Tuesday, 21 August, 2018, 12:01pm
UPDATED : Wednesday, 22 August, 2018, 9:40am

Cathay Pacific Airways has said it is close to sealing a deal in a long-running dispute with pilots over pay, allowances and working schedules, despite scepticism from union sources.

In an internal memo, Hong Kong’s flag carrier said it had made “progress” in recent weeks on contract details for pilots who signed with the company before 2008. It claimed the Hong Kong Aircrew Officers’ Association (HKAOA) was willing to put a new offer to a vote among its members.

Expressing cautious optimism, Chris Kempis, the airline’s new flight operations director, told staff last week: “We are approaching what I hope to be the concluding phase of negotiations with the HKAOA [and] the opportunity for a broad agreement.”

Almost half of Cathay Pacific’s pilots want to leave: union survey

Should a vote on a deal pass, the airline noted it would free up “how we conduct business and how you run your professional and private lives”.

Union sources confirmed preliminary agreements had been made on more costly housing allowances and work schedules set out in the old and new contracts of pilots, but poured cold water on an imminent deal.

“The company is just not getting it. To say it’s close, I don’t see it as close, there is still a pretty large gulf [on outstanding issues],” a senior union source said.

The company is just not getting it. To say it’s close, I don’t see it as close
Union source

The association accounts for about 2,300 Cathay pilots in Hong Kong, out of its total of 3,300 worldwide.

The memo also stated that no agreement was made on monthly allowances for pilots on newer contracts, with issues concerning salary still unresolved, but it was willing to allow more time for further talks.

Chris Beebe, general secretary of the HKAOA, urged the company to treat its employees, particularly pilots, as its greatest asset. “The way employees are treated is a direct reflection of customer service [standards], so they should invest more in that particular [area],” he said.

An HKAOA survey conducted in May revealed a lack of goodwill towards Cathay Pacific among aircrew, with almost half of 1,603 respondents saying they were looking to leave the airline and seven out of 10 indicating they would be willing to engage in industrial action at the risk of losing their jobs.

Cathay Pacific and its pilots are at loggerheads in a four-year disagreement over pay, pilot allowances, housing stipends and work rosters. Both sides came close to a deal in 2016 but that was narrowly rejected by pilots in a formal vote.

None of the airline’s 3,300 pilots have received a pay rise since March that year.

Cathay Pacific’s loss narrows to US$33 million as rising costs hamper its turnaround

The flight crew are also split between two employment deals. Some 43 per cent involved in more expensive contracts receive housing allowances that cost the airline “in excess” of HK$900 million (US$115 million) annually.

The airline said in September 2017 it wanted to restructure the agreement. It added the cockpit crew were receiving up to HK$100,000 a month in housing payments. The HKAOA however, said only about 5 per cent of pilots received that while most get between HK$32,000 to HK$70,000 a month on top of a salary.

Meanwhile, Cathay pilots on newer contracts, implemented since 2008, receive a lump sum to cover living expenses such as housing and school fees. The average payment, according to the union, was HK$10,000 a month, It said this was wholly inadequate to keep up with the city’s high cost of living.

Other points of contention include work rosters, with pilots claiming years of changing flight schedules have left them fatigued and disgruntled.

The Post understands there are no future meetings planned as of yet, so it is not clear how quickly other issues will be resolved.

A new automated computer system designed to bring stability was rolled out at the start of the year, but flight crew still said there were problems.

Cathay Pacific has lost money for two years in a row, amid stiff competition from mainland Chinese rivals and budget airlines. In the first half of the year, it lost HK$263 million. To lower costs it cut 600 jobs, while seeking to boost productivity and generate new forms of revenue.

The carrier is looking to cut HK$4 billion from its costs by 2019, with HK$1 billion – or 10 per cent – cut from pilot costs.

Earlier this month, Corrine Png, CEO of transport research firm Crucial Perspective, said: “More significant staff cost savings can be achieved if Cathay manages to trim its pilot-related costs but this is also one of its most difficult tasks at hand given the strong union and risk of flight disruptions.”