Cathay Pacific and pilots ironing out deal by new year to end four-year dispute over pay, allowances and roster in second bid
- Sources say some terms not as good as those set out in 2016 attempt, but union is ‘hopeful’ of closure and pilots may find conditions ‘to their liking’
Cathay Pacific Airways could settle its dispute with pilots over pay and work conditions with a money-saving agreement for the company on track for a vote by the new year, a second attempt between the sides to end a four-year industrial row.
The Post understands both parties are ironing out text for the new deal, putting Hong Kong’s flag carrier closest to reaching a solution with its cockpit crew since a set of terms in 2016 was narrowly rejected by pilot unions.
Sealing the deal would allow the troubled company to bank on much needed cost savings as it approaches the final year of a three-year restructuring during which it has suffered back-to-back losses in the face of intense competition.
A pilot source involved in the negotiations said parties were “hopeful” of closure by the new year. “We have been at these negotiations for a quite a long time. We’ve finally been able to accomplish something together that pilots will find to their liking.”
The source cautioned: “The pilots are the final decision makers on this. There are some good and not-so-good things and I am not sure how it will be received.”
Another union source said the terms were “a little closer to a marginally acceptable outcome for pilots”.
Cathay could not be reached and the Hong Kong Aircrew Officers’ Association (HKAOA) declined to comment.
If both sides agree on the text, it would be seen as a huge step forward. The document would then be presented to the union’s top committee, which would approve or reject the agreement. After that, the 2,400-strong pilot union would vote on whether to back the deal. The airline employs around 3,330 pilots worldwide.
Cathay and its pilots have been wrangling for the past four years over pay, pilot allowances, housing stipends and work rosters.
In August, the airline said it was satisfied a new agreement had been put together and the union was willing to put it to a vote among its members – but the HKAOA denied it. At the time, issues raised centred on pay and monthly allowances for pilots on contracts since 2008.
The two key priorities for the HKAOA were resolving the amount of monthly cash allowance for pilots, which stood at around HK$10,000, and the vastly more expensive housing allowance for cockpit crews on bigger contracts signed before 2008, which cost the airline HK$900 million annually.
The carrier is looking to slash HK$4 billion from its costs by 2019, with HK$1 billion – or 10 per cent – cut from pilot costs.
New conditions over pilot work schedules and pay were considered lower in priority.
While vague on specifics of the terms being discussed, the union source offered a festive analogy: “Under the Christmas tree, there will usually be a box for you of a certain size. Think of the same box but only smaller. The same basic elements are there but not as generous as [the agreement] in 2016.”
As part of the long-term effort to cut costs, Cathay rolled out cheaper contracts to new pilots and trainee cadets that kicked in on Saturday, with an increase in variable pay based on how many hours are flown. Sources at the airline said the change would cut about 30 per cent of pilot costs for the company.
In late October, the company rejected a plea by trainee pilots – who said they were misled before signing up – to reverse contract changes for new crew. Cathay said it was “unmanageable” to retain earlier terms amid the overhaul of pilot pay and perks.
Hong Kong’s biggest airline narrowed losses to HK$263 million in the first half of this year after coming off two consecutive years of unprofitability. It cut 600 jobs earlier this year, while seeking to boost productivity and generate new forms of revenue.