Cathay Pacific

Cathay Pacific to stake a trouble-free near future on mooted deal with pilots’ union, which will rule out strikes for an initial period in exchange for concessions

  • The agreement, seen by the Post, would mean no industrial action for a fixed time, in return for improved pay, perks and conditions for pilots
  • Pilots, who have long had a frosty relationship with the airline, will vote on the deal in January
PUBLISHED : Saturday, 29 December, 2018, 10:53pm
UPDATED : Sunday, 30 December, 2018, 12:00pm

Cathay Pacific Airways is seeking to discourage any form of industrial action on some of the thorniest pilot-related issues for as long as 10 years in exchange for “improved” pay, perks and conditions, to end a long-running disagreement, according to proposals seen by the Post.

As part of the bid to secure a deal, Hong Kong’s largest airline would get a commitment, starting in February 2019, for no industrial disruption for a minimum period of 18 months. If the pilot union opts for action, the entire agreement would be voided.

For the past four years, the airline and its warring pilots have been at odds over pay, working schedules, accommodation payments and monthly living allowances. A previous, similar agreement was narrowly rejected in 2016 by the members of the Hong Kong Aircrews’ Officers Association (HKAOA)

The airline’s unionised pilots were asked on Friday to consider a fresh set of proposals, which include offering its most experienced pilots an extension on their expired HK$900 million (US$114.9 million) housing package – worth up to HK$110,100 a month – until September 2029.

Also in the proposal, pilots hired after 2008 who received lump sum monthly payments of between HK$10,000 and HK$36,000 would get up to HK$4,000 a month extra for three years, and up to HK$6,000 in the fourth year.

Sealing a deal would allow the company to predict its costs more accurately as it approaches the final year of a three-year restructuring during which it has trimmed expenses, including several hundred jobs, to reverse back-to-back losses in the face of intense competition.

The deal will be voted on by the 2,400 pilot union members. Voting starts in January, with the results to be announced by the end of that month. The airline employs around 3,330 pilots worldwide.

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Apart from pay – with specific negotiations on raises in 2019 with at least a 1 per cent pay rise guaranteed – individual deals were reached on pilot allowances, valid until January 2023, housing stipends (by September 2029), and work rosters (January 2022).

But industrial action taken over any of these individual matters would annul the corresponding individual agreement.

As part of the contract, industrial action covers a strike, work-to-rule action, a company-orchestrated “lockout” that typically prohibits employees from working or entering the workplace.

Cathay Pacific confirmed the company’s talks with the HKAOA had concluded and a spokeswoman said they were “encouraged” by the progress that had been made.

In pushing for the deal to be ratified, the airline said it would provide “a solid foundation” and surety for the company to grow. It added that pilots would receive “competitive” pay, career progression and “enhanced lifestyle options”.

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“We are hopeful this will mark the start of an era where pilot representatives play an active and supportive role in helping the company address and resolve issues of importance to us all,” the airline said.

In the documents submitted to pilots, the HKAOA would not be permitted within the initial terms of the agreement to “commence, support, implement, encourage” any industrial action “against the Company for any reason whatsoever.”

After 18 months, the union would also have to honour an extra 12 months – from August 2020 for a total of 30 months in all – with its leadership not backing individual members’ calls for changes to parts of the agreement. If a vote passed during this period, specific deals would be torn up.

The length of the various deals proposed by the company is seen as a way to leave responsibility to pilots to choose to take action and let individual agreements fall apart. The duration also reflects the magnitude and challenge of resolving some of the areas of dispute with pilots, in an effort by the airline to de-risk some matters, a company source said.

A work-to-rule action that has been continuing for nearly five years would be terminated by February 12, 2019, the airline expects should the agreement be ratified, the airline said.

Cathay Pacific and its cockpit crews have endured frosty relations for more than two decades. The airline abruptly sacked 49 pilots in 2001 following an industrial dispute. This sowed the seeds for the state of relations between the sides.

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The airline is attempting to cut HK$4 billion from its expenses by 2019, with a quarter coming from pilot costs.

Elements of the costs savings have fallen on younger pilots and new recruits. Cathay rolled out cheaper contracts to new pilots and trainee cadets, with more emphasis on pay linked to the number of hours flown.

Cathay Pacific has endured a topsy-turvy year marked by the biggest expansion in its modern history – with 10 destinations launched – but also marred by the biggest leak of passenger data in airline industry history, which affected 9.4 million customers. The airline’s share price trades at HK$11.10, around 9 per cent lower than the start of the year.