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More bad news at Cathay Pacific. After cutting 600 jobs in May, the struggling airline is focusing its efforts to cut cost on the compensation packages of pilots.
The airline has urged pilots to accept pay freezes and changes in pension benefits to help save up to HK$1 billion in costs amid its ongoing restructuring of the business, the South China Morning Post reports.
An internal memo released on Tuesday and seen by South China Morning Post, revealed that almost half of the company’s HK$19.7 billion spending on staff costs last year was on pilots. Pilots account for 14.6% of the airline’s 26,670-strong workforce.
The memo said Cathay was seeking a 10% reduction target by 2019 through a pay freeze, unspecified pension “changes”, and productivity improvements.
Anna Thompson, the airline’s director of flight operations, warned the current costs were “too high”. “To turn this company around, it is clear that we need to reduce our cost base quickly and by a significant amount and also make productivity gains,” she said.
The over-generous compensation package of Cathay Pacific has long been a subject of discussion. Some industry experts have pointed out the airline’s expatriate pay and benefits packages are above market rates and would need a rethink.
The pilots’ union is expected to scrutinise the financial situation of the airline independently before considering the cost savings.
A Cathay spokeswoman told Human Resources: ““We are committed to listening to the views of all our people. We are engaged with our pilots and have been discussing with the HKAOA (Hong Kong Aircrew Officers’ Association) over the past few months and we will continue to work in a collaborative manner with an aim to come to an agreeable solution,”.