Andrzej Jeziorski/SINGAPORE
Cathay Pacific Airways has agreed on productivity increases with ground staff as it negotiates with cabin crew and begins early talks with pilots' unions, as part of its drive to improve efficiency and cut costs.
According to the airline, the productivity gains are being rewarded with a 2-3.2% pay rise. Other parts of the package include the introduction of voluntary early retirement packages to make up for excess staffing levels expected as a result of the productivity gains.
Staff turnover rates have fallen as Asia's economic slump has hit job prospects. The company now employs 14,000 people overall, including 5,500 cabin staff and 1,300 cockpit crew.
"We have reached agreement with the union responsible for most ground staff in Hong Kong on a small pay increment in return for longer hours," says Cathay. "We are having similar discussions with the flight attendants' union."
The airline, which is losing money this year for the first time in 35 years, says it normally pays a year-end bonus of a month's salary, but has decided the bonus will be HK$50,000 ($6,450). Cathay reported a first-half loss of HK$175 million ($22.5 million) this year, and analysts predict a HK$474 million loss for the full year.
The company has already imposed groundstaff redundancies this year, but will try to solve further problems among cabin crews with an early retirement scheme.
While the next review of cockpit crew terms and conditions will not take place until the middle of the year, Cathay confirms that early discussions are under way on various issues. "It's no secret we are asking for productivity improvements and possibly also salary concessions," says the airline.
Cathay retired its seven Boeing 747-200s last year, and plans to withdraw six 747-300s in 1999. By the end of the year, however, the airline will have added 13 new aircraft - Airbus A330s and A340s and Boeing 777s - to its fleet, maintaining numbers overall.
The airline had set itself a target of cutting unit costs from HK$2.58 to HK$2.24 per available tonne/ kilometre by the end of last year. It says it is on target to meet this goal, but warns: "We do not see any easing of pressure on yields."
Source: Flight International
