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Cathay Pacific asks staff to take leave

By Teddy Ng (China Daily)
Updated: 2009-04-18 08:50

HONG KONG -- Cathay Pacific Airways Ltd, Hong Kong's largest airlines, will ask staff to take unpaid leave of up to four weeks and cut down capacity due to deteriorating business conditions.

The company made the announcement Friday when its turnover for the first quarter was 22.4 percent lower than the same period in 2008. The airline recorded a loss of nearly HK$8.6 billion ($1.1 billion) last year, its first in 10 years.

Ground staff tow a Cathay Pacific Boeing 747 at Hong Kong airport (HKIA) in Hong Kong, 2007. [File Photo/Agencies]

"We have no option but to take measures that will help us weather the current storm and maintain long-term sustainability of the business," said the airline chief executive Tony Tyler, calling the current market situation as worse than the SARS and 9/11 crises.

Related readings: Cathay Pacific slashes air services Cathay tries to tackle slowdown

The airline's 17,000 staff, of whom 13,600 are based in Hong Kong, will be asked to take special unpaid leave of one to four weeks, depending on seniority, over a 12-month period from next month. The company has no plan to lay-off staff, Tyler said.

Staff joining the scheme will have their salary deducted over a six-month period from June to November. The lowest rank staff will be paid 3.84 percent less each month during the period, while the highest rank staff will get 15.38 percent less monthly. The airline will seek consent from staff on the arrangement from 20 to 30 April.

The 1,760 staff who participated in the airline's voluntary unpaid leave scheme introduced last year will be able to offset that leave against the special leave.

Tyler, who will also be taking unpaid leave, stressed that the company will not penalize staff not joining the scheme. "We cannot make it mandatory," he said.

The airline chairman Christopher Pratt, Tyler and chief operating officer John Slosar will forego their 2008 bonuses.

Cathay Pacific's subsidiary, Dragonair, also introduced a special unpaid leave scheme.

"The cost-cutting measures we have initiated since the end of last year are clearly not enough so we have no alternative but introduce further measures to help us preserve cash," said Dragonair chief executive officer Kenny Tang.

The two airlines will also reduce passenger capacity by 8 and 13 percent from May.

Cathay Pacific Airways Local Staff Union chairman Alfred Cheng Kwok-fai said the special unpaid leave arrangement was acceptable.

Cathay Pacific Airways Flight Attendants Union chairman Becky Kwan said: "We are willing to weather the storm together with the company, provided it is justified."

Dragonair Flight Attendants Association chairman Winnie Poon said the company has not promised not to lay-off staff in the future.