Cathay Pacific has decided to reduce their end of year payments in an effort to curb ongoing costs during this tough time. Employees who normally expect a large bonus will have it capped at US$3,800 and any pay rise this year will only see an increase of 2% (under the local inflation of 3%).
What are the details?
Cathay Pacific is going through a tough time at the moment. The protests in Hong Kong are still ongoing and this has caused tourism traffic to slump to an all-time low. The airline it increasingly reliant on through traffic to bolster its bottom line (a privileged fellow Hong Kong carrier Hong Kong Airlines does not have). Cathay Pacific has already issued two profit warnings for the last two quarters and is looking like it may follow through with a third if traffic does not improve.
As such, things are tight for the airline and it has asked its employees to help share the burden. Employees expecting a bonus will receive either US$3,800 or one month’s salary (whichever is lower).
“I recognize the disappointment of not being paid a Discretionary Year-End Bonus and hope the ex-gratia payment represents a token of our goodwill and appreciation,” CEO Augustus Tang Kin-wing said to the South China Morning Post. “I know people are pulling together and supporting each other through what has been a very turbulent period.”
It’s funny that staff are still receiving a bonus the way the company is going, but at least the new executives (the previous leadership team was shown the door after China threatened the airline) are still rewarding their team for coming together in this hard time (better than the CEO getting a bonus as the staff suffer).
What about those expecting a pay rise?
The currency of Hong Kong (the Hong Kong Dollar) is expected to rise by around 3% over the next year thanks to inflation. The carrier is only going to be offering staff a pay rise of around 2%. Last year, workers got a pay rise of anywhere from 4%-8%, so this is a bit unusual and will mean they will earn less money overall compared to last year.
Unions who represent some of the carriers 14,000 staff accepted the less-than-normal rate, despite coming to defend the firing of several staff members a few months ago. This involved staff who were given the sack following outward criticizm of China.
Cathay Pacific, in the meantime, is expected to fly fewer services in an effort to reduce cost (after all if around 2% of their business is down they don’t need to be flying almost empty aircraft).
What do you think about this news? Is this the right move by the airline? Let us know in the comments.