Staff at Hong Kong Express, Cathay Pacific’s low-cost arm, have been asked to take pay cuts and unpaid leave starting next year. The cuts come as HK Express aims to have no job losses, instead making deep salary cuts across the board. Cathay Pacific opted to shut down regional carrier Cathay Dragon last month, leaving HK Express as the only subsidiary airline.
In a report from the South China Morning Post, HK Express is proposing new contracts that will see non-flying staff take 20 days of unpaid leave in the first half of 2021. Pilots will see their salaries cut by 25-40% when not flying and roughly 8-14% during flight time (assuming an average of 70 flight hours monthly).
The new cuts will impact the 200 pilots working for the airline, which has over 1,000 employees in total. HK Express CEO Mandy Ng Kit-man will take a 15% pay cut through 2021, while senior directors would do so for the first half of 2021. The contracts have been described as “take-it-or-leave-it,” with a deadline of 30th November and will go into effect from 1st January.
The decision to such steep cuts is due to the airline’s commitment to not cut any jobs, allowing it to access the Hong Kong government’s wage subsidy programs. It received $3.61 million (HK$28mn) in the first round and has applied for the second round of wage subsidies.
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‘Not enough to secure our future’
Despite this round of cuts, CEO Mandy Ng Kit-man said in an internal memo seen by the SCMP, “with many challenges ahead of us, and regrettably, what we have done so far is not enough to secure our future….This is not something I ask from you lightly. The past year has been a real test of our resilience.”
Hong Kong Express has lost nearly $133,000 (HK$1.03bn) since it was acquired by Cathay Pacific last July. The airline has been hit hard by last year’s civil unrest in Hong Kong and the subsequent pandemic, giving the airline little recovery time since its acquisition. Losses will continue to mount this year as passenger numbers will likely remain negligible in the coming months.
Cathay Pacific opted to shut down regional subsidiary Cathay Dragon last month (along with laying off nearly 6,000 employees). The shutdown means HK Express will be picking up some of Cathay Dragon’s old routes and a few aircraft from its A321neo fleet. Cathay is yet to specify the exact routes and number of planes HK Express will take over in the coming year.
We can expect expanded operations at HK Express next year, likely pushing the airline to not cut jobs for now. However, both Cathay Pacific and HK Express will continue to struggle with no domestic market and low international traffic.
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