Cathay Pacific and Cathay Dragon are offering early retirement to their more experienced pilots, the company announced in an internal memo.
In one of the first big personnel moves as part of its Covid-19 pandemic restructuring, the Cathay Pacific Group is tackling one of its thorniest issues: pilot costs.
The Hong Kong carrier said it would offer early retirement to those on historically old contracts, pilots aged 50 and above.
They will be paid three months basic salary for each year remaining before normal retirement age plus an extra month’s salary up to a maximum of 12 months, in the special retirement scheme.
Cathay Dragon offered identical terms to pilots over the age of 58.
Captains and first officers on contracts created in 1999, with a retirement age of 55, will be eligible for the scheme if they are 50 and above. Those with contracts dated 2008 or 2018, with a retirement age of 65, will be eligible if they are over 55.
Cathay has projected it will lose HK$9.9 billion (US$1.27 billion) in the first six months of the year as a direct result of the Covid-19 pandemic crippling air travel worldwide.
“As you are aware, we are currently conducting a comprehensive review of all aspects of our business,” the airline told its pilots.
“By the fourth quarter of this year, the Cathay Pacific management team will recommend to the board the optimum future structure of the Cathay group to ensure we remain competitive in the new global travel market
It added in the memo: “The review is ongoing and we will share further information when it becomes available, however, given that we are operating a heavily reduced network at present and for some time to come, we are in a position to invite some our more senior, Hong Kong-based pilots who wish to leave the group early the opportunity to apply for a voluntary early retirement scheme.”
Hammered by the pandemic, Cathay had been losing up to HK$3 billion a month since February but losses had since narrowed to HK$1.5 billion.
It has carried less than 1 per cent of its normal daily passenger volume and its flight schedule has been reduced to single digits for at least three months. The company has responded with pay cuts for frontline staff and executives, among other measures.
The Hong Kong government stepped in with a HK$27.3 billion rescue package in June as part of the airline’s wider HK$39 billion capital restructuring to prevent it from collapsing.
Cathay is conducting a wide-ranging review of its business, which will involve “rationalisation of future planned capacity compared to the pre-crisis plans”, something that could impact jobs. The airline will unveil the scale of changes planned in the fourth quarter of 2020.
In the memo, the airline also told pilots who may have felt uncertain about the future of their job: “There may be appetite amongst this group for the opportunity to retire early.
“We also appreciate that the further way you are from your planned retirement, the more challenging this can be, so we have taken this into account when designing this scheme.”
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