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Sunday, Apr 05, 2020

More than 25,000 Cathay Pacific employees to take unpaid leave as airline’s business challenges remain ‘acute’ amid coronavirus outbreak

About 75 per cent of the airline’s 33,300 employees join scheme, though many pilots and cabin crew refrain from taking part. Coronavirus has thrown airline into turmoil with capacity reduced by 40 per cent and scheduled flights cancelled by 60 per cent

Hong Kong’s flagship airline Cathay Pacific warned on Wednesday that its business conditions remained “acute”, with 25,000 employees opting to take unpaid leave.

Augustus Tang Kin-wing, CEO of the airline, said “many” frontline employees and those working at the head office, overseas and subsidiary units had signed up for the scheme, responding to the company’s appeal to help conserve cash and protect the business.

People familiar with the matter said the take-up accounted for about 75 per cent of the airline’s 33,300 employees. However, not as many pilots and cabin crew had volunteered. Of the 3,800 Cathay Pacific and Cathay Dragon aircrew, of which most work for the main airline, two-thirds opted for unpaid leave.

“Our business challenges remain acute, but to those of you who have agreed to this Special Leave Scheme, thank you for selflessly making your own contribution in helping us to try and weather this storm,” Tang said.

The 75 per cent acceptance rate is in contrast with the near-universal take-up of similar schemes in 2003 and 2009, indicating not all employees bought into the company’s call for help this time.

But a memo issued by the airline noted that “most” employees in the subsidiary units, which include loyalty programme Asia Miles, cargo carrier Air Hong Kong, catering and cargo terminal businesses and recently acquired budget airline HK Express, opted for unpaid leave.

Cathay Pacific had initially appealed to its airline staff to take up to three weeks of unpaid leave, leaving the duration of such a scheme unclear for its staff working overseas and in the subsidiary units.

The outbreak of the deadly coronavirus, which causes the disease known as Covid-19, has thrown the city and the region’s aviation industry into turmoil. People have chosen not to travel fearing the spread of the disease, while governments from various countries and regions have imposed travel restrictions on mainland China, and even Hong Kong.

In response, Cathay Pacific and subsidiaries Cathay Dragon and HK Express cut their capacity by 40 per cent, amounting to the cancellation of more than 60 per cent of their scheduled flights – including most of their mainland China flights – every week.

The airline warned the first half of 2020 would be “extremely challenging financially” as the capacity reduction would mean “significantly” lower profits compared to the HK$1.32 billion made over the same period in 2019.

Other carriers, such as Singapore Airlines and Qantas, have also been forced to cut their flight schedules. United Airlines, one of the world’s largest carriers, abandoned its 2020 profit guidance earlier this week.

The International Air Transport Association, which represents the bulk of airlines worldwide, said last week the health crisis would deprive the industry of US$29.3 billion in revenue, affecting Asian carriers the most.

South Korea, Iran and Italy are also battling Covid-19, while countries such as Kuwait, Afghanistan, Bahrain, Iraq, Oman, Austria, Croatia, Switzerland, Romania and Brazil have reported new cases.

The spread of coronavirus infections across the globe is threatening to further worsen the IATA’s estimates, which were based mainly on the impact of the epidemic in mainland China.

Meanwhile, Cathay Pacific on Wednesday published its remedies for frequent fliers unable to fly and facing loss of prized travel perks in business class and first class.

The airline said it would offer extra points in February, March and April to members to boost the amount of air miles amassed. At certain thresholds, frequent fliers receive more benefits.

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