Cathay Pacific scraps year-end bonus amid global economic crisis
19 Nov 2008
Hong Kong: Cathay Pacific Airways said Wednesday that it had decided to scrap the traditional end-of-year bonus for its entire Hong Kong staff keeping the worsening economic downturn in mind. Chief executive Tony Tyler blamed the blamed the move on the difficulties the airline was facing in a bad economic environment.
Tyler offered some solace, however, promising all eligible staff an ex-gratia payment of half a month's salary or at least 8,000 Hong Kong dollars ($1,028) in addition to an average salary increase of 2 per cent in 2009. The raise would be lower than 2008's 4 per cent.
The decision will also be applicable for staff working for Cathay Pacific's sister airline Dragonair.
Cathay Pacific employs 27,000 people worldwide and 13,000 in Hong Kong.
One of Asia's premium airlines, it posted an interim loss of 663 million Hong Kong dollars in August and warned staff of cost-cutting measures in September. Recently, it issued its second profit warning of the year, stressing that full results for 2008 would disappoint.
Tyler said the Hong Kong-based carrier had been badly hit by the twin challenges of exceptionally high fuel prices as well as the fallout from the global financial crisis.
'We are in turbulent times, and things will get worse before they get better,' he said. 'As a commercial airline with no government financial support or subsidies, we have to manage our resources in a responsible and prudent manner in the interests of our shareholders and staff.
'We have made our intention clear from the outset that we will do all we can to maintain our network and keep our team together. This is an important part of our strategy to come through," he said.
Cathay Pacific carried 23.5 million passengers and 1.6 million tons of cargo in 2007.
Hong Kong is now officially in recession.
