Cathay pilots given ultimatum: Accept major cuts to pay, benefits or leave

Cathay Pacific Group has taken aim at its pilots contracts in an effort to cut costs, reportedly offering flight crew an ultimatum to either accept major cuts to their pay and benefits, or leave the company.

Pilots are said to have one week to decide whether to sign up to new contracts that are far cheaper than their existing deal, in some cases by up to 60 per cent when accounting for salary and benefits, or be terminated, with no access to redundancy payouts.

It comes after the company announced it would be cutting 5,900 jobs, 600 of which are pilots, with the majority of those coming from the demise of Cathay Dragon. Around 50 pilots from Cathay Pacific have been made redundant.

The company said it adopted a “last in, first out” approach in choosing who will be made redundant, meaning junior staff were first on the firing line.

Those who were not made redundant are now being provided with new contracts that bring their remuneration “in line” with overseas competitors, and redundancy will be off the table for those who do not agree to these new terms.

Chris Beebe, general secretary of the Hong Kong Aircrew Officers Association (HKAOA), said the union had not been made aware of these new conditions prior to them being offered to staff, however is still willing to engage with Cathay.

“It’s disappointing that the points were excluded from any significant discussions leading to these decisions. We view this as an opportunity to make this the beginning of additional discussions in terms of working through the issues confronting the company and the pilots,” he said.

“Pilots do have certain rights and entitlements under existing contracts that we expect Cathay to honour, and we will defend the contract. We would also hope Cathay is willing to work with us on [helping] any pilots that might be affected to transition to whatever their next step may be,” he added.

The changes made to remuneration and allowances would standardise terms and conditions across the board for the first time, a feat that airline managers have attempted to achieve for years in order to cut down allowance costs.

Notably, the new contracts also remove the “last in, first out” policy, which could see older and more experienced, and thus expensive, pilots in the firing line in the future.

The airline has said that under the new agreements, pilots would be offered a two-year transitional period including some housing and education allowances, however staff only have one week to accept these terms.

Pilots who sign the new agreement after 4 November will only see a one-year transitional period.

Pay adjustments under the new contracts are due to kick in from the beginning of next year.

“We understand this transition will have an impact on our pilots and their families, and to mitigate this, the company will protect current salary, allowances and benefits,” Cathay said in a memo to pilots.

According to the South China Morning Post, pilots who joined the airline from 2018 onwards currently receive a yearly basic salary of HK$376,608 for an entry-level second officer, HK$577,500 for an entry-level first officer and “up to” HK$1.2 million (US$155,000), under a contract known as COS18, which is similar to packages offered by Singapore Airlines.

In contrast, those who signed a contract known as COS08 in 2008 received HK$488,964 for second officers, HK$975,504 for first officers and up to HK$2.1 million for top-level captains.

Cathay’s most-experienced pilots, those who signed contracts from 1999 to 2007, receive bumper housing allowances of up to HK$1.2 million per annum and stipends to help with school fees. COS08 pilots and COS18 pilots receive yearly maximum housing packages of HK$480,000 and HK$396,000, respectively.

According to the airline’s annual report last year, a total of 3,360 pilots received in the millions of dollars per annum. 

For example, 94 pilots took home a yearly payment of HK$4 million to HK$4.5 million, 248 took home between HK$3.5 million and HK$4 million, while 437 received HK$3 million to HK$3.5 million.