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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Cathay Pacific Airways Limited    293   HK0293001514

CATHAY PACIFIC AIRWAYS LIMITED

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Cathay Pacific Airways : permanent pilot pay cuts 'draconian' and 'short-sighted' -union

10/23/2020 | 01:37am EST
FILE PHOTO: Aircrafts of Cathay Pacific and its regional brand Cathay Dragon are parked on the tarmac at the Hong Kong International Airport, Hong Kong

SYDNEY (Reuters) - Hong Kong's Cathay Pacific Airways Ltd's decision to force pilots permanently onto lower-paid contracts or risk losing their jobs is "draconian" and "short-sighted", the head of the union representing them said on Friday.

The carrier on Wednesday announced plans to cut 5,900 jobs to help it weather the pandemic, including nearly all of the positions at its regional airline Cathay Dragon, which it has shut down.

It is also seeking changes in its contracts with pilots and cabin crew as part of a restructuring that would cost HK$2.2 billion (217.3 million pounds).

Staff at many airlines around the world have agreed to temporary pay cuts to help their companies get through the COVID-19 crisis.

At rival Singapore Airlines Ltd, pilots have agreed to pay cuts, including up to 28.5% for most captains and up to 18.5% for most first officers through March 31, 2022 to avoid more job losses.

"The vast majority (of other airlines' pay cuts) are tied to a waypoint such as a point in time or profitability," Hong Kong Aircrew Officers Association (HKAOA) General Secretary Chris Beebe said in an interview. At Cathay, he said, the cuts are "completely open-ended and perpetual."

HKAOA said under the new contracts, Cathay will no longer need to follow the principle of "last in, first out" used at most legacy carriers, with the most recent joiners losing their jobs first.

That would enable it to target pilots for cuts based on the type of aircraft flown, which would be more efficient financially and operationally as it continues to review its fleet plans.

The new contracts, similar to those for new hires since 2018, also offer pay based more on flying hours than previously, leading to far lower salaries in periods where the airline is largely idle.

The degree of pay cut depends on which older contract the pilot was on, with one Cathay pilot telling Reuters on condition of anonymity that he expected a reduction of about 40%.

"By imposing these things, without a doubt, it will erode goodwill," Beebe said. "The arrogance of the company and the way they have approached this will be remembered for years to come."

Cathay chairman Patrick Healy told news media on Wednesday that the new terms were "highly competitive" with those of global peers. The airline did not respond to a request for comment on Friday.

BOCOM International analyst Luya You said that the new contracts might see greater uptake than expected given the soft market for aviation professionals, but that there was a risk employees could leave when conditions improve.

Pilots who do not sign the new contract will be terminated with three months' pay rather than made redundant with six months' pay, Beebe said, adding that the union was taking legal advice on the issue.

(Reporting by Jamie Freed; additional reporting by Anne Marie Roantree and Twinnie Siu in Hong Kong. Editing by Gerry Doyle)

By Jamie Freed


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CATHAY PACIFIC AIRWAYS LIMITED 0.41% 7.4 End-of-day quote.-35.76%
SINGAPORE AIRLINES LIMITED -1.53% 4.51 End-of-day quote.-50.11%
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Financials
Sales 2020 45 785 M 5 907 M 5 907 M
Net income 2020 -19 021 M -2 454 M -2 454 M
Net Debt 2020 53 282 M 6 875 M 6 875 M
P/E ratio 2020 -1,94x
Yield 2020 0,11%
Capitalization 47 120 M 6 079 M 6 080 M
EV / Sales 2020 2,19x
EV / Sales 2021 1,48x
Nbr of Employees 33 000
Free-Float 17,1%
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 7,50 HKD
Last Close Price 7,40 HKD
Spread / Highest target 20,3%
Spread / Average Target 1,35%
Spread / Lowest Target -24,3%
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Managers
NameTitle
Kin Wing Tang Chief Executive Officer & Executive Director
Patrick Healy Chairman
Gregory Thomas Forrest Hughes COO, Director & Chief Service Delivery Officer
Martin James Murray Chief Financial Officer & Executive Director
Jian Jiang Cai Deputy Chairman
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