Hong Kong - Cathay Pacific Airways said Wednesday that it has scrapped the traditional end-of-year bonus for all its Hong Kong staff in a cost-cutting measure sparked by the global economic crisis. Chief executive Tony Tyler blamed the move on the difficulties the airline was facing because of fuel price hikes earlier this year and the worsening economic downturn.
However, he offered some solace, promising all eligible staff an ex-gratia payment of half a month's salary or at least 8,000 Hong Kong dollars (1,028 US dollars) in addition to an average salary increase of 2 per cent in 2009 - lower than this year's rise of up to 4 per cent.
The decision is to also affect staff working for Cathay Pacific's sister airline Dragonair.
The bonus of one month's salary, called the "13th-month" bonus, is traditional in many Hong Kong companies and is often used by employees to pay their tax bills, which become due in January.
Cathay Pacific, which employs 27,000 people worldwide and 13,000 in Hong Kong, posted an interim loss of 663 million Hong Kong dollars in August.
In September, it warned staff of cost-cutting measures in its newsletter and more recently issued its second profit warning of the year, stressing that its full results for 2008 were expected to be disappointing.
Tyler said the airline had been badly hit by the twin challenges of exceptionally high fuel prices earlier in the year and 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 the crisis in sufficiently good shape to take advantage of the upturn when it comes."
Tyler added that the economic environment remained volatile.
"The financial health and well-being of the company is our paramount objective, and we will have to take whatever steps are necessary to secure and protect this," he said.
Cathay Pacific carried 23.5 million passengers and 1.6 million tons of cargo in 2007.
The airline is the latest to announce cost-cutting measures as the economic downturn begins to bite in Hong Kong.
Earlier this week, banking giant HSBC announced it was to axe 450 jobs among its 20,000-strong Hong Kong work force, blaming the deteriorating global economy and a pessimistic outlook for 2009.
On Tuesday, trading company Li and Fung, which derives about 60 per cent of its business from the United States, confirmed it was to cut 150 jobs.
The former British colony is now officially in recession after government statistics recorded a second-consecutive quarter of contracting economic growth between July and September.
