In a bid to cut costs amid the raging coronavirus or COVID-19 pandemic, Cathay Pacific Airways Ltd said that its Hong Kong-based pilots who are nearing retirement age will be offered a voluntary scheme to retire early. On Saturday, in an email to Reuters, the airline said that it is attempting to find various methods to decrease costs in the medium term as the diminished passenger demand shows no significant signs of improvement.
"The decision comes after careful consideration and is an effective way for the Group to manage costs. Addressing a specific group of employees for this dedicated scheme helps us adjust to the new operating environment," the airline said.
Attempts to Manage Cost
Cathay has already taken short-term measures including executive pay cuts and two rounds of voluntary special leave scheme. Pilots aged 50 or 55 and above, depending on the retirement age outlined in their contract as 55 or 65 respectively, are eligible to apply for the early retirement scheme, the carrier said. Pilots aged 58 and above at its regional arm, Cathay Dragon, are also eligible.
The scheme will pay pilots who retire early three months basic salary for each year remaining before their normal retirement age, plus a further one month allowance payment up to a maximum of 12 months' basic salary.
Recommendations for Review
Cathay said management is doing a comprehensive review of all aspects of the group's operations, and it will make recommendations to the board on the future size and shape of the airline by the fourth quarter.
The group was looking to cut costs, streamline marketing, consolidate pilot contracts and move veteran pilots to cheaper contracts, sources have told Reuters. Cathay last month warned it expected to report a HK$9.9 billion ($1.28 billion) loss for the six months ending June 30, including impairment charges on 16 planes. The estimated loss would be Cathay's biggest half-yearly loss in at least a decade,
(With inputs from agencies)