Cathay Pacific Airways Ltd (0293.HK) said it will offer a voluntary scheme to its Hong Kong-based pilots who are approaching retirement age to leave the group early, in a continued effort to cut costs amid the coronavirus pandemic.
The airline said in an email it is looking at different ways to reduce costs in the medium term, given reduced passenger demand with no immediate signs of improvement. The retirement plan was first reported in local media.
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 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 carrier said.
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.
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.
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
($1 = 7.7502 Hong Kong dollars)