Cathay Isn't Weighing Move to Cut Wages

The Asian Wall Street Journal
Tuesday, September 22, 1998
By a Staff Reporter

HONG KONG — Cathay Pacific Airways isn't considering wage cuts as a way to boost its bottom line, according to senior executives at the airline.

Chief Operating Officer Philip Chen said that "one can never say never on that kind of thing but we've not been considering that at all."

Hong Kong Telecomunications Ltd.'s recent announcement of across-the-board 10% wage cuts has prompted speculation that other major Hong Kong companies might soon follow suit. The city's unemployment rate has risen to a 15-year high of 5% and the general economy continues to sour.

Cathay, for one, recently reported a loss of HK$175 million (US$22.6 million) for the first half of 1998.

Andrew Herdman, the airline's Head of Corporate Affairs, notes that one problem with wage cuts is they "cannot be imposed on staff, it has to be a voluntary arrangement."

Cathay has preferred to opt for staff reductions rather than pay cuts as a way to trim costs. While no more large-scale layoffs are planned right now, Mr. Herdman says that the airline "can't rule out" smaller reductions at the department level as greater efficiencies are introduced and the carrier tries to outsource some parts of its business.