Cathay Pacific will cut employee profit expenses by about 50%

(Bloomberg) — Cathay Pacific Airways Ltd. plans to cut the profit share it pays employees by nearly 50%.

The Hong Kong airline only plans to allocate at least four weeks of qualified wages as part of a profit-sharing plan through 2024, according to a staff memo from Chief Executive Ronald Lam seen by Bloomberg on Thursday.

The planned wage payment is down from the 7.2 weeks paid last year.

Lam told employees that final numbers would be confirmed later, but he also noted that the layoffs were partly based on headcount growth, meaning profits would need to be spread among more employees.

Cathay Pacific’s profit fell 15% in the first half of 2024 due to intensifying competition, and analysts expect Cathay Pacific to achieve an annual net profit of HK$7.8 billion (US$1 billion), down from HK$9.8 billion in 2023.

After the COVID-19 epidemic, Cathay Pacific gradually rebuilt its flight operations and successfully achieved 100% of its flight capacity in the month before the epidemic. The airline is hampered by staff shortages and training backlogs in key areas such as the cockpit. In the next few years, the company will spend HK$100 billion to introduce dozens of new aircraft to prepare for expansion.

The profit sharing comes after employees receive an annual bonus for 2024 equivalent to one month’s salary.

Separately, Cathay Pacific said it had experienced a series of IT issues that affected flight booking services on its website and mobile app and disrupted customer online check-in. The airline’s self-service check-in system at Hong Kong International Airport was also out of order. Passengers are asked to arrive at the airport at least three hours before departure.

At 1:38 pm local time, Cathay Pacific shares fell 0.4% in Hong Kong

(Adds technical issues, stock price.)

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