Cathay Pacific Airways Ltd (國泰航空), which is conducting a critical review of its business, said senior staff will not receive any salary increase for next year amid a challenging environment.
Non-managerial staff in Hong Kong, where the carrier is based, will get a 2 percent salary raise for next year and a discretionary bonus equivalent to a month’s pay for this year, the carrier said in an e-mailed statement yesterday.
Senior staff will receive their bonuses, the airline said.
“We cannot afford to fall further behind, which is why we are undertaking a critical review of our business,” Cathay chief executive officer Ivan Chu (朱國樑) said in the statement. “We have seen a significant drop in the revenue we generate due to factors such as pressure on yield, excessive capacity and a decline in premium traffic. We believe that 2017 will remain challenging with the same adverse factors having a continued impact on our business.”
Chu has been struggling to revive profits at Cathay amid a slump in passenger yields — a key measure of profitability in the industry.
With Chinese airlines offering more direct services to the US and Europe from China, Cathay Pacific’s Hong Kong hub is no longer so critical for travelers.
The airline in October said that it was conducting a critical review of its business and its result in the second half of this year “is no longer expected” to be better than that of the first half.
In August, Cathay reported an 82 percent drop in net income in the first six months of the year and warned that premium travel was declining.
In other industry news, Philippine tycoon Lucio Tan (陳永裁) will consolidate his airline ventures as he focuses on expanding his flagship PAL Holdings Inc and increase its appeal to potential buyers.
PAL will acquire another company owned by Tan called Zuma Holdings & Management Corp through a share-swap agreement, valuing the whole deal at 8.24 billion pesos (US$166 million), the company said in a stock exchange filing yesterday.
The purchase will consolidate Philippine Airlines Inc and budget carrier Air Philippines Corp.
“The integration of both businesses into a single organization structure would make PAL a more viable investment for interested investors,” PAL said in the statement.
Consolidating the two airlines will also reduce costs and increase revenue, it said.
Philippine Airlines is in talks with potential investors and is seeking one with experience in running carriers so it can help manage its fleet, PAL president Jaime Bautista said in June.
“Consolidating the airlines is very positive and will allow PAL to fetch a higher price from potential buyers,” said Victor Felix, an analyst at AB Capital Securities Inc in Manila. “Creating synergies for both carriers means that PAL is also intent on ramping up its domestic operations and get a larger piece of the market share.”
Under the deal, PAL will issue to Zuma owners Cosmic Holdings Corp and Horizon Global Investments Ltd 19 shares in exchange for one Zuma stock, according to the statement.
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