Cathay Pacific begins pilot wage talks under threat of industrial action
HONG KONG: Cathay Pacific Airways Ltd., Hong Kong's biggest carrier, today begins pay talks with pilots who have voted for possible industrial action as they seek raises.
The discussions are expected to last five days, Carolyn Leung, a Cathay spokeswoman said yesterday by phone. She didn't say how much the pilots were seeking.
The union wants rises of more than 30 percent over the next four years and they could take action that would disrupt flights over the Christmas period, the South China Morning Post reported yesterday. Union members last month voted to allow leaders to possibly recommend shunning overtime, while rejecting calls for such action to start on Dec. 1.
"It's a cost increase that the airline should be able to absorb rather than having to face any possible disruptions," said K. Ajith, an analyst at UOB-Kay Hian Research Pte in Singapore. "I would expect the airline to come to some compromise in the negotiations."
Ajith expects the airline's staffing costs to rise about 14.5 percent next year, he said. Last month, the carrier announced it will give Hong Kong-based staff annual pay rises averaging 4 percent and 4.5 percent. Staff will also receive a 13th month bonus payment and a profitshare pay-out.
Cathay's incoming Chief Executive John Slosar said Dec. 7 he was optimistic the airline would reach an agreement with the pilots.
"We are looking forward to constructive negotiations and a mutually acceptable agreement," John Findlay, assistant general secretary of the Hong Kong Aircrew Officers Association, said today by email. "The pay claim we submitted was reasonable and is affordable."
Cathay rose 2.8 percent to HK$23.95 at 11:06 a.m. in Hong Kong. The stock has risen 65 percent this year compared with a 6.7 percent gain in the benchmark Hang Seng Index. The carrier, the world's third-largest by market value, expects to more than double profit this year to at least HK$12.5 billion ($1.6 billion), helped by rebounding travel demand and the sale of stakes in an air-cargo handler and a maintenance company.
In another news item, Airbus SAS Chief Operating Officer John Leahy and Erik Pillet, the former human resources director at the European Aeronautic Defence and Space Co. unit, were charged by a Paris investigating judge with insider trading.
Leahy was placed under investigation Nov. 5, and Pillet Oct. 1 after they were called in for questioning, said a spokeswoman for the prosecutor's office who declined to be named citing office policy.
Criminal investigators are looking into allegations that as many as 17 current and former EADS officials engaged in insider trading ahead of the announcement about production problems that would delay the A380, the world's biggest passenger plane. The report precipitated a 26 percent drop in the share price on June 14, 2006.
France's market regulator cleared the officials and the company of any wrongdoing in December 2009 in a parallel probe. Leahy's lawyer Patrick Bernard and EADS spokesman Pierre Bayle declined to comment. Calls for comment to the men's offices weren't immediately returned.
Leahy, 60, has been the one constant in Airbus's top management for close to two decades. He was hired six CEOs ago in 1985, and, as an American, is one of the few non-Europeans. Airbus, the world's largest aircraft maker, is EADS's biggest unit.
Leahy sold 260,000 shares for 3.1 million euros ($4.1 million) while exercising his options, and Pillet sold 50,400 shares for 542,416 euros, according to a report by the Autorite des Marches Financiers. Four former executives including former EADS co-chief executive officer Noel Forgeard and one current official have also been preliminarily charged in the probe. The investigation began after EADS investors filed a criminal complaint following the 2006 share price slide. -Bloomberg