Financially troubled Hong Kong Airlines is asking its 1,200 flight attendants to take a 30% salary cut. The airline has put out a call for flight attendants to take up the offer by October 4. Those flight attendants who accept the salary cut will work a two months on, two months off roster over the northern 2020/21 winter period. Hong Kong Airlines says it urgently needs to cut costs as it battles ongoing fallout from the 2020 travel downturn.
We must do all we can to reduce costs and survive, says Hong Kong Airlines
This follows nearly all of Hong Kong Airlines’ pilots taking a period of no-pay leave from early October. As a result, pilot employment costs have dropped by 60% over this upcoming winter. For the period between March and September 2020, pilots were on about two-thirds of their normal salary and allowances.
“This is the biggest crisis that the aviation industry has ever faced, and we must do all we can to reduce costs and survive,” said Hong Kong Airlines Director of Service Delivery, Chris Birt, in an employee memo last week.
“Our current crew strength is far in excess of the number required to operate the planned flight schedule.”
Usually, Hong Kong’s third-biggest airline operates a fleet of 35 Airbus aircraft. But according to Chan Ho-him and Danny Lee in The South China Morning Post today, the airline now has only about ten aircraft in the air.
Because so few aircraft are flying, the airline argues it cannot keep paying salary expenses for so many employees. The newspaper report also suggests Hong Kong Airlines has received nearly US$10 million in support from the Hong Kong Government to subsidize salary expenses over the last two months.
Problems at Hong Kong Airlines predate 2020
Financial difficulties at Hong Kong Airlines predate the events of 2020. Like homegrown competitors, Cathay Pacific and Cathay Dragon, the airline was hit hard by the pro-democracy protests in 2019. Those protests brought parts of Hong Kong and its airport to a standstill.
Towards the end of last year, Hong Kong Airlines’ operating license was under threat. The HNA backed airline was struggling to pay salaries and meet its financial commitments. Multiple aircraft lessors began legal proceedings against Hong Kong Airlines after the airline defaulted on payments.
Seven planes were seized in December over unpaid monies. Many industry experts viewed this as a precursor to the airline going out of business.
Airline positions for further financial help
But the airline struggled on. Going into 2020, Hong Kong Airlines embarked on a downsizing plan. That would have seen planes go back to their lessors, long-haul destinations abandoned, and hundreds of staff lose their jobs.
In June this year, Hong Kong Airlines asked the Hong Kong Government for financial assistance after Cathay Pacific received a multi-billion dollar bailout package. Some see the proposed flight attendant salary cuts as a strategic move by the airline. Further assistance could become available to Hong Kong Airlines if it doesn’t lay off any further employees.
A substantial salary cut for flight attendants, along with the bulk of its pilots off on unpaid leave, keeps the employees on the airline’s books. But the Hong Kong Government was close to closing down the airline last year. Whether they want to provide more aid to a business they clearly think is close to collapsing is an interesting question.
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