Cathay Pacific started Sugust by declaring that its labour dispute with pilots was at an end. But as the month wore on, it was again being forced to cancel flights, this time due to levels of sick leave.

The Hong Kong carrier already estimates that the disruptions have cost it HK$350 million ($45 million) and the abnormal level of sickness among pilots could now cost it more. Cathay's problems began at the start of July when crews, represented by the Hong Kong Aircrew Officers Association (HKAOA), began a strict "work-to-rule" campaign in a fight for an improved pay package and better rostering provisions. It quickly became a public relations fight, but by early August most observers had declared the airline the winner, saying it played hardball and successfully managed to bring about a return to stable flight operations.

There is little local sympathy with the pilots, with Hong Kong leader Tung Chee Hwa, even saying he felt they were already very well paid. Cathay was both praised and criticised for its handling of the dispute, however, taking advantage of Hong Kong's weak labour legislation and sacking 52 pilots. Although it later reinstated one pilot with a demotion from captain to first officer and a pay cut, it said it sacked most of the remainder simply because it had "lost confidence" in them.

The airline managed to bring stability to its operation amid the weeks of disruptions by temporarily chartering17 aircraft from other airlines, slashing destinations from its route network and lowering frequencies. All chartered aircraft have been returned to their owners and it has resumed services to all but two destinations: Colombo in Sri Lanka and Manchester in the UK. It says services to Manchester will remain suspended because of losses on the route while flights to Colombo remain suspended because of security concerns in Sri Lanka (see related story on page 32).

The HKAOA membership continues to discuss a further course of action but Cathay said it considered the dispute over as none of its pilots had rejected an improved pay and benefits package introduced amid the flight disruptions.

Cathay unilaterally imposed the new contracts on its pilots without the blessing of the HKAOA. Talks between the two sides ended late in June after the airline said the union had rejected an attractive package without consulting its membership.

Source: Airline Business