Nicholas Ionides ATI/SINGAPORE Cathay Pacific Airways narrowly avoided an all-out pilots' strike early in June by reaching an eleventh-hour agreement with cockpit crew on forced wage cuts.

Cathay Pacific is widely seen as having won its longstanding dispute with cockpit crew over new contract terms, after narrowly averting an all-out strike.

The Hong Kong Aircrew Officers Association (AOA) grudgingly accepted the offer, which includes pay cuts for some pilots, after two days of talks that ended on 10 June under the auspices of Hong Kong's Labour Department. Some operational issues, such as roster practices and the crewing of freighter aircraft, have still to be discussed.

Cathay had suffered damaging flight disruptions from the end of May as pilots reported in sick. The airline had been demanding wage cuts of more than 20% from some pilots and told cockpit crew on 25 May that they had until 11 June to accept new contracts, opt for voluntary redundancy, or lose their jobs.

Pilots' unions worldwide condemned Cathay for its ultimatum, and the International Federation of Air Line Pilots Associations said it was a potential threat to safety. Cathay pilots, represented by the AOA, say that, in launching their "sick-out" on 28 May - which forced the cancellation of hundreds of flights over a two week period - they were "too distressed" to fly because of the ultimatum.

The dispute backdates to early last year, when the airline management told pilots that it was looking for wage concessions. A formal offer was made in March this year, but this was rejected by the AOA. Nine weeks of negotiations failed to bring agreement.

Cathay then angered the AOA in May by handing an ultimatum directly to the pilots. It asked for those on higher-paying A-scale contracts to accept wage cuts in return for stock options. The average concession is 7% for those based in Hong Kong, says Cathay, and 18-22% for those at overseas bases. So-called B-scale pilots - those hired after 1993 on lower-paying contracts - will receive salary rises over three years. For second officers these will run at 4% in each of the first two years and then fall to 3%. First officers will receive a 5% rise in the first year, falling progressively to 3% by the end of the period.

Cathay says that the total package will save HK$1.4 billion ($179 million) over the next 10 years. The airline, which posted a loss last year for the first time in 35 years, claims that Cathay pilots are still among the highest-paid in the world and that the new contracts are the best that it can afford.

Source: Airline Business