Side-bar article from same edition:
WHEN CATHAY PLEADED POVERTY
Cathay wasn't always an angry place. Just the opposite: 15 years ago the airline was a very chummy sort of company where the relationship between management and the pilots' was close. Then, the pilots union - the Aircrew Officers Association - was less a union and more a professional organization. It's office (since evicted) was inside Cathay's airport building and both pilots and managers played in the Cathay cricket team.
But things started to change in the early 1990's when Cathay went through a major transformation. It grew big. By the end of the 1980's, Cathay had about 800 pilots, 9000 total staff and a fleet of just 28 aircraft. Nowadays Cathay is around twice that size, with some 1600 pilots, over 14,000 total staff and, by the end of this year, a fleet of 75 aircraft.
"Over the last seven or eight years thing have changed," says Tony Tyler, corporate development director at Cathay Pacific. "We've grown a lot, the union has become more aggressive - they are constantly sniping at us from the sidelines - and over time pilots have withdrawn goodwill on which much of our operations and rostering depends."
But from the pilots perspective, management has consistently chipped away at pay, benefits and working conditions in general for several years, hammering morale to the point that goodwill has become a sick joke.
The atmosphere started to sour in 1993 when Cathay tried to reign in pilots' salaries by adopting a two-tier scale - the so-called A and B scale - copied from U.S. carriers. These separate scales have long-since been abandoned in North America. In a nutshell, veteran pilots continued with the same pay and benefits package, but newcomers joining after 1993 are paid at a lower rate. Nowadays, a long-serving senior captain can take home as much as $20,000 a month in basic salary, while a newly recruited second-officer pockets just $4000 a month.
Then, in 1995, Cathay set up a separate air-cargo division that introduced a third, even lower, pay scale and staffed it separately with pilots hired from outside the company, while pushing its own cargo flights into the new division. The use of some 200 newcomers as a separate pool of labour has delayed promotion for many Cathay first officers who, had the cargo remained part of Cathay's mainline operation, would have been captains by now.
In mid-1999, the company again cut pilots' salaries by up to 27% over three years - the third and last slice taken in July this year. At the time the cuts were negotiated, face with its first loss in its history as a result of the Asian Crisis, the company pleaded poverty in its negotiations with pilots. But only a year later, Cathay bounced back and reported all-time record profits of $642 million for 2000.