Cathay cancels more flights as dispute grows

Cathay announces sackings of 49 of its pilots in the midst of a labor row

HONG KONG, China -- Cathay Pacific Airways Ltd has cancelled more flights in an increasingly bitter labor dispute in which more than 50 pilots have been fired and the holiday plans of thousands of travelers disrupted.

With the help of a costly fleet of chartered planes, Cathay operated 114 out of 143 scheduled flights on Tuesday, which it described as an improvement.

"If this improvement continues ... we will be aiming over the next few weeks to add additional flights so we can get back to our normal schedule," Cathay's director of corporate development, Tony Tyler, told a news conference.

The row escalated on Monday after Cathay sacked 49 pilots, three of whom were union negotiators, and imposed a new pay and rostering package unilaterally in a bid to end to the dispute.

MORE STORIES Cathay gets tough, sacks 49 pilots

"The reason we made these decisions yesterday … we decided we were not prepared to accept what the union was saying, that the dispute would go on until the company's resources were drained … and we felt that firm and resolute steps were necessary."

"We are having to take some short term pain for the long term future of the airline. We simply can't afford to give unreasonable and impossible pay rises to our pilots," Tyler said.

Tyler said the pay and benefits package, with nine percent rises for some pilots, would cost the airline an extra HK$200 million (US$25.6 million) a year.

The airline insists the sackings had nothing to do with the labor action, that they would have happened anyway because of an examination of the pilots' records.

"I don't buy that at all … it's not realistic," John Findlay, General Secretary of the Hong Kong Air Crew Officers Association told CNN.

"The attack that the pilots have been under has been going on since 1993. We can't continue always having the pilot's terms and conditions chipped away at."

No one wins and 49 of our members sacked yesterday, they haven't won."

"The membership believes it was a purely intimidatory action to put pressure on the pilots."

Cathay pilots called the imposed pay plan "bully-boy" tactics and vowed to pursue a work-to-rule campaign they began eight days ago.

Tourism badly affected

With both sides showing no sign of backing down, businesses warned that the pilots' action, working strictly to the terms of their contracts, was hurting the Hong Kong tourist trade.

Some agents handling incoming tours said they had seen their business fall up to 40 percent and were also having to swallow hotel and other cancellation costs.

Passenger queues were shorter at Cathay counters at the airport compared to the large, unruly crowds at the weekend when thousands were stranded, mainly due to Typhoon Utor.

Travel agents said travellers were steering clear of Cathay.

"People making new bookings prefer not to fly Cathay. Others who are booked on Cathay are asking us to make bookings with another airline just in case," said travel agent Amanda Chan.

Hundreds of Cathay flights have been disrupted since pilots began their campaign last Tuesday. Cathay has leased 17 charter planes and crew to keep partial services operating.

Financial analysts estimated the pilots' action was costing Cathay some HK$40 million a day.

It is the second major dispute between Cathay and its pilots in as many years. Cathay imposed pay cuts on pilots, some of whom earn as much as US$450,000 a year, during Asia's financial crisis in 1999.

Its share price has been battered in recent months, losing nearly 29 percent for the year to date. However, the stock ended one percent higher at HK$10.25 on Tuesday.

Reuters contributed to this report.