Cathay Pacific backs down, extends pilot housing allowances for a year

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By Jamie Freed

SINGAPORE (Reuters) - Hong Kong's Cathay Pacific Airways said on Monday it will continue paying housing allowances worth up to HK$100,000 (9,560 pounds) a month to its most senior pilots for another year, backing down temporarily from a cost-cutting proposal.

The loss-making airline is undertaking a transformation programme aiming for HK$4 billion in savings over three years from lowering costs and boosting productivity.

But a plan to cut housing allowances given to its longest-serving pilots by an unspecified amount had led recruiters from Chinese airlines to flock to Hong Kong to poach Cathay pilots. Many are expatriate Australians, Americans and Britons who were concerned that they could be priced out of living in one of the world's most expensive cities.

The housing allowances were due to expire on Dec. 29, but Cathay said on Monday it would provide "similar assistance" for the next 12 months to allow time to agree to a new scheme with the pilots union.

"The new accommodation and rental assistance arrangements...are intended to be short-term measures while we continue to pursue long-term options to lower our cost base," Cathay said in a statement.

The airline told its pilots in September the housing allowances cost more than HK$900 million a year, according to an internal memo seen by Reuters, and proposed cuts to the payments, rather than removing the benefits entirely.

The airline's unionised pilots are voting now on whether to raise funds as a buffer against any actions Cathay takes, such as unilateral benefit changes or job losses.

Chris Beebe, the general secretary of the Hong Kong Aircrew Officers Association, said on Monday the vote by members was due to close on Dec. 22. He declined to comment on the housing allowance extension.

The airline completed last week a year-end negotiation with the Cathay Pacific Airways Flight Attendants Union in which it agreed to a 1 percent salary rise next year but capped a year-end bonus at HK$35,000 or one month's salary, whichever is lower, according to the union's Facebook page.

Cathay did not immediately respond to a request for a comment on the year-end bonus.

(Reporting by Jamie Freed; Additional reporting by Anne Marie Roantree in HONG KONG; Editing by Muralikumar Anantharaman)

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