(Bloomberg) -- Cathay Pacific Airways Ltd., Asia’s biggest international carrier that’s conducting a critical review of its business, said senior staff won’t receive any salary increase for 2017 amid a challenging environment.
Non-managerial staff in Hong Kong, where the carrier is based, will get a 2 percent salary raise for next year and a discretionary bonus equivalent to a month’s pay for 2016, the carrier said in an e-mailed statement Friday. Senior staff will receive their bonuses, the airline said.
“We cannot afford to fall further behind, which is why we are undertaking a critical review of our business,” Cathay’s Chief Executive Officer Ivan Chu said in the statement. “We have seen a significant drop in the revenue we generate due to factors such as pressure on yield, excessive capacity and a decline in premium traffic. We believe that 2017 will remain challenging with the same adverse factors having a continued impact on our business.”
Chu has been struggling to revive profits at Cathay amid a slump in passenger yields -- a key measure of profitability in the industry. With Chinese airlines offering more direct services to the U.S. and Europe from the mainland, Cathay Pacific’s Hong Kong hub is no longer so critical for travelers.
The airline said in October that it’s conducting a critical review of its business and its result in the second half of this year “is no longer expected” to be better than that of the first half. In August, Cathay reported an 82 percent drop in net income in the first six months of the year and warned that premium travel was declining.
Shares of Cathay dropped as much as 1.7 percent to HK$10.30 and traded at HK$10.38 as of 3:46 p.m. in Hong Kong trading. The stock has fallen 23 percent this year, the fourth-worst in the Hang Seng Index.