Hong Kong Airlines asks pilots to take leave on reduced pay

Hong Kong Airlines Ltd. has asked pilots to take several months leave on sharply reduced pay as Covid-19 lockdowns in China snarl supply chains, weakening demand for air freight—the carrier’s key source of income during the pandemic. 

The financially troubled carrier is calling for volunteers to take leave starting in June through until the end of the year, according to a memo seen by Bloomberg News, which cited the “unpredictable” local and global pandemic situation.

At the same time, Hong Kong Airlines is seeking to bring back a handful of narrowbody A320 planes and staff to cater to “some” demand for passenger flights, the memo said. 

The memo was sent by the airline’s human resources team to senior management and all A330 pilots on Tuesday. Pilots were asked to state by Friday if they were willing to take time off. They will be paid just 1.6 months of basic salary and fixed allowances for the seven months, which won’t be paid until January 2023. 

Pilots were asked to think about the “sustainability of our business” as well as “maintaining the employment of most of our colleagues,” in what will be the carrier’s fourth cost-cutting drive during the pandemic. 

Hong Kong Airlines employs 200 pilots, half of whom currently fly the A330, according to a person familiar with the matter. The carrier has been operating three A330 aircraft in the Asia-Pacific region, mostly as cargo flights, and is planning to bring back three A320s for passenger services, the person said.

A freight service to Sydney, which was operating daily, has been cut to as little as twice a week because cargo is stuck in Shanghai—which is only gradually emerging from a six-week lockdown that disrupted manufacturing and logistics—and amid a general decline in exports to Australia from China via Hong Kong. 

The airline didn’t respond to requests for comment.

Backed by Chinese conglomerate HNA Group Co., Hong Kong Airlines was already struggling before the pandemic hit. A failed expansion into long-haul flying to the US and Canada generated heavy losses, and its woes have triggered several rounds of job cuts totaling thousands of staff.

In contrast, Hong Kong’s flag carrier, Cathay Pacific Airways Ltd., is preparing to ramp up its flight schedules as the Asian finance hub loosens from some of the world’s stiffest Covid travel and border restrictions.