Cathay Dragon offered identical terms to pilots over the age of 58.

Captains and first officers on contracts created in 1999, with a retirement age of 55, will be eligible for the scheme if they are 50 and above. Those with contracts dated 2008 or 2018, with a retirement age of 65, will be eligible if they are over 55.

Cathay has projected it will lose HK$9.9 billion (US$1.27 billion) in the first six months of the year as a direct result of the Covid-19 pandemic crippling air travel worldwide.

“As you are aware, we are currently conducting a comprehensive review of all aspects of our business,” the airline told its pilots.

Cathay is conducting a wide-ranging review of its business, which will involve “rationalisation of future planned capacity compared to the pre-crisis plans”, something that could impact jobs. The airline will unveil the scale of changes planned in the fourth quarter of 2020.

Hong Kong’s flag carrier earlier this week said it would send a third of aircraft to long-term storage, or about 60 out of 200 passenger planes, with the first sent to Alice Springs in Australia. It signalled a need to employ fewer pilots.

It added in the memo: “The [business] review is ongoing and we will share further information when it becomes available, however, given that we are operating a heavily reduced network at present and for some time to come, we are in a position to invite some our more senior, Hong Kong-based pilots who wish to leave the group early the opportunity to apply for a voluntary early retirement scheme.”

Cathay Pacific delays aircraft deliveries, slowing Covid-19 cash burn

The airline also said in a statement: “The decision comes after careful consideration and is an effective way for the group to manage costs. Having received interest from pilots in early retirement schemes and having consulted with pilot representatives, we are hopeful there will be positive uptake.”

Cathay was burning up to HK$3 billion a month from February but losses have since narrowed to HK$1.5 billion.

It has carried less than 1 per cent of its normal daily passenger volume and its flight schedule has been reduced to single digits for at least three months. The company has responded with pay cuts for frontline staff and executives, among other measures.

The Hong Kong government stepped in with a HK$27.3 billion rescue package in June as part of the airline’s wider HK$39 billion capital restructuring to prevent it from collapsing.

In the memo, the airline also told pilots who may have felt uncertain about the future of their job: “There may be appetite amongst this group for the opportunity to retire early.

“We also appreciate that the further way you are from your planned retirement, the more challenging this can be, so we have taken this into account when designing this scheme.”

The Hong Kong Aircrew Officers Association, which represents the 4,100 Cathay pilots, could not be reached for comment.

For 30 years, Cathay has sought to restructure soaring pilot costs and generous allowances. A significant portion of its aircrew are expatriates who have worked for the airline for decades.

The carrier’s 2019 annual report shows 2,738 “flight staff”, thought to be nearly all pilots, take home at least HK$1.5 million a year, including 1,330 who earn at least HK$2.5 million annually.

The Cathay Pacific Group employs 34,200 people as of last year. It recently laid off a total of 566 employees as a result of the closure of its cabin crew bases in the United States and Canada.

Across the airline industry, frontline jobs are being slashed as airlines adjust for a prolonged period of lower demand for air travel.

British Airways agreed to a deal with its pilot unions to trim 270 out of 4,300 roles – far lower than the 1,255 cuts originally sought.

Meanwhile, United Airlines and American Airlines have warned they may need to adjust their workforce by 36,000 and 25,000 respectively, referring to means such as mass layoffs or pay cuts.