Company is losing money, noted. Just don’t cut my housing allowances.

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If you are the new CEO of a losing money company, what would you do if your company is ‘bleeding’ money because of high operational costs? Naturally, you will start to cut your operational costs. Hopefully you are also paid lower than the previous CEO who would have been asked to go earlier for causing the company to lose money. Usually, if the company is overstaffed versus the sales revenue, then the first to go would be the excess manpower. Sad news of course but if not done properly then whole company collapses and no one has a job too. What happens when the company is now lean? Then, the company starts to get mean as well. Any allowances which has been given over the past many years, during all the good years would have to be reduced too. It is not an easy decision and it is even harder to implement.

This is where we come to understand who is more powerful. The company or the talents that they may lose. ( Are you one of these special talents? ) Especially if the talents are scarce in the market and many companies are waiting to grab them. A very good example? Experienced pilots. There are MANY new pilots and there has been news of pilots without work but experience comes only with years of flying. That is the reason these highly experienced pilots are paid highly. Cathay Pacific Airways was looking to cut the housing allowances of their pilots but has since extended the payment of housing allowances. The full news article in TheStar here.  Perhaps the pilots (especially the best among the rest) were saved by the timing for now.  It is holiday travel period and because the head hunters representing rivals are waiting by to poach any available ones. (Let’s be savvy to the fact that Cathay Pacific is loss-making and it has to undertake a transformation programme so that it can be competitive. It is aiming to save HK$4 billion in 3 years. In other words, it could delay but cannot not do it.)  Full article here. 

Within the article, the most important thing we should note would be this. “Recruiters from Chinese airlines have flocked to Hong Kong to try and 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.”  It says that these expatriate pilots are concerned that they could be priced out of the world’s most expensive cities. It was also quoted within the article that the housing allowances for the most senior pilots could be worth up to HK$100,000 (RM52,000) per month. Assuming the more common pilots receive just HK$50,000 (RM26,000), this is still a very high number. With ever more newer competitors, prices will be key. It is not about matching the competition’s prices but it is all about value. Perhaps prices could be  10-20 percent higher and people would still buy but what if the prices are 4-5 times higher? Happy flying.

written on 12 Dec 2017

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