Cathay ordered to pay nearly $8M in labor case

HONG KONG - A Hong Kong court ruled Wednesday Cathay Pacific Airlines Ltd. unfairly fired 18 pilots amid a labor dispute in 2001 and ordered the airline to pay their former employees nearly $8 million.

The ruling is a blow to Hong Kong's flagship airline, which like other carriers is still recovering from the global economic crisis and swine flu scare that sent passenger and cargo traffic plummeting.

The 18 pilots were among a group of 49 fired eight years ago when Cathay's main pilots' union and management were locked in a dispute over wages and scheduling. The union launched a work-to-rule campaign, discouraging members from working beyond the terms of their contracts, such as flying on their days off or when they're tired or sick.

Hong Kong High Court Judge A.T. Reyes said in a written judgment issued Wednesday afternoon the 18 pilots were unfairly dismissed and wrongfully terminated, ruling that Cathay fired them to warn other pilots.

Reyes said Cathay's stated reasons for firing the pilots — frequent sick days and a negative attitude toward management — were not its true motivation.

"By dismissing them, Cathay hoped to send a strong signal to other union members to comply with management's line or else face a similar fate as the 49ers," he said, using a nickname for the 49 fired employees.

Cathay also defamed the pilots in statements about the firings, the judge said. At the time, the pilots were accussed by executives Tony Tyler and Philip Chen of being selfish.

"Hong Kong is tired of being held to ransom. The time has come for prompt and resolute action," Tyler, now Cathay's CEO, said during the dispute.

Reyes said the executives went too far.

"It is true that Cathay Pacific is a Hong Kong airline. But it does not logically follow from a pilot voting for contract compliance ... that such a pilot does not care about Hong Kong. There is more to Hong Kong than just Cathay," he said. "A pilot may sincerely vote for what he believes to be right in the context of his union's dispute with management and still care deeply about Hong Kong."

The judge awarded 17 of the 18 plaintiffs HK$150,000 ($19,350) each for unfair dismissal, a month's pay each for wrongful termination and HK$3.3 million ($425,800) each in defamation damages. The total, excluding the month's pay, comes to nearly HK$59 million ($7.6 million).

It wasn't clear if Cathay Pacific will appeal. The airline said in a statement it was "disappointed with some aspects of the judgment," but added that its lawyers are still studying the ruling.

The pilots' union, the Hong Kong Aircrew Officers Association, didn't immediately return a call seeking comment.

Others among the 49 fired pilots had also sued but later settled with the airline, accepting 10 months' severance pay and the chance to reapply for jobs at Cathay.

Cathay Pacific rose 1.7 percent to HK$13.12 on the Hong Kong stock exchange Wednesday.

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