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Airlines turn profit from EU freeze on carbon tax: environmentalists
by Staff Writers
Brussels (AFP) Jan 22, 2013

Cathay asks crew to volunteer for early retirement
Hong Kong (AFP) Jan 22, 2013 - Hong Kong flag carrier Cathay Pacific on Tuesday asked its cabin crew to volunteer for early retirement as part of its cost-cutting measures to boost profitability amid a global slowdown.

Cathay has been trying to trim costs after it fell into the red in the first half of 2012 with a HK$935 million ($121 million) loss, partly due to high fuel prices that have also dragged down other regional airlines' performance.

The airline said the scheme would be offered to flight attendants who joined the firm before September 1996, to cut cost as well as to help facilitate recruitment and promotion opportunities.

"It is also part of the airline's cost management measures," a spokeswoman said in a statement to AFP, adding that the airline has not set any target on the number of flight attendants that it hopes would sign up for the scheme.

The carrier has around 9,000 cabin crew members, who serve 170 routes in 42 countries and are among over 20,000 staff the airline employs worldwide. It did not say what number of crew members are eligible for the scheme.

Cathay averted an industrial action by its crews -- which had threatened to stop serving alcohol and smiling at passengers -- over the Christmas holidays last month after it agreed to improve their working conditions.

The protest was sparked by Cathay's bid to give a two percent pay rise to its employees this year, on top of a discretionary one-month bonus for 2012, falling short of the flight attendants union's demand.

Singapore Airlines, one of Cathay's rivals, earlier this month asked its captains to volunteer for unpaid leave after it posted a 69-percent plunge in profit in the carrier's financial year ending March 2012.

Airlines made up to half a billion euros in windfall profits last year by passing on a carbon surcharge to travellers despite an EU decision to freeze its controversial carbon tax, environmentalists said on Tuesday.

Green group Transport and Environment said airlines chalked up extra revenues estimated at 486 million euros ($650 million) even though EU climate commissioner Connie Hedegaard in November decided to "stop the clock" on an EU carbon tax angering the global aviation industry.

She offered to freeze the measure for a year on flights to and from non-European nations amid hopes of negotiating a global CO2 emissions in the framework of the International Civil Aviation Organization (ICAO).

But Transport and Environment said that airlines throughout the year had passed on the cost of their permits to pollute to passengers even though 85 percent of the permits were allotted free, enabling carriers to make up to 1.3 billion euros in windfall profits in 2012.

And the EU freeze had enabled them to make extra profits, the group said.

"The "stopping of the clock" proposal turns revenues raised by airlines to cover the costs of their CO2 permits into additional windfalls," it said.

Asked for comment, Hedegaard's spokesman said "all we can do is ask for greater transparency in tariffs," said Isaac Valero, spokesman for Hedegaard.

The EU imposed the scheme on January 1 last year, but 26 of ICAO's 36 members, including India, Russia, China and the United States, opposed the move, saying it violates international law.

The EU tax forces airlines operating in the bloc, whatever their flag, to buy 15 percent of their carbon emissions, or 32 million tonnes, to help battle global warming.

Pay-up time however was due only from 2013, once billing for 2012 had been completed.


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