Low-cost carrier AirAsia Bhd has slashed bonus for staff getting “good” in their appraisal to 1.5 months from three months the year before at a time when it is starting to see stiffer competition locally.
Staff getting “outstanding” appraisal stand to receive up to three times their monthly pay cheque for their 2013 performance.
The bonus slash comes at a time when AirAsia, for the first nine months ended Sept 30, 2013, saw a strong revenue stream but a big dip in its net profit due to foreign exchange losses on borrowings.
The budget airline saw its yield drop 5.7% year-to-date as both Air- Asia and Malaysian Airline System Bhd (MAS) “embarked on an aggressive capacity expansion to boost topline and achieve economies of scale amid heightening competition driven by Malindo Air’s debut”, according to a sector report by RHB Research Institute Sdn Bhd dated Dec 16.
AirAsia founder and major shareholder Tan Sri Tony Fernandes made the bonus announcement at the company’s annual dinner for the Malaysia- based staff at Sepang, Selangor, last week.
When asked about the slash in bonus payout, the company declined to comment. AirAsia posted a net profit of RM198.6 million on the back of RM3.84 billion in revenue for the first nine months ended Sept 30, 2013. For the same period in 2012, it posted a revenue of RM3.59 billion and a net profit of RM486.2 million.
On its part, loss-making national airline MAS did not award any staff bonus last year and this year. MAS posted a net loss of RM830.2 million on the back of RM11.22 billion in revenue for the first nine months ended Sept 30, 2013, with its group CEO Ahmad Jauhari Yahya expecting the airliner to become profitable by the end of 2014.
Regionally, Cathay Pacific Airways had recently announced that it will award a pay increase to eligible Hong Kong based employees for 2014.
The Hong Kong-based carrier will also provide a discretionary bonus payment for 2013, based on one month’s salary, to eligible staff in their December salary payment.
“While our business has seen some improvement compared to the previous year, 2013 has still been a challenging year for our airline,” its CEO John Slosar said in a recent media statement.
In its report on the aviation sector, RHB Research noted that it has been a challenging year for Malaysian carriers.
“Competition will remain challenging in 2014 but less severe in our view, as Malindo Air has opted to take a more conservative expansion strategy, which bodes well for Air- Asia and MAS,” it said.