1. Unfortunately the pilots` union has neither accepted our offer nor withdrawn its intention to distribute its Hong Kong disruption plan. It is regrettable that the AOA leadership has now chosen disruption over negotiation.

2. Frankly, we have serious doubts over their sincerity of the AOA leadership to reach an agreement given their behaviour over the last two weeks. As the negotiations timetable demonstrates, the AOA leadership has consistently declined or delayed meetings despite our readiness to negotiate around the clock.

3. During the negotiations, they never presented a meaningful counterproposal. As we made concessions, they increased their demands. In fact, at many meetings the negotiators sat at the table with no papers in front of them, no background materials and no laptops.

4. The proposal rejected by the AOA leadership was a comprehensive package. It included better pay, better benefits and better roster practices. Specifically,

* Pay rises of up to 10.5%;

* Contributing 15.5% of the pay increase to pilots` provident funds

* Offering additional overtime pay with a premiums of up to two and a half times their basic hourly pay; and

* Improvements to roster stability and incentive pay.

5. Clearly, we have put a lot of money on the table to keep the Hong Kong public travelling at a time when the airline industry and the regional economy remains shaky. Anything more simply cannot be justified and would clearly compromise our long-term competitiveness.

6. The AOA leadership will now place enormous pressure on pilots. Individual flight crew will need to make some difficult decisions. Cathay Pacific pilots are professionals - among the best in the business - and have their own interests at heart. The airline was clearly prepared to advance our pilots` interests through significant improvements in pay, benefits and roster practices. The AOA leadership`s misguided plans will clearly disrupt Hong Kong and the airline, risking the very interests it purports to represent.

7. I would like to say an important word to our passengers and the people of Hong Kong. The AOA leadership has kept its Hong Kong disruption plan secret so it is difficult to predict the impact. Like a typhoon, it will be impossible to predict the timing or severity of the disruptions. But unlike a typhoon, these disruptions will be entirely manmade—by the leadership of the union.

8. As we have in the past, we will move heaven and earth to move our passengers. We are prepared to charter aircraft and rebook passengers on other airlines. For the moment, we will continue to operate normally and will take bookings on future flights. We encourage passengers to check the status of their flights before leaving for the airport using our Website or our telephone hotlines. We will provide ongoing updates on flight status via the media as well.

9. In closing, I would like to thank the highly capable staff of the Labour Department. They have worked very hard to help the parties reach an agreement and we look forward to their future assistance.

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