Loss-making Cathay Pacific on Thursday announced there will be no bonuses for its employees this year, but it will offer “ex-gratia payments” to staff that are managers and below.

“Whilst our transformation programme is making good progress, we continue to face some stark business and commercial challenges. Therefore, the company will not be able to pay the Discretionary Year-end Bonus to eligible employees,” Cathay CEO Rupert Hogg wrote in an internal message seen by RTHK.

Cathay said those eligible for the ex-gratia payment will get the equivalent of one month’s salary, capped at HK$35,000.

Hogg noted that staff who are senior managers or above, including himself, will not get the special payment. “We appreciate this is disappointing news, but our financial position is such that it is not possible to extend payments to this group.”

The Hong Kong carrier also announced a one percent pay rise for ground staff and cabin crew.

Cathay laid off 400 staff in June as part of a three-year cost-cutting exercise after it lost HK$3 billion last year.

“Although we have seen signs of small improvements in our business, there is still much to be done to deliver our transformation programme," Hogg added.

"We are undergoing the biggest change in our organisational history and whilst we are well on the way now, none of us should underestimate the scale of that challenge."