Cathay Pacific Airways Ltd will increase base pay by an average of 3.3% in 2023 and offer bonuses worth the equivalent of one month's salary to Hong Kong-based staff meeting performance targets, its CEO said in a memo on Monday.

"We have moved from 'survival' to 'recovery' and I am so grateful for the collective efforts of all of you as we work together to regrow Cathay," outgoing CEO Augustus Tang said in a message to staff seen by Reuters.

The airline has previously said it plans to hire 4,000 staff over the next 18 to 24 months as it works to rebuild capacity that was cut during the pandemic.

At Cathay, pilot attrition has been higher than normal after more than two years of onerous quarantine norms, combined with permanent pay cuts of as much as 58% made in 2020.

Cathay said last week it expected to reach 70% of pre-pandemic passenger capacity by the end of 2023, up from just 33% by the end of this year as it trained pilots and reactivated aircraft.

The Hong Kong Aircrew Officers Association (HKAOA), which represents some Cathay pilots, said in a statement that any increase in pay was welcome, as was the bonus, but it was not enough to stop an exodus of crew or the airline's growing training challenges.

HKAOA also expressed concern that flying targets on some fleets would rise in 2023, resulting in an effective pay cut of 9% for some pilots.

Cathay said some temporary pandemic-related measures, including reduced productivity targets, had been reviewed and would return to normal but added there had been improvements in productivity-related pay, monthly allowances and children's education allowances in addition to the base pay rise.

The airline on Friday forecast a "substantial" annual loss even though second-half results are expected to improve sequentially thanks to an uptick in travel and air cargo demand. (Reporting by Jamie Freed; Editing by Toby Chopra and Louise Heavens)