Cathay CEO Quits After Airline Caught in Hong Kong Protests

Cathay CEO Quits After Airline Caught in Hong Kong Protests

August 16, 2019

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Cathay Pacific Airways Ltd. Chief Executive Officer Rupert Hogg resigned, a week after the carrier was rebuked by China for staff involvement in the anti-Beijing protests rocking Hong Kong.

Hogg, 57, resigned to “take responsibility” as a leader of the company following recent events, said the airline, Hong Kong’s flag carrier. The board appointed Augustus Tang, 60, as Cathay’s new CEO, according to a statement released Friday.

The shock exit comes after one of the worst week’s in Cathay’s recent history. The airline has emerged as the most visible corporate victim of the political unrest in Hong Kong, with demonstrations against an extradition bill morphing into a full-scale pushback against China’s grip on the city.

Cathay is the biggest airline in Hong Kong and its airport, which was shut down earlier this week by protesters, is the carrier’s hub. After Cathay staff took part in strikes and protests, China’s aviation regulator levied a swathe of curbs on the airline, which is increasingly reliant on mainland traffic. Chinese state-owned companies have started boycotting Cathay, telling their workers not to fly with the carrier. The company was also excoriated by the nation’s biggest bank, sending its shares to a 10-year low on Tuesday.

“This is the right step to repair the relationship with China,” said K. Ajith, an analyst at UOB Kay Hian Pte in Singapore. “Someone is taking responsibility — they are acknowledging the importance of China and its shareholders.”

China’s Cathay Crackdown Bodes Badly for Hong Kong Companies

The resignation was first reported by China’s state broadcaster CCTV, which said Hogg had quit without saying where it got the information.

Hogg took the helm at the 72-year-old carrier just over two years ago, tasked with one of the toughest turnaround jobs in Asian commercial aviation. He was previously an executive with the Swire Group, the Hong Kong conglomerate and Cathay’s largest shareholder. Cathay counts state-run Air China Ltd. as its second-largest investor, with a stake of about 30%.

Once a dominant player in Asia’s premium air travel market with few serious rivals, Cathay brought in Hogg in 2017 after the airline reported its first loss in eight years. Challenges included intensifying competition from budget carriers and deep-pocketed, state-owned Chinese carriers. Incursions into Asia from Middle Eastern rivals such as Emirates Airline and Etihad Airways PJSC targeting business travelers also had an impact.

Through cost reductions, including hundreds of job cuts, Hogg managed to revive the airline’s earnings potential. This year, he spearheaded the takeover of Hong Kong’s only budget airline to enter the no-frills market, after more than a decade resisting such a move to focus on premium services.

Hogg joined the Swire Group in 1986 and steadily rose through the ranks with overseas stints in Southeast Asia and Britain, before being tagged as Cathay’s chief operating officer in 2014. As part of the senior management team, Hogg helped pull together a restructuring plan the company is still executing.

Cathay also said its Chief Customer and Commercial Officer Paul Loo resigned, and will be replaced by Ronald Lam, currently head of the Hong Kong Express no-frills business.

The airline is fully committed to Hong Kong under the “One Country Two Systems” principle, Cathay said in Friday’s statement. “The company is confident that Hong Kong will have a great future.”

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