Cathay Pacific CEO quits amid China scrutiny over protests

August 16, 2019 18:05
Rupert Hogg has resigned as Cathay chief executive following a week of scrutiny by the Chinese aviation regulator. Photo: Bloomberg

Cathay Pacific Airways (00293.HK) said chief executive Rupert Hogg has resigned in a surprise announcement, amid mounting Chinese regulatory scrutiny of the Hong Kong flag carrier over the involvement of its employees in the city’s protests.

Augustus Tang, the head of Hong Kong Aircraft Engineering Company which like Cathay is managed by Swire Pacific Ltd. (00019.HK), will take over as the carrier’s new chief.

The airline also said Paul Loo has resigned as chief customer and commercial officer, to be replaced by the head of its low-cost arm Hong Kong Express, Ronald Lam.

Cathay chairman John Slosar said recent events had called into question Cathay’s commitment to flight safety and security and put its reputation and brand under pressure.

“This is regrettable as we have always made safety and security our highest priority,” he said in a statement. “We therefore think it is time to put a new management team in place who can reset confidence and lead the airline to new heights.”

Hogg said these had been “challenging weeks” and it was right for Loo and him to take responsibility as leaders.

Hogg’s resignation was first announced by Chinese state television, CCTV. It was unclear, however, if it would help revive the company’s reputation on the mainland.

“The roots are rotten. It doesn’t make a difference no matter who’s leading the company,” a Chinese social media user said on the Twitter-like Weibo platform in a post liked more than 900 times.

Cathay, which has been under pressure from the Chinese aviation regulator, said it was fully committed to Hong Kong under the “one country, two systems” principle and was confident Hong Kong would have a great future.

The airline, which is 30 percent owned by Air China (601111.CN), became embroiled in crosswinds between Beijing and pro-democracy groups in the Asian financial hub after some of its employees took part in the Hong Kong protests.

This week, Cathay terminated the employment of two pilots over their involvement in the protests, after being ordered by China’s aviation regulator to suspend personnel who had engaged in illegal protests.

One pilot had been charged with rioting at a demonstration in Sheung Wan last month, while another is alleged to have misused flight information, according to RTHK.

Two ground personnel have also been fired for similar reasons, the broadcaster said.

China’s aviation regulator demanded last week that Cathay suspend personnel supporting Hong Kong protests from staffing flights that enter mainland Chinese airspace.

Cathay last week reported its first profit for the January-June period since 2016 and said the second half was likely to be better despite a lower forward bookings due to local unrest.

Thousands of protesters occupied the Hong Kong International Airport earlier this week, disrupting hundreds of flights.

On Wednesday, Cathay issued a statement condemning the Hong Kong airport protests, saying that 55,000 of its passengers had been stranded worldwide.

The carrier said 272 of its departures and arrivals were canceled on Monday and Tuesday.

An analyst said Hogg had been highly regarded within the industry, having led a nearly completed three-year financial turnaround plan and the recent acquisition of HK Express.

“It is disappointing to learn of his resignation particularly given this current challenging period,” said the analyst, who was not authorized to speak publicly about personnel changes. Reuters

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