Cathay Pacific Airways Ltd. (293) named Ivan Chu as chief executive, two days after Asia’s biggest international carrier reported its smallest profit in at least 15 years.
Chu, 51, will take over after annual results are announced in March 2014, and incumbent John Slosar will become chairman, the Hong Kong-based airline said in a statement yesterday. Swire Pacific Ltd. (19), the carrier’s biggest shareholder, said separately that Slosar, 57, will also become its chairman.
Cathay earlier this week reported first-half profit that missed analyst estimates as cargo revenue dropped and declining yields in North Asia offset gains from carrying more passengers. Slosar, who took over in March 2011, cut capacity and phased out planes to revive earnings as competition increased and Wall Street job losses made it difficult to fill premium seats to the former British colony and other Asian cities.
“I had thought Slosar would have had a longer time in the pilot seat,” said Timothy Ross, Hong Kong-based transportation analyst at Credit Suisse Group AG. “At some point, the carrier was likely to have had an executive of Chinese ethnic origin to run the company.”
Christopher Pratt, chairman of Swire as well as Cathay Pacific and other affiliated companies, plans to retire after March, the statements said. Slosar has worked for the Swire group for 33 years while Chu has spent 29 years in Cathay. He has been chief operating officer since March 2011.
The airline’s shares fell 0.7 percent to HK$14.24 in Hong Kong trading yesterday. The announcement was made after the stock market was closed for trading.
Cathay had a restated loss of HK$929 million in the first half of last year. It had at six other semi-annual losses since at least 1998, according to data compiled by Bloomberg.
Chu joined Cathay in 1984 and has worked with the group in Hong Kong, mainland China, Taiwan, Thailand and Australia. Before he became COO, he was director for service delivery. The post of COO has been a stepping stone for the top job at the airline for the last three incumbents.
“There’s some continuity,” said Andrew Orchard, an analyst at CIMB Group Holdings Bhd. in Hong Kong. “At least, there seems to be some succession structure that the company is following. That could only be a good thing.”
Chu will take over as a global churn in the financial industry damps business and first-class travel. Several banks, including UBS AG (UBSN), JPMorgan Chase & Co. (JPM), and Royal Bank of Scotland Group Plc had all asked senior bankers in Asia to fly economy on short-haul routes during the global financial crisis in 2008.
Asian Airlines have invested heavily in the front of their cabins in recent years to capture valuable corporate accounts. While business class and first class take up less than 15 percent of total seats on long-haul flights, they account for half of a flight’s revenue because of the higher prices.
Cathay put on a laser show and hired Lady Gaga, Tina Turner and Marilyn Monroe lookalikes for the December 2010 unveiling of its HK$1 billion ($129 million) upgrade of business-class interiors on its Boeing 777s and Airbus SAS A330s. The carrier said Jan. 18 it had 47 aircraft equipped with the new seats and the upgrade will be completed by March.
In June, Qantas Airways Ltd. (QAN) and China Eastern Airlines Corp.’s Hong Kong budget carrier sold a stake in their venture to a company founded by gambling billionaire Stanley Ho, which may help pave the way for an operating license.
Once set up it will be the first budget airline Hong Kong-based budget airline, and will offer competition to economy class passengers flying Cathay.
“Ivan Chu will continue to face competition from low-cost carriers’ expansion, strategy for China and will have to tackle Middle East carriers,” CIMB’s Orchard said.
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