Cathay Names Rupert Hogg as CEO After First Loss in 8 YearsBloomberg News
Three-decade Swire veteran to take over from Chu on May 1
Airline in the midst of a business revamp to revive earnings
Cathay Pacific Airways Ltd. named Rupert Hogg as its chief executive officer, replacing Ivan Chu, as Asia’s biggest international airline struggles to revive earnings after reporting its first annual loss in eight years.
Hogg, 55, chief operating officer since March 2014 and a 30-year veteran at parent Swire Group, will take over May 1, Hong Kong-based Cathay said in a statement to the stock exchange Wednesday. Chu will become chairman of John Swire & Sons (China) Ltd., according to the statement.
The change at the top, which usually occurs every three years at the carrier, comes in the midst of the biggest business revamp Cathay has embarked on in two decades to help reverse the decline in performance. The premium carrier has been under pressure from low-cost rivals in the region and Chinese airlines that are offering direct routes, even as demand for business travel dips.
While sharing sketchy details of its review in January, Cathay said changes “will start at the top” and it would eliminate some positions as part of the reorganization, with key moves taking effect by mid-year. The airline has set a target of 30 percent savings in employee costs at its Hong Kong head office, it said last month.
Chu was appointed CEO on March 14, 2014, taking over from John Slosar, the current chairman of Swire Group. The carrier’s three most recent CEOs -- Chu, Slosar and Tony Tyler -- were all operating chiefs before assuming the top post, with each holding the job for about three years.
“Cathay’s deterioration in performance means Rupert will spend his CEO tenure addressing the tyranny of urgency,” said Will Horton, a Hong Kong-based analyst at CAPA Centre for Aviation. “Ivan should’ve been replaced earlier but the next generation of leaders were still honing their skills.”
Shares of Cathay dropped about 30 percent since Chu became CEO, compared with a 12 percent gain in the benchmark Hang Seng Index in the same period. The carrier last month reported a net loss of HK$575 million ($74 million) for 2016.
Competition from mainland carriers such as China Eastern Airlines Corp. and China Southern Airlines Co. besides a slew of budget carriers in the region have prompted the marquee carrier to sell premium-class tickets at promotional prices. That has depressed Cathay’s passenger yields, or the money earned from flying a traveler for one kilometer and a key measure of profitability. The gauge fell 9.2 percent last year, while cargo yield plunged 16 percent.
Predicting the challenging environment will continue in 2017, the airline has announced a three-year “corporate transformation” plan to reduce costs by as much as 3 percent, while seeking to increase passenger capacity by as much as 5 percent a year through measures including nonstop flights to new markets.
“It’s easy to focus on the downside of more competition,” Chairman Slosar told reporters on March 15. “The upside is this is where the travel markets are exploding. We just need to figure out how we’re going to position ourselves to take best advantage of it.”
Hogg joined Swire Group in 1986 and became a director and COO of Cathay when Chu took over as CEO. He was previously director for cargo and sales and marketing at the airlines.
Paul Loo will become an executive director of Cathay on his appointment as Chief Customer and Commercial Officer effective June 1, the airline said, while Finance Director Martin Murray will be renamed Chief Financial Officer.
Cathay Pacific Group employed more than 33,700 people worldwide, including about 23,400 for the main airline, according to the interim report for the half year ended June 2016.
— With assistance by Dong Lyu, and Kyunghee Park