Cathay in Crisis

The airline business is as tough an industry as there is. Making money is always a challenge and operations are prey to issues and events over which management has absolutely no control. One of Asia’s most successful airlines, Hong Kong’s Cathay Pacific Airways, is in crisis mode, victim of political turmoil and the heavy hand of Chinese influence.

Back in March this year then Cathay Pacific Airways chief executive Rupert Hogg was seeing a light at the end of the tunnel. He had taken the helm of the Hong Kong carrier in 2017, charged with dragging it out of the financial doldrums following losses of $73 million in 2016 and $160 million in 2017, its first back-to-back deficits in 71 years. Intense competition from low-cost carriers and rapidly expanding Chinese operators leaking long-haul travellers away from its hub had taken their toll. His mission was to implement a three-year transformation plan, including staff cuts at home and abroad, to get the airline back into the black.

Halfway through that plan he was able to report surprisingly good news. Cathay was again making money in 2018. He was, however, not boasting about the result. “It’s good to be in the black and it’s good to be in the black at the airline,” he said at the time. But the reality, he pointed out, was that the US$240 million income the airline made wasn’t a huge amount when over US$100 billion was being invested. “Clearly, we want to do better and we’ve got plans to do better,” he mused. There remained a long, hard road ahead. Hogg could hardly have imagined just how short that road would be in terms of his involvement. Seven months later he is gone, a victim of the current political crisis in Hong Kong and the demonstrations that at one stage crippled the city’s airport, caused the cancellation of a thousand flights and turned Cathay’s recovery plans to dust. Also stepping down was Board Chairman John Slossar, who had also been chief executive between 2011 and 2014.