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Cathay Pacific has been further embroiled in the turmoil surrounding Hong Kong after announcing the resignation of two key executives, including chief executive Rupert Hogg.
The resignations of Hogg and chief customer and commercial officer Paul Loo, announced on Friday evening, have been widely interpreted by analysts as Cathay Pacific’s attempt at a fresh start, having been on the receiving end of strong criticism by China for its response to the ongoing demonstrations in Hong Kong for close to three months.
Cathay Pacific chairman John Slosar said recent events had “called into question Cathay Pacific’s commitment to flight safety and security and put our reputation and brand under pressure”.
“This is regrettable as we have always made safety and security our highest priority,” Slosar 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.”
Hong Kong-based Cathay Pacific raised Beijing’s ire when it became known some of its staff had joined demonstrations that have filled the Special Administrative Region’s (SAR) streets in recent months in opposition to a proposed extradition bill that may have allowed those suspected of crimes being sent to China for trial.
While Hong Kong chief executive Carrie Lam has removed the bill from the legislative program, the street marches have continued and turned violent as protesters clashed with police and other groups.
In addition to the complete withdrawal of the extradition bill, the demonstrators were calling for the Hong Kong government to retract its description of the protests as riots, drop criminal chargers against protesters arrested and release those in detention, hold an independent inquiry into the actions of the Hong Kong police, and implement universal suffrage.
Most recently, demonstrations took their campaign to Hong Kong airport, resulting in scores of cancelled flights and tightened security measures.
Tensions rise dramatically here @hkairport with around 2 dozen officers @SCMPNews pic.twitter.com/BUUmFAqwnw
— Danny Lee (@AirEVthingTRNSP) August 13, 2019
Live from north security pic.twitter.com/MVrp0cDHTu
— Danny Lee (@AirEVthingTRNSP) August 13, 2019
A clear sign China was turning the screws on Cathay Pacific was the recent demand from the Civil Aviation Administration of China (CAAC) that the airline submit the personal details of all staff operating flights into and out of China, as well as on flights operating over Chinese airspace.
Further, the CAAC also called on the airline to stop any employee who had participated in demonstrations from flying into and out of the mainland, as well as show how it had planned to increase its internal management, enhance flight safety and aviation security standards.
It was, by any objective measure, an extraordinary request that Cathay Pacific, which is heavily exposed to the Chinese market, had little choice but to comply with.
And the market told the story, with Cathay Pacific’s share price dropping to a 10-year low.
Hogg, who began as chief executive in 2017 and has been leading the airline’s three-year transformation plan, said it had been an honour to lead the airline and expressed confidence in the future of Hong Kong as one of Asia’s key aviation hubs.
“However, these have been challenging weeks for the airline and it is right that Paul and I take responsibility as leaders of the company,” Hogg said in the Cathay Pacific statement.
In a more expansive letter to staff that was published by Hong Kong Free Press Hogg said the disturbances in Hong Kong, as well as the subsequent focus on Cathay Pacific, had put “great stress upon the company and our people”.
“This is a grave and critical time for our airlines,” Hogg said in his letter to staff.
“There is no doubt that our reputation and brand are under immense pressure and this pressure has been building for some weeks, particularly in the all-important market of mainland China.
“Some of the damage to our brand may have been caused by external factors but, Paul and I, as the most senior members of the leadership team, have been at the forefront of this crisis and must take responsibility for the way it has been managed. Could we have managed things differently? In hindsight, ‘yes.'”
Further, Hogg said it was his and Loo’s “collective responsibility to take accountability for the situation we now find ourselves”.
“We have decided to step down from our current positions with effect from midnight on Monday,” Hogg said.
“Now is the time for swift and decisive action to restore the trust and confidence of all our stakeholders in Cathay Pacific and to assure them that safety and security will always be our number one priority.”
Cathay Pacific has also reiterated its support for Hong Kong, its government and expressed condemnation of all illegal activities.
It was also investigating reports of a staff letter supporting the anti-government demonstrations in Hong Kong.
“Cathay Pacific is deeply concerned by the ongoing violence and disruption impacting Hong Kong,” the airline said in statement on Sunday.
“We resolutely support the Hong Kong SAR Government, the chief executive and the police in their efforts to restore law and order.
“We condemn all illegal activities and violent behaviour, which seriously undermine the fundamental principle of ‘One Country Two Systems’ as enshrined in the Basic Law.
“All that is special about Hong Kong – its flourishing economy and the safe home it provides for our people and families – rests on a strong and respected rule of law. We must act now to stop the violence and preserve the stability, peace and prosperity of Hong Kong.”
Cathay Pacific said in its recent financial results the political unrest had reduced our inbound passenger traffic in July and had adversely impacting forward bookings.
Augustus Tang, currently running Hong Kong Aircraft Engineering Company, was named as Hogg’s replacement. Tang had been a contender for the chief executive’s role about a decade ago.
Meanwhile, Ronald Lam, who had only recently been tapped to run Cathay Pacific’s recently acquired low-cost carrier (LCC) Hong Kong Express, was appointed the new chief customer and commercial officer.
