(WSJ) Cathay Pacific Airways Ltd. is replacing its chief executive, Ivan Chu, just weeks after the Hong Kong-based carrier reported its first annual loss in eight years and ahead of plans for major cost-cutting.
Rupert Hogg, Cathay's chief operating officer, will succeed Mr. Chu as CEO from May 1, the airline said Wednesday. The airline also announced several staffing changes as part of a restructuring of its top management.
The senior-management shuffle follows the carrier's worst full-year results since the financial crisis in 2008.
Cathay last month reported a net loss of 575 million Hong Kong dollars (US$74 million), as it reeled under massive fuel-hedging losses and intensifying competition despite robust traffic demand in the region.
The likes of Cathay and Singapore Airlines Ltd. have been buffeted by the rapid growth of budget airlines and the fast expansion of Persian Gulf-based carriers and Chinese rivals.
Cathay's move to replace Mr. Chu, a 55-year-old Hong Kong native, isn't a surprise to the market.
Since he took the CEO post in 2014, the carrier has faced a deteriorating outlook amid strengthening competition for economy seats and softer demand for premium travel.
For years, Cathay was a dominant player in the premium-airline space, targeting business and wealthy travelers willing to pay much more for connectivity and comfort, and it had thrived.
Cathay recently upped the ante, spending millions of dollars on a revamped loyalty program, new airline lounges, and improved premium-class products on new aircraft.
Its latest efforts haven't been rewarded, however, as demand for first- and business-class services weakened significantly since last year amid renewed global uncertainties.
Meanwhile, competition for economy-class sales has become much more intense, with the rapid growth in budget carriers and Chinese airlines crowding the marketplace with cheap seats.
The airline's high cost base is no longer able to sustain its business, prompting the carrier to recently unveil plans to become leaner. Mr. Hogg, 55, will be overseeing Cathay's efforts to cut 30% of its head-office management costs, and the airline hasn't ruled out possible layoffs.
Mr. Chu will be redesignated as a nonexecutive director of the carrier and will remain in Swire Group Cathay said. Swire owns Cathay via its conglomerate unit Swire Pacific Ltd.
Mr. Hogg joined the Swire Group in 1986. He has worked with the group in Hong Kong, Southeast Asia, Australia and Britain. He was appointed as the carrier's chief operating officer in March 2014.
Source: Wall Street Journal by Joanne Chiu
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