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Hong Kong tourist arrivals have dived by 33%; Cathay Pacific’s top two executives have quit; and Hong Kong’s leading English-language newspaper has reported that the airline’s key shareholder was summoned to Beijing last week and told that “heads had to roll”.

Cathay Pacific’s two resignations include chief executive Rupert Hogg, 57, a respected business figure in the region. Analysts point to Hogg’s success in returning Cathay to profit since becoming chief executive in May 2017, when the group’s losses were mounting.

Hong Kong’s flagship airline announced interim half-year financial results earlier this month which showed the airline back in the black after huge losses in the first half of last year – but 10 weeks of wild protests in Hong Kong have depressed bookings since.

The South China Morning Post reported yesterday that “heads had to roll at Cathay Pacific Airways after British billionaire Merlin Swire was summoned to Beijing last Monday”.

Swire, 45, chairs the huge Swire Pacific conglomerate, the airline’s main shareholder. The Civil Aviation Administration of China (CAAC) asked to meet Swire, who was “told in no uncertain terms” that management changes were needed at Cathay Pacific, a source told the Hong Kong-based paper.

Former Cathay Pacific chief executive Rupert Hogg

Hogg resigned on Friday, along with one of his deputies, Paul Loo, Cathay’s chief customer and commercial officer.

Cathay appointed Augustus Tang as chief executive, succeeding Hogg, and Ronald Lam to succeed Loo. Lam will remain chief executive of Hong Kong Express until a successor is appointed.

“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 a company statement.

The changes come as China cracks down on airline workers participating in demonstrations, and tourism continues to slump throughout Hong Kong.

China warned that Cathay Pacific employees who “support or take part in illegal protests” would be banned from flying to, or over, the mainland. Two Cathay Pacific pilots have had their contracts terminated.

Cathay Pacific needs new management to “reset confidence” because its commitment to safety and security were “called into question,” the company chairman, John Slosar, stated.

 

Yesterday, Cathay Pacific issued the following statement:

We are aware of rumours circulating online regarding a letter claiming to be written by employees of Cathay Pacific. While we cannot confirm the authenticity of this letter, we are taking the matter very seriously and are conducting an internal investigation.

We have shared with major media outlets and the public both in Hong Kong and mainland China the company’s stance, which we would like to reiterate again:

We have been Hong Kong’s home carrier for many decades. This is our home. We have grown with this great city and are committed to remaining at the heart of its future growth and success.

Cathay Pacific is deeply concerned by the ongoing violence and disruption impacting Hong Kong. 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.

Running a global airline, our ever present focus is to ensure safe and secure operations for our customers and staff. We abide by the rules and regulations of the Hong Kong Civil Aviation Department and those of all the countries we serve and over whose airspace we fly. Cathay Pacific will comply with the CAAC safety directives at all times.

MEANWHILE, a Fairfax report from Hong Kong at the weekend painted a picture of territory’s economy tanking and prices plummeting as tourists avoid the streets.

A vendor at Hong Kong’s Li Yuen market for 15 years said few tourists were coming and she had never seen business so bad. Others echoed the sentiment.

Tourist arrivals fell 33% in the second week of August compared to a year ago, the Sydney Morning Herald reported, adding that on Thursday night the Hong Kong government announced a HKD 19 billion (AUD 3.6 billion) financial relief package for small business and households, hoping to boost consumer spending by cutting taxes, fees and government rents and providing HKD 2000 handouts to help people pay their electricity bills.

More than a million Hongkongers marched peacefully in rain yesterday in one of the biggest pro-democracy rallies in the territory so far. No clashes with police were reported.

In yet another advisory update, issued on Friday, Australia’s Department of Foreign Affairs and Trade (DFAT) stated:

“Protests in Hong Kong continue and are less predictable. Violent confrontations have taken place between police and protesters across Hong Kong, including at the International Airport, often following otherwise peaceful protest activities. As crowd control measures, police have used tear gas, including in enclosed areas, rubber bullets and pepper spray. Several people have been injured. Expect road closures and disruptions to traffic and transportation. New access controls are being enforced at the airport. Be alert. Avoid large gatherings and demonstrations. If there are signs of disorder, move away quickly to a safe place. Our level of advice has not changed – ‘exercise a high degree of caution’ in Hong Kong.”

Written by Peter Needham