Cathay Pacific Airways Ltd 0293.HK -0.28 percent has named a Hong Kong native to head the airline for the second time in its history, as one of Asia’s leading carriers grapples with weaker earnings and increased competition.
Ivan Chu’s appointment as chief executive, effective next March, comes after Cathay Pacific said Wednesday that it barely eked out a first-half profit because of a soft air-cargo market and weak demand for premium seats. The city’s de facto flag carrier is also facing the prospect of more competition on its home turf: Jetstar Hong Kong – a joint venture between Qantas Airways Ltd’s QAN.AU +0.56 percent Jetstar Group, China Eastern Airlines Corp. 600115.SH +0.41 percent and Macau tycoon Stanley Ho’s Shun Tak Holdings Ltd 0242.HK +0.26 percent – has said it aims to receive regulatory approvals from the Hong Kong government to start flights by the end of this year.
Chu has in recent years been the Chinese face of the carrier, often speaking with the local media. He has also been the public face of the airline in handling operational issues such as flight disruptions.
Analysts said having a CEO with Chinese ethnicity could help enhance the carrier’s ties with Air China Ltd 601111.SH -0.49 percent and bridge the cultural divide between the two airlines. “It makes sense at some point to have someone of Chinese ethnic origin in the pilot seat,” said Timothy Ross, head of Asian-Pacific transport research at Credit Suisse. Cathay Pacific owns a 20 percent stake in Chinese flag carrier Air China, which in turn owns 30 percent of the Hong Kong-based carrier.
Chu, 51 years old, who has spent all his working life with Cathay Pacific, joined the airline as a management trainee in 1984 after graduating from the University of Hong Kong. He worked in the carrier’s various operations in the greater China region, Southeast Asia and Australia, and was appointed director of service delivery in September 2008. He was named chief operating officer in 2011.
He will be the second Hong Kong native to lead Cathay Pacific, after Philip Chen, who advanced to the CEO post from chief operating officer in 2005. Chen was named to run the China investment strategy of Cathay Pacific’s conglomerate parent, Swire Pacific Ltd, 0019.HK -0.97 percent in 2007. He later left Swire for a senior position with Hang Lung Properties Ltd
The appointment of Chu isn’t expected to prompt quick changes to the competitive landscape in Asia’s aviation market. Credit Suisse’s Ross said the CEO-designate has yet to lead a major Asian carrier and will steer Cathay Pacific amid intensifying competition, persistently high fuel prices and continued weak demand for air-freight services. “Ivan Chu is very unproven, at least in the context of publicly attributable results,” Ross said.
Chu couldn’t be reached for comment.
Meanwhile, Cathay Pacific and Swire Pacific also said Friday that Swire Chair Christopher Pratt, 57, will retire in March after eight years in the post. Chu will succeed John Slosar, who will become chair of both the airline and its parent company, one of Asia’s oldest trading houses with British roots.
Category: Hong Kong