Friends and executives clinked their champagne flutes for Rupert Hogg late last week at a sky lounge offering a view of Hong Kong’s Victoria Harbour, wishing him success as he assumes the CEO role on May 1 at Cathay Pacific Airways. The 55-year-old veteran executive with the Swire Group, the Hong Kong conglomerate and Cathay’s largest shareholder, is about to take on one of the toughest turnaround jobs in Asian commercial aviation. Once a dominant player in Asia’s premium air travel market with few serious rivals, Hong Kong’s marquee carrier has hit an air pocket. Last month, the airline reported its first loss in eight years, in part from a fuel hedging bet gone bad. That was a one-off misstep, but far bigger challenges loom, including intensifying competition from budget carriers and deep-pocketed, state-owned Chinese carriers for cost-conscious passengers and incursions into Asia from Mideast rivals such as Emirates Airline and Etihad Airways for the business traveler. In recent years, Cathay has had to sell tickets below cost to keep its planes full and its operating costs are higher than most rivals. Sales per employee at Cathay in the latest fiscal year was about $352,614, while it was $473,268 at Delta and $414,610 at Qantas. Cathay’s stock has tumbled 25% since the incumbent CEO Ivan Chu took over on March 14, 2014. As part of the senior management team under Chu, Hogg helped pull together a restructuring plan announced earlier this year to help cut as much as $514m in costs over three years -- a strategy he intends to stay with now that he’s boss. “We’ve got a plan,” Hogg said at the event on April 21. “It’s the three-year business transformation program. We’ll work through this.”<br/>
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In the three years since he merged US Airways with American Airlines, CEO Doug Parker has been a preacher of sorts, arguing that it’s a new world order for US carriers and that the bad old days are over. Airline investors, which now include billionaire Warren Buffett, have been leery of this optimism, given the industry’s history of good times begetting bad behavior on worker wages and flight capacity. The latest battle between labour and capital is in Texas, with American Airlines spooking Wall Street yet again by increasing pilot and flight attendant salaries an average of 6.5%, or by a total of $930m through 2019. “This is a seminal event, and represents the first, credible potential blow to our long-held ‘it’s different this time’ investment thesis,” JPMorgan Chase & Co. analyst Jamie Baker wrote Thursday, calling himself “troubled” by the airline’s “wealth transfer of nearly $1b” to labor groups. Responding to skeptical analysts the day after the pay raise, Parker described the higher wages as a correction to years of “incredibly difficult times” for airline employees. He also adopted a different twist in his long debate with investors: Every bad thing airline owners have feared since the Great Recession has actually happened and profits are still strong. “All the things that I think people were worried about, we’ve done, and we still have a business that is producing returns like it’s never seen before,” Parker said Thursday, citing a glut of new flying that occurred when fuel prices plunged in 2015, labor wage hikes, and volatility in fuel prices, which began rising last year.<br/>
American Airlines said Thursday it had deferred the delivery of several wide-body Boeing and Airbus jets, in the latest sign of oversupply in the market for long-distance airliners. The decision by American to push back some of its Boeing and Airbus orders comes two weeks after Delta said it was reviewing wide-body jet orders to address excess capacity, noting that reductions were likely over the next several years. While demand for smaller and more standardized narrowbody aircraft has proved resilient to economic weakness as leasing companies move them to where they are most needed, the market for the more customized widebody jets is more easily saturated as manufacturers bring out competing models simultaneously. American said alongside its earnings on Thursday that it was delaying first delivery of its Airbus A350 jets from 2018 to 2020 and deferring delivery of two Boeing 787-9s to Q1 2019 from Q2 2018 to "provide widebody capacity flexibility" in its fleet. "We have some flexibility in how long we retain some of our other widebodies, so by pushing back the A350 we can keep those other planes longer, or not, in line with demand," American spokesman Joshua Freed said. American Airlines has 22 A350-900 passenger jets on order, according to the latest data from Airbus, which was hit by Delta’s decision to discuss delays in wide-body jet deliveries. Delta has no wide-body Boeing jets on order, but has unfilled orders for more than 50 Airbus wide-body jets including 25 A350-900s, the same number of future A330-900 aircraft and one current A330-300 model.<br/>