Cathay's new CEO faces one of aviation's toughest turnaround jobs

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/>