Swire’s dilemma over Cathay as China tightens grip on Hong Kong
For many people in Hong Kong, it is hard to imagine the city with its home airline controlled by any group other than Swire Pacific. Alongside Jardine Matheson, Swire is one of two British colonial trading houses that still loom large over the former UK colony. It has run Cathay Pacific Airways for more than 70 years. Under Swire’s stewardship, Cathay grew into one of Hong Kong’s most recognised global brands as the then British colony transformed itself from a sleepy Chinese entrepôt into a dynamic international business and financial hub. But then Hong Kong is rapidly changing in lots of ways that were previously inconceivable, especially as a tough new Chinese national security law adopted in July chips away at the territory’s previously robust civil freedoms. Cathay becoming, say, just another subsidiary of its second-largest shareholder, Beijing flag carrier Air China, would be entirely consistent with the current zeitgeist in Hong Kong. It would also arguably be a good thing for Swire, which is perhaps best thought of as a jumbo jet with four engines. These include a cash-cow property arm, a similarly successful Coca-Cola bottling division, Cathay and a maritime services unit whose fortunes are largely tied to the offshore oil industry. Cathay and the maritime unit have traditionally hedged each other. Low oil prices flatter Cathay’s bottom line but depress servicing demand from offshore oil rigs. When oil prices are high, Cathay suffers but the maritime business booms. As a result, Swire shareholders have traditionally been able to assume at least three of the group’s engines will be firing nicely. But then came Covid-19, which has hit both aviation and oil hard. Worse still for Swire, Cathay was already coming off a terrible year because of the increasingly violent clashes between Hong Kong pro-democracy protesters and police through the second half of 2019. The unrest had a big impact on business and tourist travel to Hong Kong. Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-11-11/oneworld/swire2019s-dilemma-over-cathay-as-china-tightens-grip-on-hong-kong
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Swire’s dilemma over Cathay as China tightens grip on Hong Kong
For many people in Hong Kong, it is hard to imagine the city with its home airline controlled by any group other than Swire Pacific. Alongside Jardine Matheson, Swire is one of two British colonial trading houses that still loom large over the former UK colony. It has run Cathay Pacific Airways for more than 70 years. Under Swire’s stewardship, Cathay grew into one of Hong Kong’s most recognised global brands as the then British colony transformed itself from a sleepy Chinese entrepôt into a dynamic international business and financial hub. But then Hong Kong is rapidly changing in lots of ways that were previously inconceivable, especially as a tough new Chinese national security law adopted in July chips away at the territory’s previously robust civil freedoms. Cathay becoming, say, just another subsidiary of its second-largest shareholder, Beijing flag carrier Air China, would be entirely consistent with the current zeitgeist in Hong Kong. It would also arguably be a good thing for Swire, which is perhaps best thought of as a jumbo jet with four engines. These include a cash-cow property arm, a similarly successful Coca-Cola bottling division, Cathay and a maritime services unit whose fortunes are largely tied to the offshore oil industry. Cathay and the maritime unit have traditionally hedged each other. Low oil prices flatter Cathay’s bottom line but depress servicing demand from offshore oil rigs. When oil prices are high, Cathay suffers but the maritime business booms. As a result, Swire shareholders have traditionally been able to assume at least three of the group’s engines will be firing nicely. But then came Covid-19, which has hit both aviation and oil hard. Worse still for Swire, Cathay was already coming off a terrible year because of the increasingly violent clashes between Hong Kong pro-democracy protesters and police through the second half of 2019. The unrest had a big impact on business and tourist travel to Hong Kong. Story has more.<br/>
