Cathay’s Slosar to be CEO as China growth drives record profit
HONG KONG: John Slosar is set to take over as chief executive officer of Cathay Pacific Airways Ltd. as a global economic rebound and growth in China help put the airline on course for a record annual profit.
Slosar, who will be promoted to CEO on April 1, helped Cathay boost passenger numbers 11 percent through October as rising wages in China spur business and leisure travel. The country's surging exports have also made the Hong Kong-based airline the world's largest international air-cargo carrier as it flies Chinese-made electronics to the U.S. and Europe.
"The airline has been performing well this year," said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. "Slosar will help ensure continuity."
Slosar, 54, has worked for Cathay Pacific parent Swire Group for about 30 years, the last three of which he has spent as the airline's chief operating officer. He will take over as CEO from Tony Tyler, who is leaving to become head of the International Air Transport Association trade group, Cathay said in a Dec. 3 statement.
The carrier, the world's third-largest by market value, didn't immediately reply to a request for an interview with the incoming CEO that was made outside of regular office hours. Slosar, also chairman of Swire's beverage unit, and Tyler will hold a press conference today at 4 p.m. in Hong Kong. The two executives will also tomorrow unveil new products at an event with thousands of guests, according to a media invite. The airline intends to add premium-economy cabins and replace coach-class seats in long-haul planes, three people familiar with the plan said in October.
The carrier rose 1.9 percent to HK$24.05 at the lunchtime trading break in Hong Kong, compared with a 0.6 percent gain for the Hang Seng Index. The airline has surged 66 percent this year, the biggest gain among the 45 companies in the benchmark index, which has climbed 7.3 percent.
As COO, Slosar helped steer Cathay through a worldwide travel slump during the global recession that contributed to the airline's first annual loss in a decade in 2008. The carrier pared services and offered staff unpaid leave to slash costs during the slowdown. Slosar, Tyler and Chairman Christopher Pratt also waived bonuses.
"Slosar has been very much a hands-on man," said Andrew Orchard, an analyst at Royal Bank of Scotland Plc in Hong Kong. "He's not a stranger to the business."
Slosar, who studied at Columbia University and the University of Cambridge, was head of Swire's beverage arm before becoming Cathay's COO. The drinks arm bottles Coca-Cola Co. beverages in China and Hong Kong, and Slosar often drinks Cokes at conferences and company events.
Cathay plans to increase passenger capacity 11 percent next year, as the economic pickup revives travel. The airline is also due to receive nine new widebody passenger aircraft. The company had a fleet of 166 planes as of June, including its Hong Kong Dragon Airlines Ltd. unit and a cargo venture with DHL.
The airline will begin taking delivery of 10 on-order Boeing Co. 747-8 freighters next year following production delays as it boosts cargo operations. Cathay is also forming a freight venture with affiliate Air China Ltd., the world's largest carrier by market value, to access hubs in Shanghai and Beijing. Flights are due to start within the next month.
Cathay also ordered 36 Airbus SAS and Boeing widebody planes in August to help boost services to Europe and North America. The airline expects to more than double profit this year to at least HK$12.5 billion ($1.6 billion) because of the travel pickup and the sale of stakes in an air-cargo handler and a maintenance company.
Cathay, which generates about half its sales in China and Hong Kong, faces increasing competition as China Southern Airlines Co. and China Eastern Airlines Corp., the two largest mainland carriers, add new planes and boost overseas services. U.S. carriers including United Continental Holdings Inc. and Delta Air Lines Inc. are also expanding flights to Asia, lured by economic growth in China that's triple the U.S. rate and greater access to Tokyo's recently expanded Haneda airport.
Slosar also faces potential labor action in ongoing salary negotiations with pilots. Cockpit crew last month voted to allow union leaders to possibly recommend a work-to-rule, which would see them shunning overtime. At the same time, they rejected beginning such steps on Dec. 1.
"A big task for Slosar is managing relations with the air-crew unions," Lun said. "The air crew are the bread and butter of operations at an airline." Calls to the head office of the Hong Kong Aircrew Officers Association outside regular office hours went unanswered.
Slosar has worked with Swire's aviation division in Hong Kong, the U.S. and Thailand since joining the group in 1980. He became managing director of maintenance unit Hong Kong Aircraft Engineering Co. in 1996. Two years later, he became managing director of the group's beverages arm. -Bloomberg