Cathay’s Slosar to be CEO as China growth drives record profit

The Pak Banker - - Company& -

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

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