Air Transport World

Everything but the kitchen sink: since the mid-1990s, Cathay Pacific has endured one challenge after another, culminating in last year's SARS crisis.(Profile)(Cathay Pacific Airways Ltd.)(statistical data included)

For many years, Cathay Pacific Airways wooed passengers with the promise of "arriving in better shape" because of its award-winning customer service and cabin amenities. Today, Director-Corporate Development Tony Tyler brags that "no airline is in better shape" given the turbulence that the Hong Kong-based carrier has endured.

Indeed, Cathay's recent history reads like an aviation version of the "Perils of Pauline," encompassing the 1997-98 Asian currency crisis, avian flu, the handover of Hong Kong to China, the transition to the new Hong Kong International Airport in 1998, a long-running dispute with its pilots that flared into open warfare in 1991 and 2001 and, to top it off, last year's devastating SARS outbreak. Yet despite all this the company has made money in nine of its last 10 years, sliding into the red only in 1998 owing to the currency crisis.

Most of all this is a tribute to Cathay's employees, as dedicated and hard-working a group as is to be found anywhere, as well as to a seemingly limitless supply of experienced and talented managers.

In early May it was announced that Chairman James Hughes-Hallett will depart at year end to become Chairman of Cathay's largest investor, John Swire & Sons. As a result, CEO and Deputy Chairman David Turnbull, who succeeded Rod Eddington as MD in 1996, will become chairman. Philip Chen, COO since 1998, is named CEO, while Tyler, in his present position since 1996, will become COO. Tyler and Chen have been with Swire since 1977, while Turnbull joined in 1976.

JP Morgan airline analyst Peter Negline describes Cathay's management team as "one of Hong Kong's best" and they proved it last year when SARS struck like a bolt of lightning and Hong Kong was disease central. In a matter of weeks, traffic fell from 40,000 passengers a day to just 5,000. "On many flights, we had more cabin crew than passengers," Chen said the time. During the month of May Cathay's load factor was just 41.4% and by the end of the month it had parked 22 aircraft as capacity dropped 42%. "We really couldn't cut back any further without closing down the airline," Tyler recalls.

Fortunately the carrier was sitting on a "pile of cash" as a result of frugal management and Tyler claims it would have been able to survive without passengers for up to 18 months. At the same time, he admits, "It's the only time I thought this could kill us." He says there is no doubt that the massive jolts in the late 1990s steeled Cathay for SARS: "We have been focusing on productivity and costs. …

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