Cathay Pacific loses millions as anxious staff fear China takeover

Bloomberg

In late January, staff of Cathay Pacific Airways Ltd were invited to an online meeting with senior management. It was supposed to be a debrief on the airline’s financial performance, but when the floor was opened to questions, the first was whether Hong Kong’s flag carrier would be taken over by its state-owned shareholder Air China Ltd.
Clearly annoyed, Cathay Chief Executive Officer Augustus Tang dismissed the notion, according to a recording heard by Bloomberg News. He called it “really sensational and hypothetical” and “grossly untrue.”
The audience of pilots, flight attendants and other employees was unconvinced. That the subject was even raised reflects the level of anxiety and distrust at the 75-year-old airline, which has gone from being a symbol of Hong Kong’s openness to one of its decline.
Made a cautionary tale for businesses that didn’t rein in their staff during 2019’s anti-China protests, Cathay has since been hammered by some of the most stringent travel curbs in the world, as Hong Kong’s government strives to toe Beijing’s isolationist line on walling out the virus.
The restrictions have decimated Cathay’s passenger business, leaving it more reliant on cargo operations for income. The airline is flying at about 2% of 2019 capacity and is bleeding as much as HK$1.5 billion ($192 million) a month.
Cathay’s second-largest investor with a 29.99% share, Air China can’t raise its stake without bidding for the entire company, thanks to a 2006 shareholding agreement.
The Beijing-based carrier has downplayed that possibility, as well, with Non-Executive Director Stanley Hui saying in January a takeover “has never been in the minds of anyone in Air China.” Still, such is the level of suspicion among staff at the storied carrier that speculation persists about the government’s plans for the airline, according to interviews with multiple current and former Cathay workers.