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SCMP Reporter

AS Cathay Pacific Airways' 50th anniversary approaches, executives are planning to celebrate the milestone in as low-key a manner as possible.

Management was expected to sell the message that it was the next 50 years that should be focused on rather than the past, given the uncertainty caused by a Chinese company which unveiled plans to set up an airline to compete with the territory's de facto flag carrier, one insider said.

 Low-key celebrations were expected partly because the airline did not want to do anything to offend the mainland at this delicate stage before the 1997 handover of the territory to China.

 It was also because Cathay's past kept coming back to haunt it.

 That a former executive who 'defected' to help start Hong Kong Dragon Airlines (Dragonair) 10 years ago is working with yet another rival, probably could have been prevented.

  As one long-time acquaintance put it, Lew Roberts has a 'track record' of joining the enemy when those with money come calling.

 The acquittance even admitted yesterday that Mr Roberts made the first approach to China National Aviation Corp (CNAC) to help out.

 The former operations man at Cathay who left in 1984 to take up the general manager operations post at then arch-rival Dragonair described himself as a 'mercenary' with 'some dreadful enemies' at Cathay.

 Mr Roberts, who was instrumental in Dragonair's launch a decade ago, is attempting to do the same for CNAC, a state-owned company controlled by China's aviation regulator.

 It aims to launch China Hong Kong Airlines with charter flights to China by April and at this stage there is little doubt it will do so.

 For the first time yesterday, the Civil Aviation Department admitted approval was expected by early next year.

 Given Mr Roberts' track record, industry observers were asking yesterday why Dragonair's management did not make him sign a document when he retired last year barring him from doing it again? Hindsight, of course, is 20-20.

 In Mr Roberts' case, since the 1997 takeover is not far off and questions over Cathay's future had already been asked well before he left Dragonair in May last year, Cathay's parent Swire Pacific should have seen it coming.

 When Cathay and Swire took a large stake in Dragonair in 1990, many of the enemies were sent packing.

 Mr Roberts, however, had close ties with the Chao family, which put up the initial capital to launch the airline, and he was allowed to stay on to the retirement age last year.

 Dragonair has since grown to a very profitable airline - much like Cathay - and is the cause of much envy by Chinese authorities, as it is seen as the 'airline of choice' when flying to the mainland.

 Little surprise that China would want to set up its own airline, many say. Others believe its real goal is to pressure Swire Pacific, which is affiliated with the British-based Swire, into selling down.

 Swire executives vehemently deny this, saying Sir Adrian Swire has had assurances from China its position is secure after 1997.

 At least one analyst said it was time those at Swire, Cathay and Dragonair learned to take their 'heads out of the sand'.

 Deals have been made with China before that did not amount to much - such as problems over regulatory approval to invest in Xiamen International Airport.

 The analysts say Cathay has underestimated CNAC.

 'I think it's pretty obvious to everyone around that things are really shaky for them right now,' one said.

 'They've finally got to admit it themselves.

 'They're not fooling anyone except themselves. Their arrogance in this whole thing is unbelievable.

 'How dumb can you be to let someone like Lew Roberts go, thinking he'll vanish quietly. They've got to wake up to reality.

 'He's a dangerous enemy. Hopefully for the sake of their shareholders, they'll finally realise from all this that CNAC has things pretty well planned out.' To understand the irony of it all one must go back 49 years, when two men formed Cathay, which has, since the September 24, 1946 founding, grown to one of the world's most profitable airlines.

 American Roy Farrell and Australian Sydney de Kantzow each put up HK$1 to register the airline - having met while flying for the China National Aviation Company, the mainland's former flag carrier now known as CNAC.

 Now it is the same but much wiser CNAC that intends to bring down what has become one of the world's most successful aviation powers.

 Three airlines are registered in Hong Kong - Cathay, Dragonair and all-cargo carrier Air Hong Kong - and Swire and Cathay have significant shareholdings in all of them.

 It was not always that way, though. Both Dragonair and Air Hong Kong were formed to compete with Cathay.

 The ire in Cathay's eyes for many years, both were eventually swallowed.

 Swire is attempting to 'buy off' CNAC, having entered into negotiations just months ago to sell it a 10 per cent stake in Dragonair.

 The transaction is still expected to go through by the end of the year, at a cost of about HK$700 million, and it was hoped it would act as a means to pacify CNAC from its plans to launch a competing airline.

 Evidently, it is not enough.

 Many say it appears CNAC will be getting the last laugh by buying a stake in the highly profitable carrier, giving it more of a slice in Hong Kong's aviation scene (it holds a five per cent stake in Cathay already), at a good price.

 Swire's plan might eventually backfire, one analyst said, as CNAC might be trying exactly the same tactic Swire was trying to use with them. Swire might ultimately be the one forced to sell to pacify it.

 'They've underestimated these guys right from the start,' he said.

 'They're obviously a lot smarter than they've been given credit for.' 



China rains on Cathay parade