Cathay Pacific C.E.O. Quits as China’s Power Looms Over Hong Kong Protests

HONG KONG — The chief executive of Cathay Pacific Airways stepped down on Friday following a storm of criticism from the Chinese government and state news media over its employees’ participation in the territory’s protests.

The resignation atop one of Hong Kong’s best known international brands could portend greater pressure from Beijing on Hong Kong’s business community as the protests intensify. The airline’s management upheaval came a week after Beijing demanded that Cathay workers who participated in the demonstrations be barred from flying to mainland China, and days after government officials met with top management.

Hong Kong companies are scrambling to assert that they side with the leaders of Hong Kong and China, and against the unrest. Beijing may increasingly demand that they show they mean it.

In a filing with Hong Kong’s stock exchange late Friday, Cathay said that its chief executive, Rupert Hogg, was resigning effective Monday “to take responsibility as a leader of the company in view of recent events.”

Mr. Hogg acknowledged, in an email to employees Friday evening, that Cathay’s reputation and brand had come under immense pressure, “particularly in the all-important market of mainland China.”

“Could we have managed things differently? In hindsight, ‘Yes,’ ” Mr. Hogg wrote, without elaborating. He could not be reached for comment.

The news was first reported by China Central Television, the official state broadcaster, minutes before Cathay Pacific issued its news release or posted its notice to the Hong Kong exchange.

Mr. Hogg, who began working for Cathay’s parent company in 1986 but had been chief executive of the airline for only two years, found himself in an increasingly precarious position as this summer’s anti-government demonstrations intensified in Hong Kong, a semiautonomous region of China.

Protests over a proposed law that would have allowed the territory’s government to extradite criminal suspects to mainland China, where the Communist Party controls the courts, have broadened into demands that local leaders resign and that Hong Kong residents be allowed to vote in free elections.

The protests have also become bloodier, culminating earlier this week in demonstrations at the city’s airport that snarled traffic and raised questions about Hong Kong’s future.

Big businesses have scrambled to reassure the Chinese government that they condemn the mayhem and support Hong Kong’s Beijing-approved leaders. Jardine Matheson, the Hong Kong-based conglomerate that owns the Mandarin Oriental luxury hotel chain, one of the territory’s largest property developers and other holdings around Asia, said on Thursday that it “strongly supported” the local government, and said that recent violence had “seriously threatened the well-being of our community.”

On Friday, Hong Kong’s richest man, the property tycoon Li Ka-shing, bought cryptic full-page ads in several local newspapers, calling in literary language for an end to the unrest.

Mainland China has huge economic heft in this city of seven million people. Once largely dominated by local tycoons and companies that can trace their history back to the Opium Wars of the 19th century, the city’s economy now depends heavily on money from the mainland. Chinese buyers have sent property prices soaring, and mainland developers often outbid local rivals for choice patches of land in a city where attractive plots are scarce.

Like multinationals, many Hong Kong companies also do significant business in the mainland. Foreign firms have often rushed to make sure they do not offend Chinese consumers, who are often goaded into outrage by state-run media. Several luxury brands apologized recently for making T-shirts that suggested that Hong Kong and other territories were not part of China.

Cathay Pacific became the target of mainland China’s ire after one of the airline’s pilots was arrested late last month in Hong Kong and charged with rioting. Not long after, the airline said it would investigate accusations that its employees had leaked the travel information for a Hong Kong police soccer team.

In the past week, Cathay has fired four workers for misconduct related to the demonstrations. Mr. Hogg also warned employees against taking part in protests that had not been granted approval by the Hong Kong authorities.

Still, Chinese state news outlets have continued to criticize the airline’s leadership, and Cathay’s shares have traded at multiyear lows.

China’s big state-run companies appeared to be putting their own pressure on the airline. Bloomberg News reported that China Citic and China Resources, two conglomerates controlled by Beijing, have forbidden employees from flying Cathay for business.

As online outrage was building last week, China’s aviation regulator last Friday imposed what it described as safety measures on Cathay Pacific. It ordered the airline to bar employees who “support or take part in illegal protests, violent actions, or overly radical behavior” from doing any work involving flights to mainland China. It also required that the company submit information about all crew members who fly to or above the mainland to the authorities for approval.

Mr. Hogg said in a message to employees a day later that the airline would comply with the new requirements. But the early reaction from Chinese state news outlets was that the airline’s measures were too little, too late.

As this week began, Merlin Swire, the chairman of Cathay’s largest shareholder, the Hong Kong-based conglomerate Swire Pacific, met in Beijing with the deputy head of China’s air safety regulator. Swire Pacific declined to say what was discussed at the meeting. The Chinese aviation authority did not reply to a faxed request for comment.

A day later, Cathay and Swire Pacific issued nearly identical statements condemning “all illegal activities and violent behavior” and expressing support for “a strong and respected rule of law.”

On Wednesday, the airline said it had fired two pilots for violating the terms of their contracts.

Friday evening, it announced that Mr. Hogg had stepped down.

The airline said he would be replaced as chief executive by Augustus Tang, a director of John Swire & Sons, the holding company of Swire Pacific. Cathay’s chief customer and commercial officer, Paul Loo, will be replaced as well, the company said.

In a statement, Cathay’s chairman, John Slosar, said the airline was committed to the principle of “one country, two systems,” the phrase used in both Hong Kong and China to describe the unusual relationship between the two.

“We are confident,” Mr. Slosar said, “that Hong Kong will have a great future.”