The company has been caught in a political firestorm because of the city's protracted protests that have made Beijing angry. Its business and share price is also hurting – hundreds of flights were canceled when protesters flew over the airport and bookings are down.
"This is a serious and critical time for our airlines. There is no doubt that reputation and brand are under tremendous pressure and this pressure has been building up for a few weeks, especially in the most important market in China," Hogg wrote in a memo to staff Cathay shared with CNN Business. "Could we have handled things differently? In hindsight," yes "."
"New events have called into question Cathay Pacific's commitment to aviation safety and security and put our reputation and brand under pressure," said Cathay Chairman John Slosar in a statement. "This is regrettable as we have always made safety and security our top priority."
Slosar did not elaborate further, but the airline has been suspended in many controversies related to the demonstrations.
China said last week that it would not allow Cathay flights manned by people who have participated in "illegal demonstrations, protests and violent attacks" to use its airspace, a rule the airline said it would follow.
The company source said that one of the pilots was charged with rioting in Hong Kong and had ceased service since July 30.
The airline was forced to cancel more than 150 flights last week in the middle of a day of mass demonstrations and strikes. The protests at Hong Kong International Airport earlier this week led to the cancellation of nearly 1,000 flights.
Cathay said last week that protests were affecting passenger numbers last month and continued to "affect" future bookings.
"It has been my honor to lead the Cathay Pacific Group for the past three years," Hogg said in a statement. "I am convinced of the future of Hong Kong as the most important aviation hub in Asia. However, these have been challenging weeks for the airline and it is right that Paul and I take responsibility as corporate executives."
Hogg will be replaced as CEO by Augustus Tang, Managing Director of Hong Kong Aircraft Engineering Company, another Swire company. Loo will be replaced by Ronald Lam, the head of HK Express, a Cathay subsidiary.
CNN's Laura He, Michelle Toh, and Sandi Sidhu contributed to this report.