SARS and Dragonair

[Flap 5]

I notice that all of the chat on this site refers to CX. However Dragonair is the major carrier into China from Hong Kong. I saw a recent news item showing the inside of the Hong Kong Airport terminal and the departure screens had many cancellations for KA flights.

So how are Dragonair taking this?

[Dragonslaver]

About half the schedule cancelled and about half the fleet parked (some of the parked A/C will be moved to more economical ports outside HKG in the near future because HKG Airport Authority is refusing to reduce exorbitant parking charges in line with reductions announced at SIN and MNL). Many (8 or 9) destinations with negative or marginal profitability before SARS have been abandoned, and it is questionable whether services will return to some of these ports. Most operating flights have <40% passenger load, with many <20%.
On a brighter note, freight is still performing very strongly, with many A-330’s carrying good loads of lower deck freight to help make up for the lack of the self loading variety.
Dragonair has been very profitable over many years, and will be again when SARS blows over, so it is hoped that there will not be a knee-jerk reaction similar to the fiasco in 1997 (A/C disposed of, orders cancelled, training halted, threats of retrenchment….) which resulted in a serious shortage of resources when the traffic returned rapidly a few months later.

[Flap 5]

Less than 40% load factors is bad for KA. I can remember load factors of 85%+ being normal. Are there many A scale pilots left now? It would be expensive for KA to keep them on and with Hong Kong laws allowing employees to be sacked for no reason as long as they receive their 3 months notice I would be surprised if KA had kept many.

[Captain White]

:ok:
All my information and contacts in Hong Kong tell the same story ....

1. KA is the Flag Carrier of the SAR
2. KA is so good due to the quality of its drivers
3. The guys and gals at KA do a great job in difficult conditions
4. KA have kept the remuneration well below CX even in times
of massive profit
5. KA has a massive cash reserve intended for shareholders &
not to support the operation :mad:

If KA lay off its best assets and/or further reduce the benefits below CX; Who is going to go there with any experience ??? Who is going to trust them but most of all ............ Will they ever be able to train the people again in the available time frame when the market takes off again ?????


:{ Thoughts are with you all !!!

[Flying Bagel]

It is kind of sad, the last I heard is that KA only has two months of cash reserves left to hold over. At this rate, they'll probably have to consider layoffs after that time is over. Some are already on unpaid leave as we speak.

Even though they're competition, I hope the best for them, because I know a few good people that work on that side of the fence. And yes, they do run a tight little airline, with good morale and atmosphere.

Who knows, no one is safe in this climate...

[Mr Nice guy]

Flying Bagel, yes they are competition.. but let's not forget we own 19% of this "competitor"..... :)

[Flap 5]

So. How many A scale pilots are there left now?

[Dan Winterland]

Flying Bagel - careful what you say. "A mate told me" type of rumour is going to be helpful to no-one in the current environemt. In fact, the situation isn't quite as bad as you say. The company has a good cash reserve and the frieght operation is doing well. And although some people have taken annual leave early and some opted for voluntary unpaid leave in May, there has been no official unpaid leave policy as such. The state of negotiation on that matter is about the same as on the 'Dark Side'.

[Flying Bagel]

Although that's not what I've been told in regards to the financial situation, I suppose no one actually knows the real state of affairs except for the ones who actually get to look at the numbers.

So the better the news the better it is, in my opinion. And I guess we all should be a bit more optimistic about the whole thing in retrospect.

The WHO still retains the estimate that the epidemic will plateau out in May...

[joebanana]

In fact they have said that it has peaked already in Hong Kong.

Now we just have to worry about that lot in Beijing! :*

[Scooter]

The issues here guys are quite complex but boil down to a one basic fact.

Although the company has cash reserves how long are they willing to commit for whilst those reserves dwindle away with no end in sight for a reverse of this catastrophy?
Sure, they may have a billion and a half in reserves but how long will it be before the board members say enough is enough???

A bit like buying a share for $1 and watching it go down.
How long before you sell and just where do you set the stop price?