Sqwak7700

Bloomberg:

Lufthansa

Looks like Jade are grounded. Tip of the iceberg, or minor speed-bump?

Farman Biplane

CX will be licking their lips ready to pounce on Jades six 744-400ERF's. Perfect opportunity to dispose of some cash to avoid embarrassingly high profit result. Also good opportunity to fully depreciate some more BCF's. Let's hope it doesn't turn into another missed opportunity.......

404 Titan

Farman Biplane

Aircraft purchases don’t affect the company’s profit. Aircraft depreciation though on the other hand is another kettle of fish.

Iron Skillet

How so, Titan?
Thanks.

404 Titan

Iron Skillet

Very simply capital expenditure balances itself out. The company spends money on a new asset so the cash at bank goes down but the company asset value goes up. Over time though that asset depreciates and it is this that affects the bottom line.

Cpt. Underpants

Correct, except when CX decide to apply "mark to market" principles where the asset is marked down when market forces determine a lower value. A neat way of reducing taxes. A lot.

404 Titan

Cpt. Underpants

Mark to Market is only used on assets who’s value goes both ways, ie assets that both appreciate and depreciate. It was used to great effect during the GFC to right down a huge unrealised fuel hedging loss. It is also used to mark up unrealised fuel hedging gains and has been used in the last couple of years this way. Accounting laws in HK and most countries (except the USA) dictate that companies must show this in their P&L. Depreciation though only goes one way and is the principal way of writing down asset values like aircraft which generally only depreciate in value.