Let's forget the gain on fuel hedge because thats just an "accounting thing", it's not real money. It only really matters when you make a paper loss and need to rape 13 month and call for unpaid leave; now that's real money!
I am quite rightly not allowed to quote information gained on intracx in the public domain; it would, however, seem to the informed observer that the operation was fairly close to break even for the first 6 months (HK$200m loss). There were extraordinary losses caused by the write down of some 340-300 leases (HK$396m) and the book value of some BCF's in anticipation of sale (HK$169m) which inflated this small loss.
Given that the first 3 months of the year were difficult, but the trend vector has been up for the 2nd quarter, one could be semi-postive about the second half of the year. I am willing wager that given the call for SLS and the fuel surcharges loaded onto passengers (and staff
) and the call for governments to lower their airport charges; the timing of these 2 writedowns is extremely convenient. It would be embarrassing to break-even (ish) on operation at such a time of need
However, forget profits: our leaders are concerned by cashflow. This was the rallying cry for SLS: preserve cash! Well HK$4.9b was needed for aircraft purchases, of which HK$5b was borrowed. Nothing remarkable there surely; that's how business works. HK$2.73b were for loan repayments.....
Hang on - the idea is you make money and repay loans. Loan repayments are not an item on your P&L account. Is Nick saying we all need to take pay cuts to repay debt and preserve Cathay's Debt/ Equity ration? Is that really what SLS was all about??... I must have missed that bit in the fine print.
There are 2 things in this world that smell of fish <insert Jeremy Clarkson pause> and one of them is the need for SLS.