Cathay Pacific Returns to Profit on Fuel-Hedging Gain

[F Scaler]

Cathay Pacific Returns to Profit on Fuel-Hedging Gain (Update1)


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By Wendy Leung
http://www.pprune.org/apps/data?pid=avimage&iid=ioDy_soQoQQ4

Aug. 5 (Bloomberg) -- Cathay Pacific Airways Ltd. (http://www.pprune.org/apps/quote?ticker=293%3AHK), Hong Kong’s biggest carrier, returned to profit in the first half after a HK$2.1 billion ($271 million) fuel-hedging gain offset a drop in traffic amid the global recession.
The airline posted net income of HK$812 million compared with a restated loss of HK$760 million a year earlier, the carrier said in a Hong Kong stock exchange filing today. The airline was estimated to make a HK$475 million profit, based on the median of six analysts.
The carrier ended a run of two straight losses helped by paper profits from fuel hedging following a 57 percent jump in the price of oil. The gain allowed Cathay to weather a plunge in global air travel that contributed to Singapore Airlines Ltd. (http://www.pprune.org/apps/quote?ticker=SIA%3ASP)’s first quarterly loss in six years.
“Full-year earnings will depend on a pick-up in premium traffic,” said Winson Fong (http://search.bloomberg.com/search?q=Winson+Fong&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who helps manage about $2 billion at SG Asset Management H.K. Ltd. “Fuel-hedging gains really aren’t something to evaluate the company’s performance on.”
Cathay made an operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, of HK$2 billion, according to the statement. Sales fell 27 percent to HK$30.9 billion.
Less Capacity
The airline has altered its network, cut capacity, offered staff unpaid leave and delayed a new cargo terminal to curb costs amid the travel slump.
“Yields plunged rapidly in the second quarter,” said Allen Wong (http://search.bloomberg.com/search?q=Allen+Wong&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Quam Ltd. “Earnings in the second half may improve on increasing traffic as the impact of swine flu eases and the economies of the U.S. and China recover.”
Across the Asia-Pacific region, international passenger traffic fell 15 percent in June on the economy and concerns about H1N1, according to the International Air Transport Association (http://www.iata.org). Carriers worldwide may lose a combined $9 billion this year, IATA has said.
Singapore Airlines said last week it may post its first annual loss in 24 years because of plunging traffic. British Airways Plc also reported a quarterly loss last week and said that yields will continue to decline.
Cathay, controlled by Swire Pacific Ltd., rose 2.4 percent to HK$12.94 as at the 12:30 p.m. trading break in Hong Kong. The earnings came after the end of the morning session. The carrier has risen 48 percent this year, compared with an 21 percent gain for Singapore Airlines.
The Hong Kong carrier slumped to its first annual loss in a decade last year after making HK$7.6 billion of unrealized losses on fuel hedges stretching out until 2011. The carrier suffered the losses after oil prices tumbled 69 percent from a record in less than six months last year.
The airline may make a HK$1.3 billion full-year profit, according to the median of eight analyst estimates complied by Bloomberg.
To contact the reporter on this story: Wendy Leung (http://search.bloomberg.com/search?q=Wendy+Leung&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Hong Kong at [email protected] ([email protected])
Last Updated: August 5, 2009 00:52 EDT

[Rook]

"The airline may make a HK$1.3 billion full-year profit, according to the median of eight analyst estimates complied by Bloomberg. "

I see. If the 13th month isn't there I'm going to be mighty unhappy.

[AD POSSE AD ESSE]

For all of the problems we face, we have not changed our position about your jobs, and we have no plans at this stage to respond to the revenue crisis with layoffs.
Of course we can’t guarantee jobs for life – that’s not the way the world works any more – but we know that our team and our network are the keys to our success, and our future.

Best regards,
Tony Tyler Chief Executive


I sincerely hope that the man is not even thinking of asking for more SLS, because if he is, I'm afraid I have some bad news for him....:=

[nitpicker330]

Not just the 13th month but I want the LWOP back as well. Like they did after SARS.

No damn excuses accepted.

[BIMBO HIMONASHI]

Did you read the Chairman's Statement ?
Towards the end it mentions an 'Underlying loss' for the FH of 2009 of $3467.
Sounds like more SLS to me !

[skyman744]

We make a paper loss, they winge! We make a paper profit, they winge even more!! What I want to know ..... do we get a "paper" profit share!!!
:confused:

[SIC]

Don't worry gents. That 7+ billion loss from last year on fuel is now 2 billion less - and we still have till 2011 until all the hedges are wound up. Watch this space but I predict that over the course of the three years the 7 billion loss will actually turn out to be a profit of several billion ( if fuel prices keep going up - which I think they will )

So we can all look forward to a nice bit of profit share in 2011.

[superfrozo]

Yeah, I want my SLS paid back too! Oh, hang on, I never took it. :}

Perhaps it was because I am still waiting for them to pay the hundreds of thousands they owe me in unpaid bypass pay? And for them to start assessing SOs as "suitable". And to stop recruiting DEFOs. And DECs. And generally ignoring my contract wholesale...:yuk:

[badairsucker]

It's simple.

If the company make any profit they should give us our SLS back. We should not be giving them unpaid leave to remain in profit.

A disgrace!!!!!!!!!!!!!

[fire wall]

They read this site
I want my SLS back

[Flap10]

badairsucker from another thread!

Ok, I see you are a little stupid my friend. SLS was a individual choice. No one told you to take it!!!!!!

So tell me why are you now complaining :confused::confused::confused:

[Sqwak7700]

All you whiners deserve what you got. You took SLS without proof that it was needed. Can't say I feel sorry for you. :yuk:

And don't give me this "oh, I just wanted the time off" bull. Nothing has changed and I'm sure you will take it again when it is "offered".

Please do, I have been enjoying the overtime and larger paychecks. :ok:

[Humber10]

I'll have the time off and be on a beach in Thailand, rather than report for work.... you can have the OT, 50 hrs a month is more than enough for me :ok:

[badairsucker]

So tell me why are you now complaining http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/confused.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/confused.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/confused.gif


As I said before Flap 10, if you need me to explain why, then you really are as stupid as I thought.

[arse]

A New York Times article has a slightly different tone to the doom and gloom we are bombarded with!

http://www.nytimes.com/2008/03/05/business/worldbusiness/05iht-air.1.10728228.html

Dowturns are all relative and from the US, ours must look mild!

[Flap10]

Actually badairsucker you are one dumb little bitch that has gotten slapped one too many times. Lets face it you'll be the first to defend the AoA and the first to abandon your AoA mates. You've already proved it! :yuk::yuk::yuk:

[A. Le Rhone]

Please tell me Flap10, badairsucker and Squak7700 are 15 year-old boys playing on dad's computer?

I would find it regrettable that professional pilots could be so abusive and childish in their discourse towards each other. "One dumb little bitch" - surely you can play grown-ups long enough to provide posts that are at least slightly more eloquent.

Back to the topic at hand: We have been told that the savings engendered by SLS would be returned when a profit was made. How soon then can we expect the 1 month salary from CX to be in our payslips?

Assume it will be forthcoming in the August payroll?

Now back to the kids throwing tantrums at each other..........

[Flap10]

A. Le Rhone,

Wars and disputes are not won by people being civilized and eloquent.

I would find it regrettable that professional pilots could be so abusive and childish

You obviously have not walked a picket line before as a professional pilot. Let me tell you it is a sight to behold, but I digress!

Back to the topic at hand: We have been told that the savings engendered by SLS would be returned when a profit was made. How soon then can we expect the 1 month salary from CX to be in our payslips?


Actually if you recall the FAQ prior to the SLS deadline for staff, TT was asked whether the SLS would be paid back when the company was profitable again, and he answered something to the effect of, "no, but you will be working for a company that will be in a stronger financial position".

[cxhk]

We make a paper loss, they winge! We make a paper profit, they winge even more!! What I want to know ..... do we get a "paper" profit share!!!
http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/confused.gif

The best thing I've heard so far.

CX can never make money, we will always either make a paper loss or operating loss, because it seems paper profit doesn't count. :ugh:

[Loiter1]

Reminds me of an old favourite, 'You spin me right round, baby right round like a record baby right round, round, round...'

I bet they have that one playing on repeat on the 7th floor.

[Kitsune]

Cathay back to profit on fuel-hedge gains
By Tom Mitchell in Hong Kong
Published: August 5 2009 06:28 | Last updated: August 5 2009 19:40
Gains on fuel hedging contracts helped Cathay Pacific record a paper profit of HK$812m ($105m) for the first half, masking a 27 per cent decline in revenues.

Excluding nominal oil-hedging gains, the Hong Kong airline recorded a pre-tax operating loss of HK$765m.

Mark-to-market hedging losses had the opposite effect on the airline’s bottom line last year, when it reported a record loss of HK$8.56bn.

“The simple truth is that we continue to lose money,” said Christopher Pratt, Cathay Pacific chairman.

“Our ultimate aim must be to safeguard the sustainability of our business and conserve cash wherever possible.”

The financial crisis has weakened demand for business and premium class travellers, on whom the airline is heavily dependent.

Employers have reined in perks for investment bankers and other corporate executives who used to fill the front-ends of Cathay Pacific’s aircraft.

The airline has been hit by a slump in cargo volumes, especially for high-value shipments from China’s Pearl and Yangtze delta regions to the US.

“This is one of the worst recessions in recent memory,” Mr Pratt said. “The best we can say is that the worst may be over.”

Cathay Pacific executives are concerned that the fall in demand for premium travel and cargo could be structural rather than cyclical. In that case, executives said they would be willing to reconsider their business model.

“We haven’t decided anything yet, but there are no sacred cows,” Tony Tyler, Cathay Pacific chief executive, said.

“If the new normal is that business and premium doesn’t return, then we’ll review that, but it’s still a work in progress.”

Cathay Pacific and Dragonair, its wholly owned regional carrier, have responded to the downturn by taking six cargo aircraft out of service, parking another half-dozen passenger planes and enforcing an unpaid leave scheme for staff.

Mr Pratt denied speculation that the airline had been approached by potential buyers.

“We haven’t received any offers in any way,” he said. “We’re not sellers.”

The crisis in the aviation industry has yielded at least one benefit at Cathay Pacific, whose own executive travel policy gives priority to passengers over company executives.

Airline employees must forfeit their seats if there is customer demand for them.

“We don’t displace revenue-paying passengers,” Mr Pratt said. “But of late that hasn’t been much of an issue.”

Copyright The Financial Times Limited 2009

[spannersatcx]

My understanding of the 'paper profit' is that because it's not really there, that cash reserves are being used to pay normal operating costs, loans for new a/c and the normal everyday running costs (i.e. you and me) etc etc, with the actual operating costs or whatever it is being a loss of HKD795 million, then cash reserves are being eaten up.

Some measures are being looked at, I'm told, to reduce this cost and although the statement is that jobs are not under threat, don't forget they also denied that unpaid leave was an option, shortly before it became one, bearing in mind it had taken some 3 months of planning and checking on legalities etc before it was introduced.

At this time I would be very worried about yours and my future, it is not rosey and it may be shorter than you think unfortunately, or fortunately for some that want out.:ooh:

[A. Le Rhone]

It's difficult to believe them.

It's always be dire: terrible: the sky is falling.

Whenever we say the loads are great they say "ah but the yields are bad", something that unlike the thousands of bums on seats we can't physically verify.

They set profit targets ridiculously high and then moan when their 9% year-on-year improvement (or whatever) is "behind target" so alas things are terrible.

And we as gullible fools are meant to lap it all up.

Yes this is a downturn but there have been downturns before and there will be again. Asia is already seeing the signs of improvement and CX just announced in excess of US$100 million profit.

So firstly, I take all their doom and gloom with a pinch of salt and secondly by their own rationale, the staff who took SLS can very obviously expect that profit to be returned to them.

As sure as night follows day this enterprising part of the world will imminently be marching again on the highway of prosperity and any airline that decides to shed staff (particulary highly-skilled staff) at this time will be very much caught short when that march gathers pace.

I suspect CX know this and all their hoopla is yet another means by which to manipulate staff and psychologically condition them.

I'm conditioned enough thanks.

[Captain TOGA]

According to StileProject: If you own an asset that increases in value, any increase in value is a paper profit, or unrealized gain. If you sell the asset for more than you paid to buy it, your paper profit becomes an actual profit, or realized gain.
The same relationship applies if the asset has lost value. You have a paper loss until you sell, when it becomes a realized loss.
You owe no capital gains tax on a paper profit, though you use the paper value when calculating gains or losses in your investment portfolio, for example. The risk with a paper profit is that it may disappear before you realize it. On the other hand, you may postpone selling because you expect the value to increase further

[ALPHA FLOOR]

Just tried buying full-fare for OCT on cx www. HKG DPS HKG economy 2 adults HKG$18592 tickets only. SQ HKG$6920 for the same thing?????

[Loiter1]

Has anyone been able to open the PDF versions of the Interim report on Intracx? Call me a cynic, but it is convinient that we can't get hold of the raw numbers. I especially wanted to check the note under staff expenses which talked about 'a rise in the average number of staff' offsetting the gains made from SLS/no bonus.

I thought it was the end of the world and we had frozen all hiring! Apparently not.;)

[badairsucker]

FLAP 10 wrote:

Actually badairsucker you are one dumb little bitch that has gotten slapped one too many times. Lets face it you'll be the first to defend the AoA and the first to abandon your AoA mates. You've already proved it! http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/pukey.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/pukey.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/pukey.gif

OK, I think you need to sit down FLAP 10, maybe an anger management course!!!!!




A. Le Rhone wrote.

Please tell me Flap10, badairsucker and Squak7700 are 15 year-old boys playing on dad's computer?

I would find it regrettable that professional pilots could be so abusive and childish in their discourse towards each other. "One dumb little bitch" - surely you can play grown-ups long enough to provide posts that are at least slightly more eloquent.

Now back to the kids throwing tantrums at each other..........


A. le Rhone,

May I request that you edit your post and remove my name from the list of 3 individuals you mentioned in your first post. If you think it's warranted to include me purely because of my choice of wording i.e. Stupid in my assumption towards FLAP 10 then I feel you are completely wrong.

I would appreciate if you could get off your high horse and give up the notion that you are the godfather of maturity and my assumption of FLAP 10 was indeed spot on, please see his reply on this and other threads if you fail to see my point.

[Ex Cathedra]

Wait a second.... The unrealised loss of las year is why we were all asked to take a paycut, while the lesser operating loss was being played down.

And now we have an unrealised profit and it's equally as bad because they're emphasizing the operating loss?

My... If I wasn't blinded by my unconditional support for our dear managers, I'd almost begin to let my mind wander towards considering the unimaginably faint possibility that they might, just might, have been trying to manipulate us towards making sacrifices that might not have been completely warranted?

:hmm:

[geh065]

Airline employees must forfeit their seats if there is customer demand for them.

“We don’t displace revenue-paying passengers,” Mr Pratt said. “But of late that hasn’t been much of an issue.”


:rolleyes: :ugh:

[Rook]

So they say the next step is to park some (I think they said 2 and 4 respectively) 340's and 744s. It seems to me that this is being played. By calling it "parking" instead of "retiring" or" selling" they really make it seem much worse that it is.
They tried to delay the new 777s but now we are told that we are getting a bunch (I think it was 11 by the end of 2010.) This just seems like a fleet renewal plan being twisted to suit the tone of the day. We may not grow as quickly as planned in the past but this "sky is falling" stuff is getting old.
As A le rone mentioned, the targets are set so high that we are set up to fail in this environment.

[Flap10]

badair,

You're quick to point out how stupid everyone else is, but you can't even intelligently answer the question I posed to you, maybe because you fail or deny to see the hypocrisy in your various posts. If you can't think for yourself, just call the AoA hotline, I am sure they will be able to assist you.

For some of you posting here complaining that we have been somehow duped by the company, were you really that naive to believe company propaganda? Or does it make you feel better convincing yourselves that you participated in SLS to help the company, rather than because you were intimidated.

[badairsucker]

FLAP 10

Do you have an AOA fetish??

Your every post has an AOA theme!!!!

boy, you are boring........:ugh::ugh::ugh::ugh:

[luvmuhud]

spannersatcx.........spot on. The operating loss is the concern.

If you were running a business that sold widgets, and due to the downturn you were losing cash each month, your company would be operating at a loss. A 'paper fuel hedging gain' has, for illustration purposes, a similar effect to a charity giving your company a million dollars. It increases your net tangible assets and, on paper, you'll then make a profit for the reporting period. It doesn't, however, bode well for the future, as your company's core business is still running at a loss. That's why our CEO is concerned despite the 'paper' profit.

Yes, like any company, Cathay employs PR spin doctors to the company's advantage. But, if we believe the auditors, the picture isn't pretty.

lmh

[mr Q]

TT suggested on RTHK that CX might have to Officially become a low cost no frills airline if those first and business class time travellers who are unpatriotic and deserting the brand in droves did not mend their ways and start coughing up full fare payment and pledges to travel always at exorbitant CX rates again
sad news no brand loyalty especially in a recession when CX expects.......

[Captain TOGA]

Well they could always ask for some SLS from the geriatric crowd.

[Max Reheat]

mr Q, spot on...

The fuel is costing what plan called for, flights are bursting at the seams with passengers, but we still not making any money. Somebody is not doing their job properly!

If we stopped overbooking to the extent that we are doing, and if we stopped upgrading those diamond and gold MPOs, the B?ankers would start buying in the class of travel which they desire. There is currently absolutely no incentive to pay the going rate for a ticket because they all know that they will be pushed up at least one class, at the expense of everyone else...
The staff who have bought ID90 first, business, or even EY tickets are losing out.
The cabin crew who have to deal with the great unwashed upgrades are losing out
Yes, even TT and CP are losing out with the present policy, due to lost revenue.
The B?ankers are loving it.
If we are continuing to make a loss with load factors as they are we need a change of policy.

[Flaps10]

Just looked up a flight to for a friend. Toronto-Hong Kong-Toronto. $6186. At first I thought wow, that is a really cheap fare, no wonder we are loosing money! Then I realized the price was in CANADIAN dollars ($6186 = 44,311HKD) HOLY S&#T! I had friends fly out two years ago, before the shi-t hit the fan and it only cost them about $1500 CAD each to fly round trip. Where are these low fares people speak of. At $6000+ we are more likely to be pushing people away to other "lesser" carriers than drawing them in. Still, the Toronto flights are pretty much full. :ugh:

[CodyBlade]

Something not quite right.

On standby the whole day cannot get a seat!

[Sqwak7700]

If you can't make money with 85% LF, then you are doing something wrong. Time to move on and try your managing skills at something different. You can't expect your employees to compensate or be accountable for your bad decisions.

If you run a restaurant and it is empty every night, then the problem is the cook. If the restaurant is full but you are still not making money, then your problem is the manager. Plain and simple.

The time for new leadership has come. I can't believe the shareholders have not taken action yet. They must not care much about making money. :D

[Captain Dart]

Maybe the front end revenues are down because the product is rubbish?

Recent PX experience from so-called 'First Class': colleague's seat 'manual recline', neither PTV's working properly and the 'thrombosis bar' under the (hard) seat cushions acting like an alarm clock every hour of sleep. Our cabin crew do their best with what they have to work with, but with the opposition, it does not compare.

'Olympus coffins': almost total sensory deprivation (like the back of a military Hercules). You can't talk, see out or read a broadsheet newspaper. You can't feel well in turbulence due to the offset axis of the seat. You can sleep if you are under six feet, in that case the cabin crew won't run into your legs as they walk up and down. Oh yes, Olympus has an 'alarm clock' too: the next seat's occupant's tray table being slammed up and down into the divider next to your face.

If I'd paid full fare then experienced this product it would be a letter to the CEO and never again. Appalling.

[flynhigh]

Someone said they are adding 11 B777 by end of 2010, so when will they start hiring or with these 11 airframe it's still net gain zero to fleet.

[CXtreme]

(like the back of a military Hercules).

That hurt Capt. Dart ...And I felt like an Airline pilot flying those pongo's, they acted like it was first class going on R&R.

More seriously, the pax complaining if it's not Olympus must compare it to the regional seats as if they see the SQ, EK, Etihad, Qatar or even QF flat beds they will never come back, like so many have already done.

Our girls are really trying hard with a sub standard product.

[Liam Gallagher]

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:mad:) 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:oh:

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.

[Sqwak7700]

"Someone said they are adding 11 B777 by end of 2010, so when will they start hiring or with these 11 airframe it's still net gain zero to fleet."

You are quite right high flyer, because at the end of the day, actions speak louder than words.

Here you have a company that is crying about being "overstaffed", and they go and extend their most expensive pilots that were due to retire for "natural causes". Other majors that are overstaffed for real would give their left nut for age 55 retirement. I know that most majors in the US and Europe are begging their seniors to take early retirement.

Then consider the fact that at Cathay we are chronically understaffed, at all times, that is just how the airline is run. Our reserve coverage is really not reserve because you are awarded trips days in advance - that is not what reserve is for. True last-minute disruptions are covered with O day extensions and G-day callouts.

Then the AOA wins the bypass pay court case. The DFO comes on about how it is not that big a deal - but the company appeals. Then, not a word about it for a few weeks. When does he choose to mention this? The friday when the mid-year figures are released, crying about how the AOA just keeps taking them to court. I got news for you sport, stop violating the contract and the court cases will go away. :ugh:

And who pays to return aircraft early when flights are full? Managers that are trying to staff an airline without hiring, that is who. There are plenty of airlines like AirAsia that are looking for A340-300s to lease. I have a hard time believing that it is cheaper to pay ILFC hundreds of millions to take the planes back than it is to sub-lease them out to AirAsia.

Again, more bad decisions being made and they expect us to subsidize them. I'm not. :ok:

[Max Reheat]

Perhaps the time has come when Sir Adrain and his colleagues should seriously consider shutting up shop!!!
The fuel is costing what they expected, the load factors are ridiculous and still they can't make any money.
Time to cut the losses......:confused:

[HEALY]

Fac6

I agree with what your saying but how did SQ make a loss as well then and thats probably not including hedging stuff ups either.

[Freehills]

Yep, maybe Asia is just catching up with US and Europe, with only the no-frill LCC (SW, Ryanair, Air Asia) able to make money, even when full.

[coded_messages]

As some have stated here... How can CX continue to be top when they have so many old configurations? The SQ A380 is operating daily now Sin - Hkg. How the hell can CX compete with that route when they're flying the 777 and Airbus with ancient C class seats? Hardly rocket science :ugh:

[Freehills]

Yeah but no but yeah - SQ is losing more money. If passengers are only willing to pay for Air Asia/ Jetstar levels of service on HKG-SIN, then spending money on giving them luxury seats in an A380 just increases your losses...

Looks like at Finnair, the CEO has given up!


Finnair Plc Company Announcement FINNAIR'S PRESIDENT & CEO RESIGNS


FINNAIR PLC STOCK EXCHANGE RELEASE 7 AUGUST 2009 AT 0901

Finnair's President & CEO Jukka Hienonen has resigned from his
post.
My four years in Finnair's service has included both periods of success
as well as the increasingly adverse development of the entire sector, and now a
clear change of course is required. I am not satisfied with the results
achieved; the rate of change has been insufficient, says President & CEO
Hienonen.
Many structures as well as the company's culture have been formed in
totally different conditions. With these we cannot do well in the present
competitive environment, but changing them has proved to be extremely difficult.
Some personnel organisations have shown no willingness to adapt.
Finnair has
a good and effective strategy, on which it would be possible to build future
success. It will require a lot of work and also a completely different way of
thinking in terms of working conditions. Finnair has many expert personnel and
an excellent management team, with whom I have been able to work. I wish to
extend to them my warm thanks.

Finnair's Board of Directors regrets Jukka
Hienonen's resignation.
The decision is entirely President & CEO Hienonen's
own. I am sorry at his decision, because cooperation between Jukka and the board
has always been excellent, says Christoffer Taxell, Chairman of Finnair's Board
of Directors.

Jukka Hienonen continues as President & CEO for the time being.
The period of notice in Hienonen contract is six months. Because Hienonen's
resignation is at his own request, no severance pay will be paid.

Finnair Plc

Communications
7 August 2009

[Fac6]

SQ apparently are operating their A380's into HK full! How can you have over 460 seats sold and make a loss on a 3 hour flight? Have you seen how much SQ are charging to fly Singapore to Hong Kong?

[nitpicker330]

Let me see.........................fly in a old cabin 773 from CX with 13 year old regional business class, crap IFE..........

or, fly in a brand spanking new A380 with all the latest gizzmos in Business class.............

Gee, it's a hard choice really.:}

I guess if CX were charging less then....................but wait they're charging the same as SQ............or more.:\

Either the pax don't know or don't care.:sad:

[Freehills]

1375 HKD round trip, including all fuel surcharges and taxes... (according to their web site)

So that is 88 USD or 50 GBP for a three hour flight, with a meal and just about all the booze you want. I find it hard to see how they can make money with that fare, even if all seats are filled!

[Kitsune]

Japan Airlines cuts service after $1bn loss

By Jonathan Soble in Tokyo

Published: August 7 2009 10:05 | Last updated: August 7 2009 17:18

Japan Airlines suffered a record Y99bn ($1bn) loss in the quarter to June, forcing it to cut or reduce services on 16 domestic and international routes and switch to smaller aircraft on more than a dozen others in an effort to save costs.

Asia’s biggest air carrier by revenue secured Y100bn in emergency funding from a group of existing creditors in June after the Japanese government agreed to guarantee new loans.


A former national carrier, JAL had only just returned to profit after a four-year restructuring.

The airline had initially sought an injection of Y200bn and continued steep losses could force the government to stretch its guarantee to cover more funds, analysts said.

Globally, airlines could lose as much as $9bn this year, according to the International Air Transport Association.

Even traditionally strong carriers are struggling. Singapore Airlines has warned it could make its first full-year loss since its founding in 1972.

Finn departure

The chief executive of Finnair quit on Friday after the airline posted a worse-than-expected quarterly loss.

“I am not satisfied with the results achieved. The rate of change has been insufficient,” Jukka Hienonen said.

The Finnish airline cited weak demand and falling ticket prices for the loss of €32.5m ($46.2m), compared with analysts’ forecasts of a €30m loss.

All Nippon Airways, JAL’s smaller but sturdier Japanese rival, fell into a Y29bn loss in the three months to June against a profit of Y6.6bn a year earlier.

JAL’s loss compared with a Y3.4bn deficit a year ago. The airline said on Friday that sales had fallen 32 per cent in the quarter to Y335bn.

The decline was concentrated in its international business, where passenger numbers dropped by nearly a fifth and revenues plunged by half as the airline was forced to offer steep discounts to fill seats.

The airline stood by is forecast for a smaller Y63bn loss for the full year. That projection risks being undone, however, if JAL’s pensioners reject a plan to cut pay-outs, which would generate a one-time saving of Y88bn.

JAL must win approval from two-thirds of its 9,000 pensioners in order to cut benefits. According to an unofficial count by a group of pensioners opposed to the plan, more than 3,000 intend to vote against it.

JAL has sold non-core assets, cut jobs and eliminated unprofitable routes in an effort to turn itself round, but analysts and creditors say more radical measures are needed.

As part of the service reductions announced on Friday, JAL said it would suspend flights to Paris and Seoul from the central Japanese city of Nagoya.

Copyright The Financial Times

[Freehills]

Maybe out of SIN, but on the HK website they are showing 1375. So maybe they are just ripping off their own citizens...

[Night Watch]

Just paid for a full fair out of SIN to HKG this morning on CX..... $400 SGD. Completely full 777.... but not making any money?

[AAIGUY]

1375 is a VERY limted fare.
I've looked a month on.. Not available.. 6-8000 HKG for a Y class ticket.

Flexi Saver
From HKD 6,862
Cancellation fee applies

Flexi
From HKD 8,122


ALL the promo fares you see are extremely limited.. The planes are full.
AND they are charging a bucket full.

Thats the way it is.

EDIT>> Same dates on CX yield a fare fo 3500 HKD

NOTE : To Revenue Management... you need to charge more!!

[Freehills]

According to their latest results:

SIA
Passenger carried (thousand) 3,809
Revenue passenger-km (million) 18,655.0
Available seat-km (million) 26,072.6
Passenger load factor (%) 71.6
Passenger yield (cents/pkm) 10.2
Passenger unit cost (cents/ask) 8.6
Passenger breakeven load factor (%) 84.3

So, yes, if they are going out full they are making money. But they aren't, they are 72% full, and they need to be 84% full to make money.

[cxhk]

Lets average some ticket prices and seats for a flight in 1 month off their site, Actual figures...

EY = $580 C = $2084 and F = $4084 ALL in $ SGD

Their seating config is 399 EY, 60 C class and 12 F Class

399 x $580 = $231,420
60 x $2084 = $125,040
12 x $4084 = $49,008

Total = 405,468.00 SGD = $2,175,643.41 HKD

Now divide that by 2 = $1,087,821.2 HKD per sector which is over $140,000 USD per sector.

Are you suggesting they are losing or making NO money? Even if the flight went 70% full they are still taking $98,000 USD per sector. Are SQ's overall operating costs per sector higher than that?

By the way these are prices quoted off their website http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/smile.gif

Some may argue that travel agents get discounts and that not all tickets are sold at the internet prices. Fair argument but even if a full flight after discounts generated 70% of the revenue the website would generate you're still looking at approx $100,000 USD per sector.

I think you figures are very inflated. First you never sell 60J and 12F for HKG - SIN... usually you end up getting loads like 450EY and maybe 20J and 1F. Plus your price of SGD580 for EY ticket are quite high. I just check on some Hong Kong travel agent site, you can get HKG-SIN return on CX or SQ plus 3 nights of 5 star hotel for HKD2500. So I wonder how much CX actually pocket, maybe HKD600 to 700 each leg? So I think the actual revenue receive maybe less than half of what you have calculated.