Don't understand the profit but not a profit

[CokeZero]

Under our Profit Share Scheme, a share of profit is only payable in the event of our airlines being in profit. I regret that is not the case for 2012.

The Cathay Pacific Group reported an attributable profit of HK$916 million for 2012.

So is it a profit or not?

[Capetonian]

As far as I remember from my accountancy course, an attributable profit accrues for the benefit of shareholders only. This is a weasel trick to avoid giving employees a profit share.

[1200firm]

and what is an "operating loss after tax" ???

[Liam Gallagher]

Slosar is referring to the Group making a profit. The Group takes into account the contributions of CX, KA, Air HK and I suppose Air China. Ask yourself, if Air China makes a massive profit and CX a small loss, should you have any entitlement to a share of the Air China profit?

The Profit Share scheme is not really a profit share scheme at all. If you want to share in the Group profit, then use your own cash to buy shares. The Profit Share Scheme is really a motivating scheme. It motivates you to save costs and raise profits. The shareholders sacrifice some profit to reward/motivate you to save more.

Putting this all together, you have no means of influencing the profits of the other airlines in the group and therefore the shareholders do not reward you for Air China/ KA/ Air HK etc performance. You can only influence CX's bottom line and therefore CX needs to make a profit before you have any prospect of a "profit share".

[CokeZero]

Liam

The way it came across is that Cathay Group made a profit. Looking into the breakdown of it, it doesn't show any other group profits/losses so am confused by Slosar's statement.

We made just under 1 billion dollars profit but still the doom and gloom message. At the end of the day, we didn't have enough cargo. Maybe if we went hunting for cargo to carry instead of waiting for it to turn up for us we would have made more profit here.

Passenger ticket prices seem to be quite cheap - but yet we were (mostly) full on our flights? Go figure.... Simple supply/demand problem that a 1st year grad could fix.

But hey what do I know, double Law & Business degree but loved flying...... go figure!!!!
:ugh:

[goingdown]

You hit the nail on the head! There's some limits to how much you can squiz.
CX is the prime example. This company should tap where the money is, and we should wonder how a DXB-JED or HKG-DME as well as other increase in rotation to already hammered destination make sense.
Brazil?Africa?Where's that on the map?

[geh065]

They've said they keep looking at South America and can almost made a cargo flight work...almost. The yields aren't quite there to make a profit though. Cathay's costs are a lot higher than the likes of Atlas Air, kalitta etc...

[Threethirty]

Perhaps with this profit money they can buy some new aircraft to replace the clapped out ones we currently fly. :ugh:

[White None]

Mine's nice and shiny thanks!

( Despite there being "No money in freight" :ok: )

[CokeZero]

So did we make a profit or not. How simple a question is that John?

[spannersatcx]

Did the airline make an operating profit? NO. Did the Cathay Pacific group (whatever that is) make a profit YES. Do we get a profit share no? Why? because it is based on the AIRLINE operating profit!

If the airline makes an operating profit next year will we get a profit share? NO, why? because the rules will be re-written so you don't.

Expect nothing and you won't be disappointed! :ugh:

[crwkunt roll]

Why do I give a **** if the "group" made a $0.9 Billion profit ???? If there's no profit share, then we don't need to know..... Irrelevant..... Just say, "we didn't make any operating profit".........

[Busbert]

RTFM
Profit share is based on what the projections were in the business operating plan. If they generate less profit than they budgetted for, no profit share, even if the business generated a tidy sum.

[cxorcist]

So CX, the airline, had an operating profit of 158M HKD. That was wiped out by 268M HKD in taxation. Anyone know the story behind that? Why are we paying so much tax? Or are these the cargo fines and French labour penalties coming to fruition?

[Kontract Killer]

Trying to get a seat out of LHR - all 0/0/0 from Monday through Friday.

Not making any money...perhaps employ somebody who can, cause with these load factors, a blind idiot could make money!

Its always been, protect the customer base at all expense. Guess the expense has now exceeded the profit! Wake TFU :rolleyes:

Think your reps worth it? Raise the price and find out, chicken s**t.

Dont believe a word I'm afraid.......

Stick your 100KG's!

[fly123456]

Turnover 95,771
Expenses 94,775

And it's not an operational profit?

Anyway, it is very easy to have an airline make huge losses, while other "branches" make huge profits. Sell maintenance and bill ridiculous amount of money. Or sell real estate and pay a ridiculous rent. Just examples...

[Freehills]

Some countries tax airlines on sales/ turnover in that country, not profit.

[cxorcist]

Is Hong Kong one of those countries? What country(ies) are we paying tax on revenues? Very curious about this if anyone has insight... NC, where are you?

Also, let's not forget the Air China Cargo disaster. This has been a money loser from day one on both ends. Not only does ACC cost CX money and potential growth, it has diluted the profitability of our own cargo network by adding capacity, lowering rates, and taking cargo off our planes and putting it on their money losing BCFs. Now we have lost a big freighter order (8x777F) to ACC which will undoubtedly restrict capacity for the new cargo terminal in HKG. The AC Chinese must be laughing their asses off at CX's gweillo stupidity.

[Pucka]

The Swire group as a whole, especially the property segment, has done very well. You'll notice, via Swire News, where the CX reportage remains politically minimal, that the rest of the group, including shipping, is very solid.

[Freehills]

HK isn't. The main one I can think of is Philippines, as they are finally getting rid of it this year I think. It was 5.5% of sales it seems

"Airlines have, for some time, lobbied for the removal, or at least a reduction, in the 2.5% Gross Philippine Billings Tax (GPBT) and the 3% Common Carrier’s Tax (CCT) to which they are subjected. The GPBT and CCT are levied on all revenues, passengers, cargoes and excess baggage leaving the Philippines.

The taxes have caused a total withdrawal of foreign airlines, one by one, from providing direct flights to Manila. Air France-KLM dropped the only remaining direct flight from Manila to Amsterdam in March this year, due to the high taxes it paid for loading passengers in the Philippines"

[BusyB]

So why don't they put the fares up??:confused:

[cxorcist]

Freehills,

This tax sounds like a sales tax which should be (and probably is) collected at the time of sale; just like other airport taxes, fees, and surcharges. Why it would ever be reported as revenue and then taxed after the fact, I don't know. Maybe it makes no difference either way.

WRT to the KLM flight, I suspect this has more to do with softened demand to and from Europe due to the economy there. This can only be considered good news for CX as we will undoubtedly pick up some of those passengers and cargo.