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anxiao
20th Apr 2020, 20:57
Can I interest anyone on the 3rd floor in a May NYM light crude May delivery? Just up your street, buy for -38 there must be a bonus at year end for this Lulu...

cxorcist
20th Apr 2020, 21:15
Can I interest anyone on the 3rd floor in a May NYM light crude May delivery? Just up your street, buy for -38 there must be a bonus at year end for this Lulu...
Gotta put it somewhere... How about all those widebodies sitting on the aprons and taxiways in Hong Kong? That’ll make them heavier for when the season’s first typhoon blows through. Not a serious suggestion!

Flying Clog
20th Apr 2020, 21:50
Last time I checked, if you stuck crude oil in the fuel tanks the engines wouldn't be too chuffed about it when you fired them up..

OMAAbound
20th Apr 2020, 22:08
Last time I checked, if you stuck crude oil in the fuel tanks the engines wouldn't be too chuffed about it when you fired them up..

Would be like the whole VW scandal all over again!

OMAA

Flying Clog
20th Apr 2020, 22:41
It'd be a bloody environmental disaster! We complained about the pollution over Hong Kong before... imagine if all those airplanes at HKIA fired up one by one with oil in the fuel tanks!

oriental flyer
20th Apr 2020, 22:57
I wonder what price we are paying for fuel right now because oil at the moment is negative $38 . I never thought that I would see that

The May US WTI contract fell $55.9, or 306%, to settle at a discount of $37.63 a barrel after touching an all-time low of -$40.32 a barrel

Flying Clog
20th Apr 2020, 23:06
I believe CX is mostly hedged at around 60-70 usd. So not going to be pretty.

michigan j
21st Apr 2020, 01:18
I believe CX is mostly hedged at around 60-70 usd. So not going to be pretty.

“There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again.”
― George W. Bush

Slasher1
21st Apr 2020, 01:21
Fool me once, shame on you. Fool me twice, shame on me.

Fool me thrice, must be a Cathay Pilot.

Rinse and repeat as necessary.

Flex88
21st Apr 2020, 01:24
Yep, Oil today at $10.50 bl ... Expect more massive Fuel Hedging losses n 9th floor crying...

Gnadenburg
21st Apr 2020, 01:35
If an airline can get a massive unsecured loan it must have some heavy backers. Air China must come into play soon? What a victory for Beijing if so.

Freehills
21st Apr 2020, 03:04
I believe CX is mostly hedged at around 60-70 usd. So not going to be pretty.


even worse, they will have hedged c 50-70% of expected fuel requirements. As so little flying is being done, that means they need to buy oil at the hedged price that they won’t even be using, ie they are probably now hedged around 200% of fuel...

highflyer40
21st Apr 2020, 08:43
even worse, they will have hedged c 50-70% of expected fuel requirements. As so little flying is being done, that means they need to buy oil at the hedged price that they won’t even be using, ie they are probably now hedged around 200% of fuel...

To be fair and put it in perspective, that will also be the same with almost every other airline out there!

You can’t blame decisions made before the pandemic for there outcome now.

cxorcist
21st Apr 2020, 10:19
To be fair and put it in perspective, that will also be the same with almost every other airline out there!

You can’t blame decisions made before the pandemic for there outcome now.
True, but maybe CX should have learned their lesson about fuel hedging after losing $4B USD in the last five years and just stick with the spot prices???

Asturias56
21st Apr 2020, 10:21
yeah but then what are all the MBA whizz kids going to do to earn their bonuses???

Dilbert68
21st Apr 2020, 15:17
To be fair and put it in perspective, that will also be the same with almost every other airline out there!

You can’t blame decisions made before the pandemic for there outcome now.

AA does not hedge fuel at all, their CEO says it is just not worth it in the long run. Based on the 4B USD we recently lost plus the losses that are coming, I would say he is right. CX has lost more money through their hedging department than they have ever gained. The fact that these people are still employed while continuing to lose billions of dollars for the airline is gross negligence.

Hugo Peroni the V
21st Apr 2020, 15:26
Interesting to note that the fuel hedging loss was equal to 16 months worth of the $2billion per month we are supposedly losing. That’s quite a lot!


AA does not hedge fuel at all, their CEO says it is just not worth it in the long run. Based on the 4B USD we recently lost plus the losses that are coming, I would say he is right. CX has lost more money through their hedging department than they have ever gained. The fact that these people are still employed while continuing to lose billions of dollars for the airline is gross negligence.

cxorcist
21st Apr 2020, 20:01
yeah but then what are all the MBA whizz kids going to do to earn their bonuses???
Why abandon such a tried and true way of stuffing CX cash into the Swire coffers without having to split it with other shareholders or ”the help” (employees)? If you think the Swires aren’t on the other end of these trades, then I have a bridge to sell you...

mngmt mole
21st Apr 2020, 20:19
AA does not hedge fuel at all, their CEO says it is just not worth it in the long run. Based on the 4B USD we recently lost plus the losses that are coming, I would say he is right. CX has lost more money through their hedging department than they have ever gained. The fact that these people are still employed while continuing to lose billions of dollars for the airline is gross negligence.

It is likely that a certain HK company may have lost more in fuel hedging in the past 5 years (and the next two or three to come) than they have probably earned in profits since the mid 80's. Fair to say that decades of effort and dedication of it's long suffering staff have effectively been rendered worthless. Oh, the Swire family is still amongst the richest in the UK however.

cxorcist
21st Apr 2020, 20:34
It is likely that a certain HK company may have lost more in fuel hedging in the past 5 years (and the next two or three to come) than they have probably earned in profits since the mid 80's. Fair to say that decades of effort and dedication of it's long suffering staff have effectively been rendered worthless. Oh, the Swire family is still amongst the richest in the UK however.
Maybe the Swires’ eternal destinies are less enjoyable than their present circumstances. I hate to admit it, but a part of me hopes so.

mngmt mole
21st Apr 2020, 20:58
Well, I don't "hope" that to be honest (the reality of that is too awful for just about any human being to contemplate), although if I was a betting man the likelihood is high. It is more the case that ultimately their reputations will be ruined. They will always have money at a personal level. I suspect Swire's involvement with CX is drawing to a close. The likelihood of another fuel hedging debacle is high, and I suspect that they will soon have to declare such. There is NO way CX will emerge from this episode as the same airline it was going in.

8driver
21st Apr 2020, 23:21
I don't think it's as bad as last time, it doesn't say what price they hedged it at. And we certainly aren't alone.

​​​​​​https://qz.com/1815376/hedging-strategies-mean-low-oil-prices-wont-help-most-airlines/

cxorcist
21st Apr 2020, 23:27
You see... in their minds, it’s their money to do with as they please. If they have to backdoor it out of the airline, so be it. They are just planning to leave a debt laden shell when they hand it over to the Mainland. They don’t care one iota about the employees or the other shareholders.

turnandburn
22nd Apr 2020, 00:30
If you work at cx look at table on the hub, hedging to end of 2021. 50%-65% $40

1200firm
22nd Apr 2020, 02:35
JFC it is "plain sight"

mngmt mole
22nd Apr 2020, 02:43
I suspect there is a minimum contractual "buy" each day/week/month/year. The company is likely paying high prices for millions of gallons that they don't currently require. Just a guess, but another epic loss to be announced at a later date. Certainly, the company will likely seek to recoup some of that from their employees, just like the last time.

Asturias56
22nd Apr 2020, 08:06
"AA does not hedge fuel at all, their CEO says it is just not worth it in the long run."

Hedging , as a user, does make sense if

a) you can guarantee you'll need x amount of fuel

b) you can guarantee to make enough money to cover the costs (eg if you have a fixed price , long term contract to crank out widgets)

The problem with airlines is that they can't guarantee their income so it just becomes a bet

cxorcist
22nd Apr 2020, 14:03
JFC it is "plain sight"
No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?

Pickuptruck
22nd Apr 2020, 14:28
No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?
Village idiot strikes again.
Easy enough to see, same as any market contract. But doesn’t really matter, at the end of the day. Keep your tinfoil hat on and keep wasting your life with ridiculous conspiracy theories.....

controlledrest
22nd Apr 2020, 23:27
Village idiot strikes again.
Easy enough to see, same as any market contract. But doesn’t really matter, at the end of the day. Keep your tinfoil hat on and keep wasting your life with ridiculous conspiracy theories.....

If it is 'easy enough to see' please post details of the market contract and put the 'ridiculous conspiracy' to rest. I asked a senior manager at a fleet forum for details of who the hedge was taken with and if the other party was in any way associated with Swire. He refused to answer.

The $US4 billon loss on the hedge was either a clever way to move money out of CX to Swire without sharing it with other share holders or gross incompetence. Take your pick. And it does really matter. $US4 billon would go a long way keeping us employed! As would competent and moral senior managers.

1200firm
23rd Apr 2020, 00:18
No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?
previous poster had written "plane site". Now deleted that bit.

Freehills
23rd Apr 2020, 00:29
I suspect there is a minimum contractual "buy" each day/week/month/year. The company is likely paying high prices for millions of gallons that they don't currently require. Just a guess, but another epic loss to be announced at a later date. Certainly, the company will likely seek to recoup some of that from their employees, just like the last time.


something like this - yes. You can’t actually hedge jet fuel/ kerosine, just the underlying crude. And 50-60% hedged would be on forecast fuel needs, so they are almost certainly needing to settle crude oil contracts in excess of fuel burn

Gnadenburg
23rd Apr 2020, 01:06
The likelihood of another fuel hedging debacle is high, and I suspect that they will soon have to declare such. There is NO way CX will emerge from this episode as the same airline it was going in.

Yes, this is bailout territory now. Was heartening to hear rumours of the ease of credit available recently. But if its paying off a bad fuel hedge bet, rumours of a government intervention requirement plausible and where will Air China play out?

The intent of a more rapid transfiguration of Hong Kong, aided by a crisis, will have implications for a highly visible flagship.

mngmt mole
23rd Apr 2020, 01:16
Just read the latest DFO newsletter. Focus on this bit:

" In the next week or two we intend to meet with the HKAOA to discuss how we must achieve savings on the Hong Kong base if we are to survive and compete in future. ".

I don't need to highlight what is probably about to happen.

controlledrest
23rd Apr 2020, 04:13
The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

MENELAUS
23rd Apr 2020, 04:31
The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

When might that be ? Assuming we’re all still sat down when the music stops, we will be a far smaller company, if around at all, whilst China Eastern or Air China becomes Hong Kong’s de facto flag carrier. And who would care or indeed stop them. Not the local populace, and shareholders sadly have to suck it up. It has already been admitted that we’ll have 3 or 400 hundred pilots in excess if we get through this.
So downsizing is inevitable. And yesterday’s missive from CK is the usual shot across the bows; expat benefits (due to our failure to ratify them under some illustrious AOA guidance.. clause 7 will shortly appear to be a bargain) are now policy and can be changed as they see fit. The rest of the company ( in fact now in the majority) are not on said benefits (well not to the same extent ) and therefore they have to be more inventive.
My guess would be basic salary ? Which I think we have to agree too ? Unless it’s the ultimate paycut, like our colleagues in VX, VS (?), and Norwegian.

Asturias56
23rd Apr 2020, 07:59
"We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again."

I don't think you have a leg to stand on right now and, as Globo points out, it won't be any better in the foreseeable future

AllWobbly
23rd Apr 2020, 09:45
The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

At the risk of sounding defeatist can anybody come up with a cogent plan? Purely a personal opinion but I think “pushing” would be uphill with a pointed stick.

freightdoggiedog
23rd Apr 2020, 10:00
I don't think you have a leg to stand on right now and, as Globo points out, it won't be any better in the foreseeable future

“The leg to stand on” is that contracts are legally enforceable in Hong Kong. If they want to make people redundant that’s their prerogative. If instead they want to ask for contractual concessions since times are tough, fine, but these should be temporary, lasting no longer than the crisis itself. Seems to me, when times are good we don’t exactly share in the spoils, but when times are bad suddenly we’re all one team.

This is an extremely serious situation, but the bubonic plague this is not. When (not if) people start travelling again, they will need all those shiny airplanes currently parked and the people who fly them.

Pilots have the tendency to try and solve the airline’s problems for them and we often fancy ourselves managers, but that’s not our job. Our job is to be flight deck professionals, and I might add that we also have a responsibility towards our profession, our colleagues and our families to protect our terms and conditions.

Management only ever have an interest in getting us to work harder for less, whether times are good or bad. If they want us to work for less, that may be quite reasonable in a dramatic time like this, but only as long as the crisis lasts, not as a permanent concession.

mngmt mole
23rd Apr 2020, 13:45
I am cutting and pasting from something AllWobbly said on another thread:

"Here’s a direct quote from the employment ordinance website re varying contracts

Under the Employment Ordinance, the five valid reasons for dismissal or variation of the terms of the employment contract are:

the conduct of the employee;
the capability or qualifications of the employee for performing his work;
redundancy or other genuine operational requirements of the business;
statutory requirements; or
other substantial reasons


It depends whether one thinks grounding almost all of the fleet is a ”substantial” enough reason to vary a contract or that ” requirements of the business “ are such that the company could justify it.

I guess the only way to find out what it really means would be to run it by an employment lawyer or test it"

I have it on good authority that management are resting what is to come on points 3 and 5. It is nice to believe that they will "honour" our contracts on every point, but this time round they are planning to move aggressively to restructure the business once and for all. I know that isn't a palatable thing to hear, but realistically what would we now expect. I don't know specifically what they are planning (only that they are), and they may change their minds prior to implementation, but I think it wise for everyone to prepare themselves for difficult days ahead. Sadly, fear of an invisible bug has caused our entire industry to collapse. Black Swan event indeed.

GTC58
23rd Apr 2020, 15:51
https://www.thestandard.com.hk/section-news/section/2/218344/Cathay-falls-5pc-amid-hedging-woes

mngmt mole
23rd Apr 2020, 16:58
I am not certain these number are correct, but if they are, then everyone needs to ponder the stark reality of them. Effectively, those numbers, combined with new (and possibly larger) hedging losses mean the end of everything.



"...The airline's largest cost last year was oil, accounting for 28.4 percent of operational costs. From 2015 to 2017, it lost US$8.47 billion, US$8.46 billion and US$6.38 billion in oil hedges respectively. The company only lost US$101 million in 2019 and gained US$13 million in the second half of 2019 in oil hedges..."



I might also add that no one at a senior level has been held accountable. Not a single individual. The same abjectly incompetent and arrogant people are still in charge. They have "lifeboats"....the rest of us, not so much. Sad.

GTC58
23rd Apr 2020, 17:29
I am not certain these number are correct, but if they are, then everyone needs to ponder the stark reality of them. Effectively, those numbers, combined with new (and possibly larger) hedging losses mean the end of everything.



"...The airline's largest cost last year was oil, accounting for 28.4 percent of operational costs. From 2015 to 2017, it lost US$8.47 billion, US$8.46 billion and US$6.38 billion in oil hedges respectively. The company only lost US$101 million in 2019 and gained US$13 million in the second half of 2019 in oil hedges..."



I might also add that no one at a senior level has been held accountable. Not a single individual. The same abjectly incompetent and arrogant people are still in charge. They have "lifeboats"....the rest of us, not so much. Sad.


I believe you are correct. The fuel hedge numbers for 2015-17 should be in HKD and even then they are off by a couple billions. However the 2020 hedging numbers are pretty close.

Cathay Pacific (0293.HK (https://www.reuters.com/companies/0293.HK)) hedged around 35% of its 2020 fuel at between $61.37 and $65.41 per barrel of Brent.

https://www.reuters.com/article/us-health-coronavirus-airlines-oil-idUSKBN2171FJ

Dilbert68
23rd Apr 2020, 19:39
It is absolute madness to continue to hedge fuel. They think they are so clever yet they are bankrupting the company with their incompetence. Fire them all and pay the spot price, we would have been much better off if they had never hedged at all, ever.

cxorcist
23rd Apr 2020, 19:46
Careful guys! You might be accused of wearing a tinfoil hat, the surest sign that you are onto something. I think employees, via their trade unions where appropriate, need to be asking detailed questions about fuel hedging. There is obviously no accountability for these stiffs at CX, and that hurts the airline, which is of clear concern to the employees. Full investigation and accountability should be forthcoming.