ClOSedloop22

[jobe]

2021 brought us COS18, "sign or be fired".
So what will 2022 bring? Well that should be pretty obvious now. "Closed Loop or be fired".
Concurrently CX will be applying to CAD for "temporary" amendments and exemptions to every part of the current AFTLS so that 2 months flying can be crammed into a 3 week period. These will be granted without exception.
There will be RAT/PCR tests before and after every flight as well as ASR-F to be submitted after every pattern. Any breach of any of these requirements will result in criminal action against you personally as they will be law.
What is also certain is that the penalty for your family will increase. A week in PB for them if you are deemed a close contact. 3 weeks in PB for them if you test positive even if completely asymptomatic.

The Government, the Company, even the HK public, all need a scapegoat. You're it. Good Luck.

[Rie]

Sounds like the wives are going to keep the tennis coaches busy. Just watch that seniority skyrocket...

[kenfoggo]

Unfortunately Cathay Pacific is dead and in the ground. The Government are just waiting to heap the soil on the casket. Huge shame but at least they will get rid of a lot of pesky foreigners with their ideas of democracy, hurrah!

[MENELAUS]

I think Ken’s post had more than a touch of irony.

[RAT Management]

Just look at the morons falling over themselves to VOLUNTEER even after the forced contract change. When will the pilots ever show any self respect for their colleagues or even more importantly for themselves!

[kenfoggo]

Thanks for that Globonik. Fac6 doesn’t do irony or perhaps doesn’t realise that the SCMP sometimes refers to Cathay pilots as “foreigners”. Oh well, good luck guys.

[missingblade]

Good thing all those saffers you British colonial fast jet commanders and superior aussie prisoners like to blame for all your troubles got themselves HKG passports then...

[MENELAUS]

Good thing all those saffers you British colonial fast jet commanders and superior aussie prisoners like to blame for all your troubles got themselves HKG passports then...


So that they can spend the rest of their lives in Groundhog Day ? Without Andy McDowell sadly.
Maybe it’s payback time for Robbens’ Island ?

[missingblade]

So that they can spend the rest of their lives in Groundhog Day ? Without Andy McDowell sadly.
Maybe it’s payback time for Robbens’ Island ?

It's now become a game of "last man standing".

I do love Andie McDowell. I'd marry her for a green card yesterday!

[MENELAUS]

It's now become a game of "last man standing".

I do love Andie McDowell. I'd marry her for a green card yesterday!


Sadly she’s got the IQ of a Kit Kat/Hershey bar / other confectionery is available.

[missingblade]

Sadly she’s got the IQ of a Kit Kat/Hershey bar / other confectionery is available.

Perfect for the average cx pilot whose primary concerns in life seems to be when will his JFO upgrade be and how to claim for a taxi when he gets out of Penny's bay..

[MENELAUS]

Peace. Out.

[red_dirt]

Look maybe I’ve missed something. I’ve read a lot of comments about how the government wants to shut CX down or TRYING to shut CX down as if it’s some great conspiracy.

My question is, why exactly do you think that? What benefit would there be to the government closing CX?

[KABOY]

Look maybe I’ve missed something. I’ve read a lot of comments about how the government wants to shut CX down or TRYING to shut CX down as if it’s some great conspiracy.

My question is, why exactly do you think that? What benefit would there be to the government closing CX?

https://www.business-standard.com/article/international/why-xi-jinping-waited-years-to-launch-his-crackdown-on-tycoons-121081100067_1.html

This is a war against business, not against a single entity. However what does not bode well is that CX is a legacy from a colonial period, something the CCP would like to remove.

[smogluver]

Unfortunately Hkg is now run by the “Sopranos Inc China’ who compared to Swire are still the new boys on the block. Don’t think they will roll over just yet

[Jnr380]

So latest update is asking for crew to “seriously” consider volunteering for Closed Loop or EDTF to increase productivity.

When the (GMO) and everyone on the third floor sold our freedoms, well-being and mental Heath to the CHP to keep the operations running, no one will be stupid enough to help them out.

Bring on another round of VSS

[KABOY]

Closed Loop will be the least of CX worries soon.

Beijing now wanting to punish CX for spreading Omicron will be the biggest threat.

The ‘Operations’ clowns are looking for ‘wetbacks’ to keep a ****show on the road.

[Cury Lamb]

The jellyfish will be the first ‘casualty of war’ - retiring due to ‘family reasons’.

Can’t wait to see the back of this excuse for a human being.

[anxiao]

These are the new promotions to the Hong Kong Government. Highly respected by president Xi, they have a direct line to him and his thought. Closed loop is the least of your problems.

From Bloomberg.

"Chinese President Xi Jinping has deployed a top Xinjiang police official to command the nation’s army post in Hong Kong, raising fears Beijing is taking an increasingly hard line on security in the Asian finance hub.

Major General Peng Jingtang will become commander of the People’s Liberation Army’s Hong Kong garrison at the request of Xi, China’s Defense Ministry said in a statement. Peng was previously deputy chief of staff for the armed police force in the far Western region of Xinjiang, where the U.S. government has accused China of repressive polices against Uyghur Muslims that amount to genocide. Beijing strongly denies the charge.

China has in recent years installed officials with experience heading crackdowns in key Hong Kong roles. In early 2020, Luo Huining, a Communist Party stalwart known for executing Xi’s anti-corruption campaign, became head of the central government’s powerful Liaison Office in the city. Xia Baolong, known for prosecuting a campaign against Christian churches in Zhejiang province, was named director of the Hong Kong & Macau Affairs Office in the same year."

[NewLow]

Just got an email from Debs saying I could ‘potentially’ earn my old salary if I sign up for closed loop duty cycles.

Education, housing, medical and rostering issues will remain the same and all my mates who were on bases who would have made closed loop flying unnecessary can stay fired.

But sure, I’d love to be paid with the money that was forcibly taken from me so I can support HK’s insane zero Covid policy. I also lose sleep at night about huge management bonuses. Speaking of which, when is management reverting back to full pay or has that already happened?

If you’re desperate for $ then closed loop is your only option but personally I’ve had enough of enabling the lunatics who run this asylum.

[kenfoggo]

How long before all you remaining Cathay pilots realise that Management simply consider you as being “useful idiots”? That is all you are to them.

[tanchekming]

i think soon you boys will be heading to beijing for a caac atpl conversion. Don't worry, its gonna be easier than the astronaut medical

[Asianexpress]

How long before all you remaining Cathay pilots realise that Management simply consider you as being “useful idiots”? That is all you are to them.
May take a while Ken, they are pretty slow. Abused children comes to mind.

[MENELAUS]

i think soon you boys will be heading to beijing for a caac atpl conversion. Don't worry, its gonna be easier than the astronaut medical


Ah yes. PRC ATPL. The very nadir of aviation professionalism.

[Klimax]

i think soon you boys will be heading to beijing for a caac atpl conversion. Don't worry, its gonna be easier than the astronaut medical

The greatest license of man kind is the CAAC ATPL. Nothing beats it. It´s so precious that the employer will safeguard it - and keep it at safe distance away from you. You will not be granted a dual license rating - that way it´ll be harder for you to leave the smoggy ****hole mainland city that you´re based in with your depressed family. Oh, how I wish I was worthy of a CAAC ATPL - perhaps it comes with a Wuhan China Covid endorsement (BAT PIC).

[Klimax]

How long before all you remaining Cathay pilots realise that Management simply consider you as being “useful idiots”? That is all you are to them.
No way Jose.

[Will IB Fayed]

Just got an email from Debs saying I could ‘potentially’ earn my old salary if I sign up for closed loop duty cycles.

Surely she didn’t? Sign up to closed loop ****, and you can earn a full salary like you did before we unilaterally slashed it?
I don’t believe anyone could stoop that low, not even a cx manager….

[viking avenger]

Taking something away and offering to sell it back to you for in this case ( 5 weeks of your life ) I think I'd pass.

[dabz]

https://cimg2.ibsrv.net/gimg/pprune.org-vbulletin/1024x431/img_20220120_wa0000_742ed77dc4c696d8e03901f693a5d7e12c92ad6f .jpg

[CovidRefugee]

HK$100,000!!....Wow, so Cathay Pilots really can put a price on freedom. I have no doubt Rostering will be flooded with volunteer e mails.

[1200firm]

If you do 4 closed loops in sequence as a captain you will earn HK$400 per day in that 8 month period.

[Cury Lamb]

If you do 4 closed loops in sequence as a captain you will earn HK$400 per day in that 8 month period.

Subject to tax off course, something Debs conveniently forgot to mention, as the honey was dripping out of her mouth.

[Oasis]

I wonder what kind of human rolls out at the other end of 4 closed loops at the price of 100.000?

[MENELAUS]

One that shouldn’t be anywhere near the controls of an aircraft.

[Jackschitt]

sooooo

gma is trying to get our remuneration back up to cos 08 level but only for doing closed loop?

i don’t think so deb….

how about giving just giving us back cos 08….

[CovidRefugee]

How About Debbie chipping in with a few closed loop cycles? Isn't she an ex cabin crew manager? Maybe she could heat up the meals on the freighter.

[BubbaJ]

None of it goes towards the PFund either. How convenient

[QNH set]

Thank you to all the people continuing to sign up to CL…

[Sam Ting Wong]

You mean for keeping the airline afloat so you can continue to get a salary for nothing?

[MENELAUS]

How About Debbie chipping in with a few closed loop cycles? Isn't she an ex cabin crew manager? Maybe she could heat up the meals on the freighter.

Debbie does Dallas ? Followed by Tung Chung !
I’ll get my coat.

[cxflog]

You mean for keeping the airline afloat so you can continue to get a salary for nothing?

If no one volunteered then maybe the airline would adjust its approach and support its pilots.

or maybe there’s too much logic in that…

[Bekol delay]

You mean for keeping the airline afloat so you can continue to get a salary for nothing?
I spend most of my month on EMS, or queueing for 2hrs+ at a testing centre. I do not do closed-loop and I still take a salary, how does this fit your "nothing" description?

[Sam Ting Wong]

Fair enough. Let me re-phrase: stop the righteous judging of closed-loop volunteers. Mind your own business.

PS Any suggestion that starts with " If no one would.." is futile

[hyg]

You mean for keeping the airline afloat so you can continue to get a salary for nothing?
the airline is afloat because the HK government poured almost 30b into it.....

[Sam Ting Wong]

True. For now.

[KABOY]

True. For now.
true-airline solvent
false-airline bankrupt
for now- ??

Is this stating the airline is afloat due to closed loop or government money?

Or, the airline is now a zombie company?

[Sam Ting Wong]

Afloat mainly because of Gov money. For now.

[MENELAUS]

Have they actually drawn down the government money ?

[Sam Ting Wong]

No, but they might have to when they see my closed loop paycheck.

[MENELAUS]

No, but they might have to when they see my closed loop paycheck.


Well I trust you live long enough to spend it.

[Dingleberry Handpump]

No, but they might have to when they see my closed loop paycheck.
Hahaha cringe.

[Sam Ting Wong]

In seriousness, the government help is bifold: equity plus an optional loan. The equity deal has been done, the loan is on hold. At least that is my understanding.

[anxiao]

According to Bloomberg the loan is structured like a developing country loan. In 2026 the annual repayment will be more that Cathay Pacific have ever made as a profit in a year.

A developing country has to give a sea port or a third of its agricultural produce to offset the loan. Cathay will have to give most of itself. Such is "Capitalism with Chinese characteristics"

[Sam Ting Wong]

Cathay made a profit of 14 Billion HK$ in 2010.

[MENELAUS]

Cathay made a profit of 14 Billion HK$ in 2010.


And that’s the last time you’ll see that.

[Flex88]

true-airline solvent
false-airline bankrupt
for now- ??

Is this stating the airline is afloat due to closed loop or government money?

Or, the airline is now a zombie company?

If you have even a rudimentary ability to balance a cheque book, your question becomes rhetorical :rolleyes:

[hyg]

Have they actually drawn down the government money ?

isn't that a way they manipulate the words? They said they haven't used the gov money and they have 20 billion in the acc or thereabout, wouldn't that mean if it wasn't for the Gov, they would've used up all their own cash?

[Numero Crunchero]

Anxio, I remember reading that article and thinking it was like reading the financial version of the national enquirer. A load of sensationalist BS

If my memory is correct it was talking about an interest bill of $2billion HKD in 2025 or 2026 - we made 1.5-2Billion in the 2nd half of last year with less than half our aircraft flying and in the middle of a pandemic. We lost 32 Billion in fuel speculation over 4 years - so yeah, I think we can manage to make the interest payments on less than 30billion in loans at an interest rate that gradually catches up to around 5-6 %

CX aint going broke any time soon. Not this year anyway - if things stay locked down like they are on 10th of Feb for the rest of this year - we will still have probably half of that money left undrawn.

[MENELAUS]

Hold on to that thought NC. I can’t name a single airline ( other than the ones solely in Govt hands with long pockets such as the ME3 that tend not to publish results anyway) that can function without actually generating revenue. ie flying.
Where do the lease payments for -8’s, A320’s/ A321’s/A50’s figure in your calculations ? And that’s the CX fleet alone. HKE has a relatively young fleet. I can’t imagine that they’re all paid for. To say nothing of the rent etc on the tenanted land that the airline and subsidiaries occupy at CLK, rents at outports, leasing of APU’s/ power plants etc.
It’s a massive drain. And can only lead to the balance books going one way, in the absence of any real revenue.

[KABOY]

Anxio, I remember reading that article and thinking it was like reading the financial version of the national enquirer. A load of sensationalist BS

If my memory is correct it was talking about an interest bill of $2billion HKD in 2025 or 2026 - we made 1.5-2Billion in the 2nd half of last year with less than half our aircraft flying and in the middle of a pandemic. We lost 32 Billion in fuel speculation over 4 years - so yeah, I think we can manage to make the interest payments on less than 30billion in loans at an interest rate that gradually catches up to around 5-6 %

CX aint going broke any time soon. Not this year anyway - if things stay locked down like they are on 10th of Feb for the rest of this year - we will still have probably half of that money left undrawn.

The best analogy here is ‘ selling the farm’ leasing the livestock and having an overdraft that incurs significant interest penalties.

Yeah, CX isn’t going broke anytime soon, but how big is the noose that it’s head is sitting in?

I like the saying I can’t see the forest through the trees’.

If CX don’t turn this around, the convertible bonds will collapse the share price, ask yourself what happens then?

[Cury Lamb]

Anxio, I remember reading that article and thinking it was like reading the financial version of the national enquirer. A load of sensationalist BS

If my memory is correct it was talking about an interest bill of $2billion HKD in 2025 or 2026 - we made 1.5-2Billion in the 2nd half of last year with less than half our aircraft flying and in the middle of a pandemic. We lost 32 Billion in fuel speculation over 4 years - so yeah, I think we can manage to make the interest payments on less than 30billion in loans at an interest rate that gradually catches up to around 5-6 %

CX aint going broke any time soon. Not this year anyway - if things stay locked down like they are on 10th of Feb for the rest of this year - we will still have probably half of that money left undrawn.

More like 9% interest by 2026. Here’s the Bloomberg article again. Tax payers money used or not, fact is that any loan must be paid back, capital + compounded interest.


https://cimg0.ibsrv.net/gimg/pprune.org-vbulletin/828x898/a7c13ea9_439b_48cd_a9f2_20997b0d26ac_774feb05f414eaf3523988c cfb4ba05e16e97c1e.jpeg


https://www.bloombergquint.com/gadfly/cathay-pacific-is-buckling-beneath-hong-kong-s-strict-quarantine-measures

[Busbitch]

150 very expensive jets still parked, ! Piling up the debt, total lockdown looming, staff still leaving, the CCP. You don't need a commerce degree to see they are in very hot water.

[Numero Crunchero]

Globnocnik
I don't 'come up with the figures' - accountants following GAAP do so. So if they say we made 1.5-2.0B for 2nd half of last year, then you might find that all the things you mentioned are included.

Cury
thanks for posting that article - saved me looking for it. I recall that CX sought permission to delay borrowing so not sure when the interest rate ratchets up - from drawdown or on predetermined calendar dates.

But from the article - it says the interest bill will 'top out' at around 2Billion in mid 2025(assuming all government money has been drawn down). So, if things hadn't taken a turn for the worse in December, we would NEVER have used a single cent of the government loan as were cash flow neutral to positive for the 2nd half of last year. If things stay as they are now till say, June 30th this year, then yeah we will probably have drawn down 5-7.5B. If we were cashflow neutral to positive late last year, when we can match that level of flying again we will no longer draw down any more money. So in that hypothetical "back to Nov 2021 conditions on 1st of July 2022" if we never choose to repay the 5-7.5B then the interest bill in 2026 will be about 450-675m. So like i said - not going to be a game changer. The Bloomberg article is as prescient and accurate as the Melbourne Truth or TMZ or National Enquirer.

Last thing people don't seem to get - this company has 3 main shareholders who hold, collectively, 80+% of the shares (Swire, China and Qatar). So pray tell how falling corporate bond prices will cause the other 20% of shares to fall to levels such that the 80% majority stake is forced to capitulate to market sentiments? This is effectively a privately owned company with a small public stake and an even smaller government stake.

As I said - this airline aint even close to going broke - and given past govt support is there a good reason for the government not to further support us in late 2023 or 2024 if things are still as bad as this month?

I tend to agree with STW on the macro - HK is less than 1% of China's population with low single digit contribution to the economy. We are, at best, a 32nd province. And they care no more nor less about CX and expats than Aussie govts(federal and state) cared about Qantas or Virgin. The hotel industry is hurting - restaurants are hurting - bars are hurting. Is the mainland also trying to get rid of hotels, bars and restaurants? Or they similarly the unlucky recipients of current polices?

[jetjockey696]

https://www.flightglobal.com/strategy/cathay-pacific-expected-to-return-to-profitability-in-2022-hsbc-report/147393.article

[Dingleberry Handpump]

https://www.flightglobal.com/strategy/cathay-pacific-expected-to-return-to-profitability-in-2022-hsbc-report/147393.article
That article clearly states that the prediction is based on late 2021 performance.

Things have taken a huge step backwards since.

[Sam Ting Wong]

The notion Cathay had accepted usurious conditions forced on them by the HK government is self-defeating. If you want to kill off a dying company you obviously don't inject cash into it first.

Governments all over the world supported local airlines and other companies in times of force majeur, not really surprising HK followed that path.Additionally, if borders remain closed the credit line will obviously be extended or altered.

I recommend the stock price as indicator. Cathay is up 10% YTD. The credit conditions can't be that ominous.

[kenfoggo]

Cathay can do nothing about CoVid and it is powerless to do anything about Government restrictions. It is adrift without any ability to turn the bad news into good. They have no alternative other than to continue to burn cash until these factors beyond their control change. How long will that be? How long will the cash last with a predicted cash burn of $1 billion HKD per month? As yet the stock price has not plummeted ,so perhaps the markets have more optimistic data but from an outsider point of view the situation looks grim.

[Sam Ting Wong]

Go on Google Earth and check the HKIA development. Someday in the not so far future this place will be one the biggest airports in the world. Cathay will be the major airline operating out of HKIA, and the China market will grow faster than any other global market. Additionally, Cathay will have a much lower cost base than before the pandemic. I say Cathay will be highly profitable. And if that sounds unbelievable, I have one more for you. Hong Kong will become one of the wealthiest and most prosperous cities in the world, if not THE richest city in the world. No other city is better placed to profit from the Asian century.

[Cury Lamb]

You’re smoking some seriously strong S:mad:T STW

[kenfoggo]

STW, I have to admire your glass half full optimism! You will obviously be buying Cathay stock like crazy. However, “in the not so far future” that you envisage is a long , long, loooong way off especially as the Government are adamant around the Zero CoVid policy ( which is now unachievable). As a result the HKG Airport remains almost closed for business until when ? Until CoVid suddenly disappears from the rest of the world? No airline can survive indefinitely on a 2% passenger and 20% cargo current figure from pre Covid figures.

[ToCatLady]

I think STW, you need to get back to your Rugby 7's adverts and flash mob dancing,You are beginning to sound very desperate! I know your boss is giving you a hard time about retention but trying to convince our mob on here that CX is going to become the most incredible airline in the most incredible city is cringeworthy.

Have you been sampling those CBD oils recently?

[Sam Ting Wong]

I never said nor do I think living in HK or working for Cathay will be desirable. I said the pandemic will end and Hong Kong's economy will recover.

[Piet Lood]

https://cimg8.ibsrv.net/gimg/pprune.org-vbulletin/480x489/ef092f7d_b206_4f9f_91c3_8973ed68c63b_8389001583c52f7d7aaa462 9d99823c0ccfb12d2.jpeg
STW, you remind me of Ernie sometimes.

[Flying Clog]

Spot on, this post.

Cathay can do nothing about CoVid and it is powerless to do anything about Government restrictions. It is adrift without any ability to turn the bad news into good. They have no alternative other than to continue to burn cash until these factors beyond their control change. How long will that be? How long will the cash last with a predicted cash burn of $1 billion HKD per month? As yet the stock price has not plummeted ,so perhaps the markets have more optimistic data but from an outsider point of view the situation looks grim.

[Flying Clog]

What in the hell are you smoking STW?

Blimey.

Go on Google Earth and check the HKIA development. Someday in the not so far future this place will be one the biggest airports in the world. Cathay will be the major airline operating out of HKIA, and the China market will grow faster than any other global market. Additionally, Cathay will have a much lower cost base than before the pandemic. I say Cathay will be highly profitable. And if that sounds unbelievable, I have one more for you. Hong Kong will become one of the wealthiest and most prosperous cities in the world, if not THE richest city in the world. No other city is better placed to profit from the Asian century.

[Flying Clog]

Yeah, good luck with that mate.

Get back to your closed loop, and quit posting nonsense.

Idiot.

I never said nor do I think living in HK or working for Cathay will be desirable. I said the pandemic will end and Hong Kong's economy will recover.

[Flying Clog]

https://cimg1.ibsrv.net/gimg/pprune.org-vbulletin/1034x1204/last_one_out__2b545d532a775b419cc1f287ac5ca0067fd1fd61.png

[betaboy]

STW and NC are right. The investments made by various parties in the new airport infrastructure make the last and future CX government bailouts look like peanuts. The new runway alone is costing $142 billion HKD.

Bondholders and the market don't seem too worried. Cathay was recently able to issue bonds yielding a ridiculously low 4.875% (for a company that has no short term revenue prospects), and can issue more if it needs to. It can also issue more shares, and it can also ask the government for more money.

Based on it's current cash position it can keep paying all its obligations for another three years with practically zero revenue.

[Cury Lamb]

betaboy

I’ve said this multiple times, and I’ll say it again:

CXi’s problems started way before covid. There’s this thing called competition, and with GB Airlines making it’s entrance this year (or magically when the borders open), the monopoly that CXi was hoping HK Express would have had, will evaporate.

And then there’s a plethora of other LCCs and legacy carriers who will be back too, utilising the 3rd runway, which, btw, wasn’t built for CXi.

The HK Govts (tax payers) loan to CX, which was made very clear to be a once off only, was granted before the introduction of the national security law, and the company has since fallen foul with the CCP.

So mix politics with competition, a massive loan that carries interest and companies + individuals leaving the “SAR” in droves, on one way tickets, and you’ll find that the picture doesn’t seem so rosy any longer.

Time will tell, but one thing that is for certain: CXit will never ever be what it was before. Lost opportunities, billions squandered away by so called “top management” - a bunch of amateurs with one mission only: plunder and move on!

[Sam Ting Wong]

At some point you guys will have to make a decision. Will there be no flights forever or will there be flights but the competition will steal them? It can't be both, can it?

[happyguy99]

Here's some info I dug up while not enjoying my stay in Paris last year. Disclaimer, I take no responsibility for the accuracy/recency of any details, I don't know what the hell I'm talking about, I can barely speak English, I may edit this post at any time, without prior notice or consultation at my own discretion, and in accordance with my own policies that are either constantly changing or non-existent.

At time of writing in 2021, no dividend has been paid to shareholders since 2019. However last year CX announced a recapitalisation plan which resulted in just over $39B in new liquidity. This was raised in 3 ways. 1) the issue of 195 million Preferences shares at $100 each; 2) the issue of 2,503,355,631 (2.5 billion) Warrants at $4.68 each; and 3) a bridge loan of $7.8B @ 3.00%

The end result is the majority 3 shareholders maintain the same percentage shareholding, the government as a new shareholder via a company called Aviation 2020 Limited, receive guaranteed ROI, all other shareholders are diluted.

Here’s where it gets interesting, in the agreement, Preferential Shares issued will receive a Preference dividend rate of 3.00% per annum for the first 3 years, 5.00% per annum for the 4th year, 7.00% per annum for the 5th year, and 9% per annum for subsequent years. The dividend is payable semi-annually if in the opinion of the Directors, the amounts available to Cathay Pacific for distribution justify such payment. Any dividends not paid on the Preference Shares shall accumulate in arrears to be distributed at a later date.

On 16th Feb & again 12th Aug 2021 the Directors deferred dividend payment payable on the Preferential Shares.

The Preference shares are not redeemable however, at any time, CX may redeem all or some of the Preference Shares at an amount equal to the issue price of $100 per share plus any unpaid dividends.

Subsequent to the recapitalisation CX has issued the following bonds:

Round 1: Feb 2021 HKD$6.740 billion @ 2.75% maturing 2026

Round 2: May 2021 USD$650 million (HKD$5.057 billion) @ 4.875% maturing 2026

Round 3: Aug 2021 USD$2.5 billion (HKD$19.450 billion) still under offer rate not known at time of writing.

Here’s a calculation of the dividend owed on the Preference Shares, whether or not it is paid on schedule or deferred until a later date, until CX redeems them: Years 2021 to 2023 $585 million per year; Year 2024 $975 million; Year 2025 $1.365 billion; Year 2026 onwards $1.755 billion per year. And the annual interest on the bond issuance: Round 1 $185.35 million; Round 2 $246.53 million; Round 3 $948.19 million (assuming same rate as Round 2)

The 2021 interest owed in the form of special dividends amounts to $585 million, plus bridge loan interest $234 million, total $819 million

The 2022 special dividends owed amounts to $585 million, plus 2021 deferred special dividends $585 million, plus bridge loan interest, plus Round 1 - 3 bond interest. This would add up to over $2.8 billion, far more than most years annual profit. I suspect that the recent bonds issued are in fact going to be used to redeem the Preferential shares and or repay the bridge loan since the overall finance cost would be lower but this is only my thoughts. If I’m incorrect and they plan on holding all this additional debt then CX is now a zombie company and can only exist in an environment of further suppressed interest rates and government backing.

Here’s the reported annual Profit / (Loss) going back to 2011.
2011 $5.501 billion
2012 $862 million
2013 $2.620 billion
2014 $3.15 billion
2015 $6.000 billion
2016 ($575) million
2017 ($1.259) billion
2018 $2.345 billion
2019 $1.691 billion
2020 ($21,648) billion
2021 interim ($7,565) billion

[MENELAUS]

Revenue was down before the woo flu hit CX. The small matter of protests hardly made HK the dream spot for a long weekend. Or any other stay for that matter. Combine that with a draconian security law, punitive and nonsensical quarantine requirements ( which will take an age to unwind now that the infrastructure is in place and the bureaucrats have got a taste for it) and a brain and talent brain and the place is well and truly f@@ked. Talk about killing the goose that laid the golden egg.
The 3rd runway will just become another vanity project, ( they’re scattered all over the planet from Zaragoza, Bangkok to Beijing ) Shenzhen will subsume HKG anyway, and quite frankly who needs 4 airports in the Pearl River Estuary when one would suffice.
Oh for the days when the only worry we had post flight was not cocking up the e tech log, which gate we were on, and which bus we were going to catch. !

[Sam Ting Wong]

Interesting work, happyguy.

What are your thoughts on assets? You concentrate on profit and cash flow in your analysis, but in 2020 Cathay had assets of 26 Billion (!) US$. There are multiple ways to repay debt. I don't know the underlying debt associated to those assets, but the price to book ratio is currently at a comfortable 0.64 and there has been about 2 billion in liquidity reserves just before Covid hit. A label as "zombie company" hence appears a bit drastic in my opinion.

Globo, yes there was a slight reduction of revenue caused by the protests, but you have to keep that into perspective. The revenue in 2018 was 14.238 Billion, in 2019 it was 13.714 Billion. The gross profit was actually higher in
2019 than in 2018, at 2.814 Billion compared to 2.751 Billion. Additionally, If there is one thing we can agree on it probably would be to acknowledge that the political protests are history and done. They won't be a problem anymore in the future.

[KABOY]

What are your thoughts about assets? You concentrate on profit and cash flow in your analysis, but in 2020 Cathay had assets of 26 Billion (!) US$. There are more ways to repay debt, plus the price to book ratio is currently at a comfortable 0.64. A label as zombie company is a bit drastic in light of the actual
balance sheet in my opinion.

It also acts as a red flag that that the Company value could deteriorate. That variable being the convertible bonds issued.

Swire have financially engineered equity with the expectation of a return to profit by 2021. The deferred dividend payments illustrate this.

The Swire logo that adorns the tails of all their aircraft is being painted red and there isn’t any yellow stars appearing.

Globo, yes there was a slight reduction of revenue caused by the protests, but you have to keep that into perspective. The revenue in 2018 was 14.238 Billion, in 2019 it was 13.714 Billion. The gross profit was actually higher in
2019 than in 2018, at 2.814 Billion compared to 2.751 Billion

Revenue rose on the capacity increase, but so do the costs. You can keep expanding capacity, but the yields collapse.

CX were forced to do this as their competitors seized the opportunity from the disastrous fuel hedge. All those old fuel hungy B744’s became useful, but CX were forced to retire to seek fuel savings, lowering their ROCE.

This slow motion train wreck has been in motion for the past 5 years.

[Sam Ting Wong]

There are two ways to look at the fuel hedge disaster

First, to state the obvious. It was a major strategic error.

Second, much more interesting in my opinion, the company could absorb it. Many companies with weaker balance sheets would have collapsed.

[Cury Lamb]

Ah yes, how can we all forget that fuel hedging was actually a good thing :ugh:

Listen here to Ivan Clueless:

https://www.bloomberg.com/news/videos/2016-03-09/cathay-pacific-benefitted-from-fuel-hedging-strategy

[LongTimeInCX]

Listen here to Ivan Clueless:

https://www.bloomberg.com/news/videos/2016-03-09/cathay-pacific-benefitted-from-fuel-hedging-strategy


Ah yes, the famous A50 speech.
A most motivating and inspiring interview that instilled confidence.....

[MENELAUS]

Which is why he was kicked upstairs

[CodyBlade]

"A50" he means the bus service right?

[Bokpiel]

betaboy

The HK Govts (tax payers) loan to CX, which was made very clear to be a once off only, was granted before the introduction of the national security law, and the company has since fallen foul with the CCP.


But we know the company was already in Beijing's bad books during the 2019 protests, before the loan or implementation of the NSL.

F knows what the HK gov (CCP) wants for CX, but if they want to get rid of them to make way for GBA or whatever other rumours there are going around, then it makes no sense to bail them out.

[KABOY]

Go on Google Earth and check the HKIA development. Someday in the not so far future this place will be one the biggest airports in the world. Cathay will be the major airline operating out of HKIA, and the China market will grow faster than any other global market. Additionally, Cathay will have a much lower cost base than before the pandemic. I say Cathay will be highly profitable. And if that sounds unbelievable, I have one more for you. Hong Kong will become one of the wealthiest and most prosperous cities in the world, if not THE richest city in the world. No other city is better placed to profit from the Asian century.

Seems like the HKSAR is starting to recoup their investment without divesting their interest. Better to suck it out whilst still solvent right?

What will be the cost on introducing Omicron to Hong Kong? If this gets traction, CX will become a state owned carrier without Air China having to put a dollar in.

https://tickernews.co/cathay-pacific-sued-by-hong-kongs-department-of-justice/

[Koan]

Seems like the HKSAR is starting to recoup their investment without divesting their interest. Better to suck it out whilst still solvent right?

What will be the cost on introducing Omicron to Hong Kong? If this gets traction, CX will become a state owned carrier without Air China having to put a dollar in.

https://tickernews.co/cathay-pacific-sued-by-hong-kongs-department-of-justice/

So make CX a legal scapegoat. Hard to prove omicron would not have gotten in despite any crew actions.

[Dingleberry Handpump]

So make CX a legal scapegoat. Hard to prove omicron would not have gotten in despite any crew actions.
It did. The current wave has nothing to do with CX crew.

[CovidRefugee]

What on earth has 'proof' got to do with anything. The verdict has already been decided.

[Sam Ting Wong]

One word..... Institutionalised


https://www.scmp.com/presented/business/banking-finance/topics/business-hub-connecting-cities/article/3166678/standard


https://www.11-skies.com

[MENELAUS]

https://www.scmp.com/presented/business/banking-finance/topics/business-hub-connecting-cities/article/3166678/standard


https://www.11-skies.com


BFD. Another doomed white elephant, as is the bridge, which should at the very least have been built with dual rail and road access. That’s if there’s any actual need for it in the first place.
“ close to travel hub “. Travel to where. ?

[KABOY]

https://www.scmp.com/presented/business/banking-finance/topics/business-hub-connecting-cities/article/3166678/standard


https://www.11-skies.com

A fantastic opportunity for GBA to bring mainlanders to HK.

CX will try to target that market, but they need to gain approval for all the KA routes they jettisoned. There is no doubt they will gain the approval eventually….

CX will become a regional player, the mainland doesn’t want a colonial business being a Chinese city flag carrier.

[Koan]

It did. The current wave has nothing to do with CX crew.

Yep. Can't be stopped. Cook Islands confirms first coronavirus case - two years into pandemichttps://www.yahoo.com/news/cook-islands-confirms-first-coronavirus-192354194.html