Cathay Pacific Returns to Profit on Fuel-Hedging Gain
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Cathay Pacific Returns to Profit on Fuel-Hedging Gain
Cathay Pacific Returns to Profit on Fuel-Hedging Gain (Update1)
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By Wendy Leung
Aug. 5 (Bloomberg) -- Cathay Pacific Airways Ltd., 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.’s first quarterly loss in six years.
“Full-year earnings will depend on a pick-up in premium traffic,” said Winson Fong, 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, 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. 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 in Hong Kong at [email protected]
Last Updated: August 5, 2009 00:52 EDT
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By Wendy Leung
Aug. 5 (Bloomberg) -- Cathay Pacific Airways Ltd., 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.’s first quarterly loss in six years.
“Full-year earnings will depend on a pick-up in premium traffic,” said Winson Fong, 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, 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. 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 in Hong Kong at [email protected]
Last Updated: August 5, 2009 00:52 EDT
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"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.
I see. If the 13th month isn't there I'm going to be mighty unhappy.
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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
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
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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.
So we can all look forward to a nice bit of profit share in 2011.
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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...
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...
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badairsucker from another thread!
So tell me why are you now complaining 
Ok, I see you are a little stupid my friend. SLS was a individual choice. No one told you to take it!!!!!!
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All you whiners deserve what you got. You took SLS without proof that it was needed. Can't say I feel sorry for you.
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.
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.
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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/bu....10728228.html
Dowturns are all relative and from the US, ours must look mild!
http://www.nytimes.com/2008/03/05/bu....10728228.html
Dowturns are all relative and from the US, ours must look mild!
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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!
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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..........
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..........
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A. Le Rhone,
Wars and disputes are not won by people being civilized and eloquent.
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!
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".
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
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?
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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!!!
CX can never make money, we will always either make a paper loss or operating loss, because it seems paper profit doesn't count.
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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.
I bet they have that one playing on repeat on the 7th floor.