13th month
Joined: Aug 2007
Posts: 241
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From: hong kong
From today's SCMP
Cathay Pacific Airways will cut passenger capacity 1.6 per cent next year, the first reduction since 2009, as it contends with slowing international travel demand and a need to train pilots for new aircraft.
The cut, which mainly affects long-haul routes, is “a slight surprise,” Bank of Communications analyst Geoffrey Cheng said in a note today, following a briefing by the company on Tuesday.
UOB-Kay Hian gave the same numbers in a note. Elin Wong, a spokeswoman for Hong Kong-based Cathay, said she couldn’t immediately comment in a reply to Bloomberg News questions.
The carrier is boosting its focus on short-haul routes and premium-economy cabins as the global economic slowdown saps demand for premium-class long-haul flights to cities including New York. The airline also last week told staff it was stepping up cost-cutting measures because of the inter-continental slowdown, a cargo slump and higher fuel prices.
The long-haul capacity reduction “implies a lack of confidence as well as a repositioning of the company’s strategy,” UOB-Kay Hian’s K. Ajith and Eugene Ng said. “The focus towards short-haul is fraught with risk, especially given that various low-cost carriers have expanded in the region.”
Ajith and Ng cut their 2012 earnings estimate to a HK$425 million (US$55 million) loss from a HK$329 million profit. The airline lost HK$935 million in the first half. The analysts also cut their target price to HK$12.60 from HK$12.80, while keeping a sell rating. Bank of Communications lowered its earnings forecast and price target, while maintaining a neutral rating.
The airline rose 0.7 per cent to HK$13.96 at 11:18am (HK time), while the benchmark Hang Seng Index declined 0.7 per cent. Cathay has risen 4.8 per cent this year.
The carrier also said part of the reason for cutting capacity was a need to train pilots on new aircraft, according to the UOB-Kay analysts. “This is unusual as an airline typically schedules training well in advance,” they said.
The airline will boost cargo capacity 12 per cent next year, as it adds new Boeing 747-8 freighters. The carrier received three of the planes in October and two more will arrive next year, the UOB-Kay analysts said. Cathay is beginning to see an upturn in cargo, particularly in North America, and it will be able to slow capacity growth if needed, they said.
On the passenger side, the airline will receive 14 new wide-body planes next year, while retiring six Boeing 747s. Cathay faces the risk of making a loss from shedding the 747s, Ajith and Ng said.
This year, the airline increased passenger capacity 4.1 per cent through October. Its cargo capacity, as measured by available ton kilometers, was little changed.
The cut, which mainly affects long-haul routes, is “a slight surprise,” Bank of Communications analyst Geoffrey Cheng said in a note today, following a briefing by the company on Tuesday.
UOB-Kay Hian gave the same numbers in a note. Elin Wong, a spokeswoman for Hong Kong-based Cathay, said she couldn’t immediately comment in a reply to Bloomberg News questions.
The carrier is boosting its focus on short-haul routes and premium-economy cabins as the global economic slowdown saps demand for premium-class long-haul flights to cities including New York. The airline also last week told staff it was stepping up cost-cutting measures because of the inter-continental slowdown, a cargo slump and higher fuel prices.
The long-haul capacity reduction “implies a lack of confidence as well as a repositioning of the company’s strategy,” UOB-Kay Hian’s K. Ajith and Eugene Ng said. “The focus towards short-haul is fraught with risk, especially given that various low-cost carriers have expanded in the region.”
Ajith and Ng cut their 2012 earnings estimate to a HK$425 million (US$55 million) loss from a HK$329 million profit. The airline lost HK$935 million in the first half. The analysts also cut their target price to HK$12.60 from HK$12.80, while keeping a sell rating. Bank of Communications lowered its earnings forecast and price target, while maintaining a neutral rating.
The airline rose 0.7 per cent to HK$13.96 at 11:18am (HK time), while the benchmark Hang Seng Index declined 0.7 per cent. Cathay has risen 4.8 per cent this year.
The carrier also said part of the reason for cutting capacity was a need to train pilots on new aircraft, according to the UOB-Kay analysts. “This is unusual as an airline typically schedules training well in advance,” they said.
The airline will boost cargo capacity 12 per cent next year, as it adds new Boeing 747-8 freighters. The carrier received three of the planes in October and two more will arrive next year, the UOB-Kay analysts said. Cathay is beginning to see an upturn in cargo, particularly in North America, and it will be able to slow capacity growth if needed, they said.
On the passenger side, the airline will receive 14 new wide-body planes next year, while retiring six Boeing 747s. Cathay faces the risk of making a loss from shedding the 747s, Ajith and Ng said.
This year, the airline increased passenger capacity 4.1 per cent through October. Its cargo capacity, as measured by available ton kilometers, was little changed.
Joined: Jul 2007
Aviation Qualifications: ATP+Mil
Posts: 1,953
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From: with the ex-CX pond scum (a zoologist was once head of Flight Ops)
“This is unusual as an airline typically schedules training well in advance,” they said.
Cathay knows best; also leading the way with iCadets, Navtech charts, what an age we live in!
Cathay knows best; also leading the way with iCadets, Navtech charts, what an age we live in!
Last edited by Captain Dart; 28th November 2012 at 07:24.
Joined: Mar 2008
Posts: 1,542
Likes: 5
From: London
Couple of points
1) the bases have the 13th month incorporated in their salaries. If the company is not going to claw back that amount, then they are in fact discriminating against HK based pilots. I expect the AOA to deal with this discrepancy through the courts.
2) the13th month equates to roughly 15% of my annual pay. If they don't pay it, then they have effectively 'stolen' 15% of my income from myself and my family. As a result, I will make sure that I 'recoup' this through approximately 15% extra time off over the year......funny old thing, that equates to about a month!
3) as someone else said on this forum: 'if they pretend to pay me, I will pretend to work'.
1) the bases have the 13th month incorporated in their salaries. If the company is not going to claw back that amount, then they are in fact discriminating against HK based pilots. I expect the AOA to deal with this discrepancy through the courts.
2) the13th month equates to roughly 15% of my annual pay. If they don't pay it, then they have effectively 'stolen' 15% of my income from myself and my family. As a result, I will make sure that I 'recoup' this through approximately 15% extra time off over the year......funny old thing, that equates to about a month!
3) as someone else said on this forum: 'if they pretend to pay me, I will pretend to work'.
Last edited by Trafalgar; 29th November 2012 at 07:53.
Joined: Mar 2007
Posts: 139
Likes: 0
From: Aus
Please post a reference to where Management say 13th month is incorporated into based salaries? In 2010(?), we had a 9% pay rise in Aus to take us up to local conditions, so I fail to see how your statement is true.
Joined: Jun 2009
Posts: 230
Likes: 0
From: az
CX is making it sound bad to prevent others from invading it's market.... hence the first half loss. Has nothing to do with 13th month, CX will make a profit in line with everybody else in the industry - record breaking! mgt trying to make you work harder and have pity on the company, while they keep competitors out. perhaps we should collectively leave and work for emirates.... then EK could take over Hong Kong in one fell swoop.... of course they will pay us dearly for us because it will be a lot cheaper than infiltrating swire.
Joined: Oct 2006
Posts: 651
Likes: 0
From: Hong Kong
Based 13th month
I think it was in the sign or be fired 'negotiations' of 1999 when 13th month was incorporated into Based B scale salaries. Based B scales were woefully uncompetitive at the time so it gave the salary scale a pseudo 8.3% leg up, when in fact the total remuneration never changed.
A scalers were not so lucky - they lost 13th month.
Since that time there has been no mention of paying 13month to bases.
Since B scales were inadequate in 1999 it doesn't matter whether they gave them a 8.3% payrise and simultaneously ceased 13th month or just took 13months and divided by 12.
Since the 13th month is guaranteed across the rode at KA, there is no good reason why HKG based CX pilots shouldn't get it too!
A scalers were not so lucky - they lost 13th month.
Since that time there has been no mention of paying 13month to bases.
Since B scales were inadequate in 1999 it doesn't matter whether they gave them a 8.3% payrise and simultaneously ceased 13th month or just took 13months and divided by 12.
Since the 13th month is guaranteed across the rode at KA, there is no good reason why HKG based CX pilots shouldn't get it too!
Joined: Nov 2011
Posts: 343
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From: Here
Malaysian Airlines Q3 earnings up, 12 million US dollars net, they need to get some more creative accountants down in KL, far too transparent! Sarc.
Last edited by Threethirty; 29th November 2012 at 16:04.
Joined: Aug 2007
Posts: 241
Likes: 0
From: hong kong
Was the 13th month negotiated out...?
No. In the pre-1999 contract, round about the time of Red Oddington, the company made a unilateral change to call the 13th month payment a discretionary annual bonus. That gave them the legal right to pay or not or not pay all with no come back by the staff.
Joined: Sep 2005
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From: Paradise
"He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."
Joined: Aug 2005
Posts: 79
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From: Honolulu, Hawai'i
1984 v. The Future
"He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."
Last edited by alohajec; 1st December 2012 at 09:49.