Doom & Gloom
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Doom & Gloom
Cathay Pacific forecast to see earnings dive | South China Morning Post
The airline, hit by high fuel costs, weak demand and uncertain economic conditions, is expected to report 90 per cent fall in profit for last year
I wonder if that includes provision for the potential fines for flouting French labor law (Paris base closure), reputedly some tens of millions of euros.
Once again behaving as if the world is one big Hong Kong, they have managed to 'p' off a broke, English-hating country that has a Socialist government.
No doubt that once again, the flight crew will be asked to 'take one for the team'.
Once again behaving as if the world is one big Hong Kong, they have managed to 'p' off a broke, English-hating country that has a Socialist government.
No doubt that once again, the flight crew will be asked to 'take one for the team'.
Last edited by Captain Dart; 11th Mar 2013 at 22:07.
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Oh my God!!!
Times are tough! I know they've been saying that every year for the past 20, but surely this time it must be true.
I mean, with all the challenges they face:
No money in freight
softening yields
high fuel prices
exchange rates working against us
fines in Paris
(please feel free to add more....)
Times are tough! I know they've been saying that every year for the past 20, but surely this time it must be true.
I mean, with all the challenges they face:
No money in freight
softening yields
high fuel prices
exchange rates working against us
fines in Paris
(please feel free to add more....)
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I guess that means we'll get 90% less profit share. What does that work out to? 2.4 hours profit share??
........ please don't forget to include HKD 6000 or half month salary, whichever is lower ..
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Cpt Dart
I am trying to guess how old you are reading your rant about the french.......I've stopped counting.
You break a law.......you get a slap....a financial slap. That's how the world godes mate. Just wake up and smell the coffee.
I am trying to guess how old you are reading your rant about the french.......I've stopped counting.
You break a law.......you get a slap....a financial slap. That's how the world godes mate. Just wake up and smell the coffee.
I pitched it and you missed it, 'mate'. No 'rant' intended. I actually agree with the French stance and am stating that the employees may be asked to pay for the airline's management not complying with French law.
Read my post again, and while you are at it, check your own rant and fix the appalling syntax and spelling.
Read my post again, and while you are at it, check your own rant and fix the appalling syntax and spelling.
Last edited by Captain Dart; 15th Mar 2013 at 00:47.
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Making almost a billion HKDs in a difficult year despite all the capital investments seems like a sign of health more than anything. The cargo terminal, cabin / lounge improvements, aircraft retirements and acquisitions were but a few investments CX made this year. Top that off with stubbornly high fuel prices, a down cargo market, and difficulty maintaining passenger yield; it is little wonder that the profit was significantly less than last year's.
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Really no affect eh?
My skimming of the results noted that a/c depreciation/leasing costs increased by 10% over the previous year (almost 100 Million HKD). Yet our fleet size didn't, I trust we saved at least this amount in fuel from the re-balancing of the fleet.
My skimming of the results noted that a/c depreciation/leasing costs increased by 10% over the previous year (almost 100 Million HKD). Yet our fleet size didn't, I trust we saved at least this amount in fuel from the re-balancing of the fleet.
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How long has the results of Dragon and the Mainline been combined? Is there somewhere that the two are seperated?
The load factor on CX livery seems to be more than enough to cover costs and if mid 80% doesn't get you into the black, what will?
The load factor on CX livery seems to be more than enough to cover costs and if mid 80% doesn't get you into the black, what will?
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Plunging Cathay profits: What went wrong?
With Cathay Pacific Airways, one of the world’s leading airlines, announcing an 83% plunge in annual profit, one must begin to wonder what went wrong.
Almost five years since the onset of the global economic crisis, the fortunes of the airlines can be best alluded to the unpredictable movements of the yo-yo. It was only at the end of last year that the International Air Transport Association (IATA) could with some confidence finally revise its profit forecasts upwards instead of downwards: from US$4.1 billion to US$6.1 billion for 2012, and from US$7.5 billion to US$8.4 billion for the current year.
Could Cathay be an exception to the rule? For all the hype about product improvement all round including the new Premium Economy class and a new regional business class, the Hong Kong-based airline posted a net profit of HK$916 million (US$118 million), down from HK$5.5 billion a year ago.
Cathay has attributed its poorer performance to a number of factors.
First, higher fuel costs. Cathay reported that throughout much of 2012, fuel prices were at sustained high levels and the Cathay Group’s fuel costs increased by 0.8% compared to 2011. What’s new anyway, when this should similarly affect all airlines across the industry? Yet, in spite of that, some airlines such as Japan Airlines (JAL) are reporting improved performances. The volatility of the fuel price has been an easy target to blame no matter what degree its impact is on performance. It may not apply to Cathay, but in fact the average jet fuel price had been falling from September to December 2012 before rising again.
What is more of a concern is the reason for the decline in the fuel price, as explained by IATA chief executive and director general Tony Tyler: “The reduction in fuel prices is a great thing for the airline industry but they are coming down because of concerns over world economic activity. If the world enters an economic slump, that will be even worse for the industry than the higher fuel price was on its own.”
Second, a drop in demand for corporate travel. This is a more cogent argument as the industry continues to be hard hit by the economic stagnation or slow recovery if at all it is happening, particularly in Europe and the United States. Cathay, which banks on its premium product, is naturally affected more than other airlines that thrive on the low-end traffic.
In a statement issued by the airline, Cathay Pacific chairman Christopher Pratt said: “Premium class yields were affected by travel restrictions imposed by corporations.
Again, this is not a new lesson gleaned only yesterday but widely recognised during the global financial crisis which all but favours cheaper alternatives. Cathay is not alone in this predicament; rivals such as Singapore Airlines (SIA) and Qantas face the same threat.
In a counter-move, Cathay introduced the premium economy class to retain downgraders and attract those who are prepared to pay a little more but not that much more to upgrade to enjoy the frills of an in-between class. It is tempting to conclude that this strategy – perhaps to the relief of SIA which has until now snubbed the idea – is not working judging by the results posted by Cathay, but its full impact is yet to be realised. If the global economy continues to weigh down, it may well prove to be Cathay’s lifeline.
That brings us to the third point as to what went wrong then. Cathay attributes it to increased competition. Pratt said: “An increasingly competitive environment added to the difficulties.” That may be true, but when an airline such as Cathay which is among the world’s most successful carriers resigns to that, it comes across as being somewhat less plausible and lame, and smacks of something amiss.
Competition is a given in this industry. So what has Cathay done or is doing to check the competition? To be fair, it has done much more than most airlines. It has rolled out new product improvements and improved its in-flight service. The airline is ranked consistently among the industry’s favourites, particularly its business class, by air travellers. By all account, its strategy should place it in the forefront of the competition, so what is missing that it should ascribe its falling performance to increased competition? If there’s such a thing as a success formula to suit different environments, has it got the equation not quite right?
Fourth, the weak cargo demand in major markets, particularly from Asia to Europe. No doubt this has affected Cathay’s overall profitability. If it is any consolation, close rival SIA is also similarly afflicted. There are no clear signs that the situation will improve substantially in the near term. In light of the weaker outlook, Cathay has cancelled an order for eight Boeing 777-200F freighters but instead placed an order for three Boeing 747-8F freighters which will carry 16% more revenue-producing freight than predecessor Boeing 747-400. Cathay Pacific chief executive John Slosar said the larger airplane would result in fuel savings for the revamped fleet.
Fifth, high operating costs, especially of the long haul routes that according to Pratt were dominated by “older, less fuel-efficient Boeing 747-400 and Airbus A340-300 aircraft”. Last year, the company announced plans to accelerate retirement of the less fuel-efficient 747-400 as it continues with the fleet upgrading programme for both airlines in its fold – Cathay and Dragonair. In January, Cathay ordered 10 Airbus A350-1000 and converted 16 of its existing order for A350-900 to the larger A350-1000. These 350-seaters will ply high-density routes which include non-stop flights to Europe and North America.
The future should look rosier. Slosar said: “This is an important strategic development for Cathay Pacific. The A350-1000 aircraft will bring us world-beating fuel efficiency.”
Last, incommensurate cost-cutting measures that include offering unpaid leave to crew and reducing capacity on some routes which unfortunately, according to Pratt, “were not enough to offset in full the effects of high fuel prices and weak revenues.”
And we have come one full circle. So what makes one airline more likely to succeed than another when almost every one of them alike ascribes its failed performance to the same factors?
Pratt said: “Our core strengths remain the same ever: a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.”
Sounds familiar, you may say, except for specific references applicable only to Cathay
Plunging Cathay profits: What went wrong? | Aspire Aviation
With Cathay Pacific Airways, one of the world’s leading airlines, announcing an 83% plunge in annual profit, one must begin to wonder what went wrong.
Almost five years since the onset of the global economic crisis, the fortunes of the airlines can be best alluded to the unpredictable movements of the yo-yo. It was only at the end of last year that the International Air Transport Association (IATA) could with some confidence finally revise its profit forecasts upwards instead of downwards: from US$4.1 billion to US$6.1 billion for 2012, and from US$7.5 billion to US$8.4 billion for the current year.
Could Cathay be an exception to the rule? For all the hype about product improvement all round including the new Premium Economy class and a new regional business class, the Hong Kong-based airline posted a net profit of HK$916 million (US$118 million), down from HK$5.5 billion a year ago.
Cathay has attributed its poorer performance to a number of factors.
First, higher fuel costs. Cathay reported that throughout much of 2012, fuel prices were at sustained high levels and the Cathay Group’s fuel costs increased by 0.8% compared to 2011. What’s new anyway, when this should similarly affect all airlines across the industry? Yet, in spite of that, some airlines such as Japan Airlines (JAL) are reporting improved performances. The volatility of the fuel price has been an easy target to blame no matter what degree its impact is on performance. It may not apply to Cathay, but in fact the average jet fuel price had been falling from September to December 2012 before rising again.
What is more of a concern is the reason for the decline in the fuel price, as explained by IATA chief executive and director general Tony Tyler: “The reduction in fuel prices is a great thing for the airline industry but they are coming down because of concerns over world economic activity. If the world enters an economic slump, that will be even worse for the industry than the higher fuel price was on its own.”
Second, a drop in demand for corporate travel. This is a more cogent argument as the industry continues to be hard hit by the economic stagnation or slow recovery if at all it is happening, particularly in Europe and the United States. Cathay, which banks on its premium product, is naturally affected more than other airlines that thrive on the low-end traffic.
In a statement issued by the airline, Cathay Pacific chairman Christopher Pratt said: “Premium class yields were affected by travel restrictions imposed by corporations.
Again, this is not a new lesson gleaned only yesterday but widely recognised during the global financial crisis which all but favours cheaper alternatives. Cathay is not alone in this predicament; rivals such as Singapore Airlines (SIA) and Qantas face the same threat.
In a counter-move, Cathay introduced the premium economy class to retain downgraders and attract those who are prepared to pay a little more but not that much more to upgrade to enjoy the frills of an in-between class. It is tempting to conclude that this strategy – perhaps to the relief of SIA which has until now snubbed the idea – is not working judging by the results posted by Cathay, but its full impact is yet to be realised. If the global economy continues to weigh down, it may well prove to be Cathay’s lifeline.
That brings us to the third point as to what went wrong then. Cathay attributes it to increased competition. Pratt said: “An increasingly competitive environment added to the difficulties.” That may be true, but when an airline such as Cathay which is among the world’s most successful carriers resigns to that, it comes across as being somewhat less plausible and lame, and smacks of something amiss.
Competition is a given in this industry. So what has Cathay done or is doing to check the competition? To be fair, it has done much more than most airlines. It has rolled out new product improvements and improved its in-flight service. The airline is ranked consistently among the industry’s favourites, particularly its business class, by air travellers. By all account, its strategy should place it in the forefront of the competition, so what is missing that it should ascribe its falling performance to increased competition? If there’s such a thing as a success formula to suit different environments, has it got the equation not quite right?
Fourth, the weak cargo demand in major markets, particularly from Asia to Europe. No doubt this has affected Cathay’s overall profitability. If it is any consolation, close rival SIA is also similarly afflicted. There are no clear signs that the situation will improve substantially in the near term. In light of the weaker outlook, Cathay has cancelled an order for eight Boeing 777-200F freighters but instead placed an order for three Boeing 747-8F freighters which will carry 16% more revenue-producing freight than predecessor Boeing 747-400. Cathay Pacific chief executive John Slosar said the larger airplane would result in fuel savings for the revamped fleet.
Fifth, high operating costs, especially of the long haul routes that according to Pratt were dominated by “older, less fuel-efficient Boeing 747-400 and Airbus A340-300 aircraft”. Last year, the company announced plans to accelerate retirement of the less fuel-efficient 747-400 as it continues with the fleet upgrading programme for both airlines in its fold – Cathay and Dragonair. In January, Cathay ordered 10 Airbus A350-1000 and converted 16 of its existing order for A350-900 to the larger A350-1000. These 350-seaters will ply high-density routes which include non-stop flights to Europe and North America.
The future should look rosier. Slosar said: “This is an important strategic development for Cathay Pacific. The A350-1000 aircraft will bring us world-beating fuel efficiency.”
Last, incommensurate cost-cutting measures that include offering unpaid leave to crew and reducing capacity on some routes which unfortunately, according to Pratt, “were not enough to offset in full the effects of high fuel prices and weak revenues.”
And we have come one full circle. So what makes one airline more likely to succeed than another when almost every one of them alike ascribes its failed performance to the same factors?
Pratt said: “Our core strengths remain the same ever: a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.”
Sounds familiar, you may say, except for specific references applicable only to Cathay
Plunging Cathay profits: What went wrong? | Aspire Aviation
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What went wrong, it's simple we don't fly to emerging markets such as Africa and Brazil. Service standards have dropped despite what they say. We don't offer the passengers the experience of the A380 whilst our competitors were quick to jump on the bandwagon. Finally the middle east has far and away surpassed the competition in terms of being the air transport hub of the world; plus it's respective airlines provide service and cabin standards that are superior to that of CX.
Last edited by Threethirty; 3rd Apr 2013 at 12:25.
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The fact our senior management may have worked at Coca Cola last year, and BuonAqua next must all play into. Not being committed to the airline, but only looking to minimize exposure during your tenure doesn't really lend itself audious planning
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If you're all so smart, why don't you go and start your own airline to compete with Cathay?
Anyone who thinks that getting the super jumbo is the key to profitability is truly clueless. While it may attract 2 or 3 more business travelers than a 777, it still has operating costs that far exceed those 2 or 3 pax. To make money on that aircraft, you have to fill it..which leads me to my point: Cathay is struggling due to a downturn in premium travelers as well as high fuel costs.
Anyone who thinks that getting the super jumbo is the key to profitability is truly clueless. While it may attract 2 or 3 more business travelers than a 777, it still has operating costs that far exceed those 2 or 3 pax. To make money on that aircraft, you have to fill it..which leads me to my point: Cathay is struggling due to a downturn in premium travelers as well as high fuel costs.
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I'm with Billy on this one. Seldom heard are pilots' views that include anything other than expanding the cost side of the balance sheet. Fancy new destinations and super jumbo aircraft all sound great to the drivers up front, but the bean counters see it differently. They assess massive risk in those moves. Their jobs are to maximize ROI (return on investment) while minimizing risk. Are they overly cautious sometimes? Of course, but I prefer that to some ego maniac up there with hair-brained schemes that might blow the whole thing up.
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So.. EK, BA, THAI ect.. are all flying about with no one in F or J?
Of course not. We are NOT attracting the customers. Its that simple.
Whether due to our ****ty FA's, poor seats, bad food, or whatever..
People are flying. We have record passengers traveling thru HKIA.
BUT .. they aren't choosing CX.
Of course not. We are NOT attracting the customers. Its that simple.
Whether due to our ****ty FA's, poor seats, bad food, or whatever..
People are flying. We have record passengers traveling thru HKIA.
BUT .. they aren't choosing CX.
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Two Tigers. What does Coca Cola have to do with it, other than being a massive global brand? Slosar started as Cathay, and is now back, having broadened his knowledge and experience.
Have you?
Have you?