Fuel hedging
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Fuel hedging
Cathay Pacific Airways Ltd., Asia’s largest international airline by passengers, reported net income that lagged behind analyst estimates after it had losses from fuel hedging and passenger yields dropped. The Shares plunged.
Profit jumped almost sixfold to HK$1.97 billion ($254 million) in the six months ended in June, trailing the HK$2.22 billion median estimate in a Bloomberg News survey of six analysts, Hong Kong-based Cathay said in a statement Wednesday. Sales in the first six months declined 0.9 percent to HK$50.4 billion.
Cathay shares fell the most in more than six years after the results, which included a HK$3.74 billion loss from fuel hedges. Last year’s slump in the crude oil market had left several Asian carriers holding hedges placed when oil prices were higher, adding to the challenges for Chief Executive Officer Ivan Chu.
“It’s a mixed set of earnings,” said Mohshin Aziz, a Malayan Banking Bhd. analyst in Kuala Lumpur. “On the revenue side things were very weak, much weaker than expected. Fortunately on the cost side, they seem to be making a lot of improvements.”
The airline had an unrealized fuel hedging loss of HK$7.42 billion at the end of June, Cathay said in the statement.
Cathay’s shares fell 7.7 percent, the biggest decline since April 27, 2009, to close at HK$15.38 in Hong Kong. The stock dropped for an eighth consecutive day, the longest losing streak in more than two years.
Profit jumped almost sixfold to HK$1.97 billion ($254 million) in the six months ended in June, trailing the HK$2.22 billion median estimate in a Bloomberg News survey of six analysts, Hong Kong-based Cathay said in a statement Wednesday. Sales in the first six months declined 0.9 percent to HK$50.4 billion.
Cathay shares fell the most in more than six years after the results, which included a HK$3.74 billion loss from fuel hedges. Last year’s slump in the crude oil market had left several Asian carriers holding hedges placed when oil prices were higher, adding to the challenges for Chief Executive Officer Ivan Chu.
“It’s a mixed set of earnings,” said Mohshin Aziz, a Malayan Banking Bhd. analyst in Kuala Lumpur. “On the revenue side things were very weak, much weaker than expected. Fortunately on the cost side, they seem to be making a lot of improvements.”
The airline had an unrealized fuel hedging loss of HK$7.42 billion at the end of June, Cathay said in the statement.
Cathay’s shares fell 7.7 percent, the biggest decline since April 27, 2009, to close at HK$15.38 in Hong Kong. The stock dropped for an eighth consecutive day, the longest losing streak in more than two years.
So the 'Millionaire Morons' save hundreds of kilos of fuel a month by pressing buttons and letting the planes fly themselves - at efficient levels, taking short cuts, organising slick descents and approaches - and our genius friends 'up on the 9th' chuck nearly $4 Billion HKD away by guessing wrong on the fuel price!!!!
Seems fair to me. Any explanations forthcoming??? No, I didn't think so. Perhaps the shareholders should get together and ask Management what the hell they're playing at!!!
Seems fair to me. Any explanations forthcoming??? No, I didn't think so. Perhaps the shareholders should get together and ask Management what the hell they're playing at!!!
This from today's The Australian newspaper:
As US oil fell to a six-year low below $US41 a barrel, an increasing number of analysts and traders are saying crude could drop into the $US30s — and soon.
The move to a price last seen at the height of the financial crisis, in February 2009, could come amid a seasonal fall-off in demand, coupled with concerns about the Chinese economy and the continuing global glut of crude.
I believe I read CX are hedging out to 2019. If that's the case, and with oil's price trending downward, expect losses "due to fuel hedging" for some time to come. Of course world issues can and have changed quickly, however, dare I say don't plan on receiving that Profit Share anytime soon.
b.
As US oil fell to a six-year low below $US41 a barrel, an increasing number of analysts and traders are saying crude could drop into the $US30s — and soon.
The move to a price last seen at the height of the financial crisis, in February 2009, could come amid a seasonal fall-off in demand, coupled with concerns about the Chinese economy and the continuing global glut of crude.
I believe I read CX are hedging out to 2019. If that's the case, and with oil's price trending downward, expect losses "due to fuel hedging" for some time to come. Of course world issues can and have changed quickly, however, dare I say don't plan on receiving that Profit Share anytime soon.
b.
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I am looking forward to hearing the profit share announcement of yet again "the lesser of X weeks or XXXHKD". Once again devaluing the true effect we have had on reducing costs.
ASKs increased 6.4% and Load factor increased by 2.3 points to 86% so you would think revenue should have increased by about 8-9%, and yet revenue decreased by 1%. When will the morons get over their fixation on filling the aircraft before making a profit? Oh that's right we prevent other carriers from also making a profit by putting on the low-cost specials through the night.
We have just announced our early-bird specials for 2016, prices include all taxes and aren't that much greater than ID90 for Y class.
ASKs increased 6.4% and Load factor increased by 2.3 points to 86% so you would think revenue should have increased by about 8-9%, and yet revenue decreased by 1%. When will the morons get over their fixation on filling the aircraft before making a profit? Oh that's right we prevent other carriers from also making a profit by putting on the low-cost specials through the night.
We have just announced our early-bird specials for 2016, prices include all taxes and aren't that much greater than ID90 for Y class.
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Blatant Market Manipulation
The most amazing thing to me is that the senior management types are so fugging clueless about the actual state of affairs in the global economy. Published in 2008, still relevant today.... or are they:
?Perhaps 60% of Today?s Oil Price is Pure Speculation? | Global Research - Centre for Research on Globalization
So, the oil markets are rigged. Financial firms aren't "providing liquidity," it's the liquidity that is causing the volatility. The firms not only profit from the volatility, they induce it, because the greater the volatility, the greater their trading margins, the more handsome their profits.
MSNBC with John Slosar's comments on fuel hedging: "...if we knew exactly what [the price of fuel] would be, we'd be very smart."
Hey Slosar, go with these assclowns, they see to know exactly where the markets are going... day in, day out:
Virtu Celebrates Another Year Without a Single Day of Losses - Bloomberg Business
And now you know why you aren't entitled to respectable cost-of-living increases, reasonable pay raises, a decent housing package. Every bloody penny has to be squeezed out of the operation so that one class of management clowns can hand over your hard-earned money to another set of finance clowns who get to pocket it themselves. It just might be that Swire itself is thieving its own profits by intentionally placing bad bets, then pocketing the difference through the trades gone south. Why share with the stock holders when you can just keep the money yourself through some elaborate "hedging" bets. If only I had thought of it myself.
?Perhaps 60% of Today?s Oil Price is Pure Speculation? | Global Research - Centre for Research on Globalization
So, the oil markets are rigged. Financial firms aren't "providing liquidity," it's the liquidity that is causing the volatility. The firms not only profit from the volatility, they induce it, because the greater the volatility, the greater their trading margins, the more handsome their profits.
MSNBC with John Slosar's comments on fuel hedging: "...if we knew exactly what [the price of fuel] would be, we'd be very smart."
Hey Slosar, go with these assclowns, they see to know exactly where the markets are going... day in, day out:
Virtu Celebrates Another Year Without a Single Day of Losses - Bloomberg Business
And now you know why you aren't entitled to respectable cost-of-living increases, reasonable pay raises, a decent housing package. Every bloody penny has to be squeezed out of the operation so that one class of management clowns can hand over your hard-earned money to another set of finance clowns who get to pocket it themselves. It just might be that Swire itself is thieving its own profits by intentionally placing bad bets, then pocketing the difference through the trades gone south. Why share with the stock holders when you can just keep the money yourself through some elaborate "hedging" bets. If only I had thought of it myself.
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This is business management 101 in the 21st century.
Take huge gambles with other people's money.
Get it right. Reward yourself with massive bonuses.
Get it wrong. No repercussions at all.
Just like the banks.
It's how the game is set up. You can hardly blame the pigs for playing the game by the current rules.
Speaking of which, I wonder if profit share will be calculated this year using "operational profit" or "overall profit"?
Let me just check business management 101 again....
Take huge gambles with other people's money.
Get it right. Reward yourself with massive bonuses.
Get it wrong. No repercussions at all.
Just like the banks.
It's how the game is set up. You can hardly blame the pigs for playing the game by the current rules.
Speaking of which, I wonder if profit share will be calculated this year using "operational profit" or "overall profit"?
Let me just check business management 101 again....
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Yup. As I said before, hedging without some degree of certainty of supply is really no different than day trading or gambling. Shots in the dark.
Better to keep the money in capital reserves and use it to ride out the waves; at least you have SOME idea of the value of your investment.
And as CR said adjust your prices (using capital reserves as a buffer for the lag time between the time the ticket is sold and the flight is flown--taking out when things go up and putting in when things go down) to reflect costs of the operation.
Futures markets only work when you have SOME idea of what the future might hold. This hasn't proven true in fuel.
The reasons we have these bubbles and staggering paper losses is folks gamble with OTHER people's money. Learned that lesson as a kid early in life from my grandmother while playing poker. NEVER gamble with someone else's money. It's bad luck.
Better to keep the money in capital reserves and use it to ride out the waves; at least you have SOME idea of the value of your investment.
And as CR said adjust your prices (using capital reserves as a buffer for the lag time between the time the ticket is sold and the flight is flown--taking out when things go up and putting in when things go down) to reflect costs of the operation.
Futures markets only work when you have SOME idea of what the future might hold. This hasn't proven true in fuel.
The reasons we have these bubbles and staggering paper losses is folks gamble with OTHER people's money. Learned that lesson as a kid early in life from my grandmother while playing poker. NEVER gamble with someone else's money. It's bad luck.
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So let me get this right Cathay declares a half year net profit of HK$1.97 not a bad result but the shares take a 7.7 percent dive
The big elephant in the room of course was the fuel hedging loss , a massive HK$3.7 billion yup ! that's Billion with a very big B. So it begs the question why are the individuals connected with this massive blunder still employed?
The directors stated that the drop,in cargo revenue was hard to forecast , well isn't that why you are paid tens of millions of dollars every year ,supposedly because you are so much better than the rest of us , and therefore should be ahead of the situation.
From the SCMP " the airline that prides itself on its premium product offering, is not filling as many seats in the front of the plane as it would like."
The reason , Our first class product is well below average when compared to Emirates ,Etihad ,ANZ and BA , who offer a much better product and in some cases in a more comfortable aircraft type . If you want to attract a first class passenger you have to offer a first class product ,something we are no longer doing . There is an urgent need to improve the overall product including more food and beverage choices .
Again if you are going to offer a premium product it is imperative to make the FC passenger feel special. To supply them with top quality meals and drinks of their choice. There should never be a situation where a FC passenger has to be told that his/ her first choice of a main dish is not available.
To make the required impact our service has to be special and delivered with enthusiasm . Unfortunately this management has adopted a policy of beat the goodwill out of the frontline staff, who now simply don't care
It's well past time the top management of this company left their ivory towers and earned their huge salaries . Get down on the front lines and see what needs to be done to turn this airline around . Because as a shareholder from where I am sitting you certainly aren't earning your salary
The big elephant in the room of course was the fuel hedging loss , a massive HK$3.7 billion yup ! that's Billion with a very big B. So it begs the question why are the individuals connected with this massive blunder still employed?
The directors stated that the drop,in cargo revenue was hard to forecast , well isn't that why you are paid tens of millions of dollars every year ,supposedly because you are so much better than the rest of us , and therefore should be ahead of the situation.
From the SCMP " the airline that prides itself on its premium product offering, is not filling as many seats in the front of the plane as it would like."
The reason , Our first class product is well below average when compared to Emirates ,Etihad ,ANZ and BA , who offer a much better product and in some cases in a more comfortable aircraft type . If you want to attract a first class passenger you have to offer a first class product ,something we are no longer doing . There is an urgent need to improve the overall product including more food and beverage choices .
Again if you are going to offer a premium product it is imperative to make the FC passenger feel special. To supply them with top quality meals and drinks of their choice. There should never be a situation where a FC passenger has to be told that his/ her first choice of a main dish is not available.
To make the required impact our service has to be special and delivered with enthusiasm . Unfortunately this management has adopted a policy of beat the goodwill out of the frontline staff, who now simply don't care
It's well past time the top management of this company left their ivory towers and earned their huge salaries . Get down on the front lines and see what needs to be done to turn this airline around . Because as a shareholder from where I am sitting you certainly aren't earning your salary
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Unless u make $ from hedging
U guys got it all wrong😜
Whenever there is a loss someone else wins.
Have Look at whom is benefiting on the other end. 👏
Another string is pulled on the bath plug and no matter how hard we try for record profits we will just never fill the bath.
Milking the Cow 🐃 again and again..
Whenever there is a loss someone else wins.
Have Look at whom is benefiting on the other end. 👏
Another string is pulled on the bath plug and no matter how hard we try for record profits we will just never fill the bath.
Milking the Cow 🐃 again and again..
Maybe buy some shares (pretty low prices now) as a group and file a complaint against the Directors who cause these kinds of losses. Someone, at a very high level, authorises the 'hedging' (gambling). Who is that? What are their terms of reference?
It is undoubtedly an appallingly poor judgement that has cost the Company a serious amount of money. Why hedge so far ahead?
So many questions. So few answers.
If we cost the Company anything like these numbers, we would be fired in a heartbeat.
Can the AOA find out? Or is it some kind of Corporate secret?
We can certainly forget any so called Profit Share ( joke).
FOUR BILLION DOLLARS!! ++ Work out how much that is a day!!
It is undoubtedly an appallingly poor judgement that has cost the Company a serious amount of money. Why hedge so far ahead?
So many questions. So few answers.
If we cost the Company anything like these numbers, we would be fired in a heartbeat.
Can the AOA find out? Or is it some kind of Corporate secret?
We can certainly forget any so called Profit Share ( joke).
FOUR BILLION DOLLARS!! ++ Work out how much that is a day!!
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Thats the trouble when you work for an airline that thinks its a hedge fund. If it had just bought fuel on a real time basis this wouldn't have happened. Not content with being an airline and with delusions of grandeur playing at being city boys; they get advise from some w&nker banker charlatan; thus ensuring that this type of event happens time and time again.
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Dear MH. In light of the approximately hkd $20 million per DAY hedging loss, can you please spare us any further commentary about fuel savings. Obviously ANY effort we make is completely and utterly wasted. I can't be bothered any more with RETI, F25 or any other fuel mitigating strategy. Save the memos for the utterly incompetent managers who have wasted nearly 20+ years of fuel saving effort by the pilots. What an utter disgrace.
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Maybe my tin-foil hat's on too tight but I'm kinda wondering who and where those billions of dollars are going TO.
If it's part of the same conglomerate that ultimately owns or shares ownership with the airline (or one in which some folks hold a bunch of shares) then one would simply be watching a shell game designed to shaft US.
On another note I never understood F25 landings; one is landing faster, going farther, heating the brakes up more, sometimes having to pull reverse, and having to taxi back longer. And the spacing sometimes gets tight. Maybe I just don't get it.
If it's part of the same conglomerate that ultimately owns or shares ownership with the airline (or one in which some folks hold a bunch of shares) then one would simply be watching a shell game designed to shaft US.
On another note I never understood F25 landings; one is landing faster, going farther, heating the brakes up more, sometimes having to pull reverse, and having to taxi back longer. And the spacing sometimes gets tight. Maybe I just don't get it.
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On another note I never understood F25 landings; one is landing faster, going farther, heating the brakes up more, sometimes having to pull reverse, and having to taxi back longer. And the spacing sometimes gets tight. Maybe I just don't get it.
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Last time this happened they were out-foxed by a Mexican Civil Servant who essentially sold his oil production forward at $80 to the CPG and watched the price fall to $40. I bet they have a good laugh about that down at the Club!!
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Does any of this seem familiar?
Annual Report 2008
The Cathay Pacific Group recorded an attributable loss of HK$8,558 million in 2008, compared to a profit of HK$7,023 million the previous year. Turnover rose by 14.9% to HK$86,578 million.
The price of aviation fuel reached new highs in July 2008 though prices fell significantly towards the end of the year. Fuel surcharges on cargo and passenger tickets only partially offset the additional cost incurred over the course of the year. The fall in fuel prices, though welcome, caused unrealised mark to market losses of HK$7.6 billion on our fuel hedging contracts for the period 2009-2011
The Board of Directors (the “Board”) of Cathay Pacific Airways Limited (the
“Company”) announces that:
(1) Mr. Robert Michael James ATKINSON has resigned as Finance Director of the Company with effect from 12th March 2009;
Mr. R.M.J. Atkinson has confirmed that he is not aware of any matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company. He has also confirmed that his resignation is due to his retirement, and that he is not aware of any disagreement with the Board.
Hong Kong, 14th January 2009
Annual Report 2008
The Cathay Pacific Group recorded an attributable loss of HK$8,558 million in 2008, compared to a profit of HK$7,023 million the previous year. Turnover rose by 14.9% to HK$86,578 million.
The price of aviation fuel reached new highs in July 2008 though prices fell significantly towards the end of the year. Fuel surcharges on cargo and passenger tickets only partially offset the additional cost incurred over the course of the year. The fall in fuel prices, though welcome, caused unrealised mark to market losses of HK$7.6 billion on our fuel hedging contracts for the period 2009-2011
The Board of Directors (the “Board”) of Cathay Pacific Airways Limited (the
“Company”) announces that:
(1) Mr. Robert Michael James ATKINSON has resigned as Finance Director of the Company with effect from 12th March 2009;
Mr. R.M.J. Atkinson has confirmed that he is not aware of any matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company. He has also confirmed that his resignation is due to his retirement, and that he is not aware of any disagreement with the Board.
Hong Kong, 14th January 2009
