CX profits falls by 82%
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First off I assume we can agree that we have indeed reduced our First Class product, if not in quality then certainty in quantity.
The question of profitabilty is more complex (and above my paygrade!) but I note that historically our management (in common with most major carriers) has stated that the premium classes are where the profit is, certainly not with the backpackers in Y.
The question of profitabilty is more complex (and above my paygrade!) but I note that historically our management (in common with most major carriers) has stated that the premium classes are where the profit is, certainly not with the backpackers in Y.
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Ivan stated that it is not all doom and gloom at Cathay Pacific. The two highlights are the introduction of the A350 and the new Lounges at airports. BUT with the A350 fleet not even offering a First Class product where are the First Class passengers going to come from who will fill these wonderful and expensive new Lounges? CX have abandoned the First Class market to the competition and instead are targeting the Student and Senior market to top up the seat occupancy, a strategy which is bound to lower yield . Meanwhile the competition offer what the customer wants , which is the A380 and a First Class option, to offer less would be an unacceptable erosion of their Brand image.
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Maindog,
I include business as premium, and the 777 has a higher percentage of premium seats compared to our 747.
But my whole point is: how do you know more premium seats would increase profits?
It seems to me that most pilots think :
better product equals more profit.
But this is not necessarily the case, that is all I am saying.
What is certain however: a bettter product equals higher cost.
Is there are market for a higher priced seat ? How do you know?
Plus polls among hundreds of thousand of passenger do not support the alleged decline in quality in the first place. This is a fact.
I include business as premium, and the 777 has a higher percentage of premium seats compared to our 747.
But my whole point is: how do you know more premium seats would increase profits?
It seems to me that most pilots think :
better product equals more profit.
But this is not necessarily the case, that is all I am saying.
What is certain however: a bettter product equals higher cost.
Is there are market for a higher priced seat ? How do you know?
Plus polls among hundreds of thousand of passenger do not support the alleged decline in quality in the first place. This is a fact.
Last edited by Sam Ting Wong; 20th Aug 2016 at 10:37.
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We are entering the realm of the low cost carrier with a cost structure, labor basing scheme, crew scheduling system, pricing scheme, and history (branding) that does not support being a low cost carrier. No wonder profits take a hit while jets fly full and other airlines make record profits. Better to establish a wholly new entity to fulfill this role if this is the desired path.
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Short-termism?
STW, frankly I hope you're right, as I actually love being here and would gladly continue working for the inspiring, profitable and growing airline I joined until retirement.
My uneasy impression and that of many others, however, is that we have lost our vision at some point, and are reducing quality, whether it be our choice of airframes, far fewer First Class seats available, no salt and pepper shakers (and pretty average meal choices) in Business, or ten seats abroad in Economy on the 777. Not encouraging for an airline whose vision was to be the "world's most admired"?
This while other major carriers (not just the ME3) but also LH, and perhaps even BA seem to be trending in the opposite direction, and the local unhedged or less-hedged competition is making record profits. I'm no beancounter and in no position to judge profitability, but as an employee I am uninspired by our course. Time will tell, and I really, really hope I'm wrong.
MD out
My uneasy impression and that of many others, however, is that we have lost our vision at some point, and are reducing quality, whether it be our choice of airframes, far fewer First Class seats available, no salt and pepper shakers (and pretty average meal choices) in Business, or ten seats abroad in Economy on the 777. Not encouraging for an airline whose vision was to be the "world's most admired"?
This while other major carriers (not just the ME3) but also LH, and perhaps even BA seem to be trending in the opposite direction, and the local unhedged or less-hedged competition is making record profits. I'm no beancounter and in no position to judge profitability, but as an employee I am uninspired by our course. Time will tell, and I really, really hope I'm wrong.
MD out
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Have you no idea that 2009 happened and almost all trading desks in almost every bank have dramatically cut back? And the housing market and property developers are tanking? Why the hell would you want more first class then?
The point is, CX is trying to compete on price with the budget airlines and Chinese airlines, compete on quality with the ME carriers, compete on frequency and slots with everyone, and ends up doing nothing well.
The bloomberg interview last week with the CEO said it all. when asked what is CX's plan on pressure coming from shorthaul competitions from PRC carriers and budgets, and/or longhaul competitions from Middle East carriers, he froze, then said hopefully these pressure are "temporary" (they are not), and hopefully to add more routes with new planes (which doesnt address the current problems).
Best of luck
The point is, CX is trying to compete on price with the budget airlines and Chinese airlines, compete on quality with the ME carriers, compete on frequency and slots with everyone, and ends up doing nothing well.
The bloomberg interview last week with the CEO said it all. when asked what is CX's plan on pressure coming from shorthaul competitions from PRC carriers and budgets, and/or longhaul competitions from Middle East carriers, he froze, then said hopefully these pressure are "temporary" (they are not), and hopefully to add more routes with new planes (which doesnt address the current problems).
Best of luck
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Trash,
That is an excellent assessment of the current situation. I'll add that most of the terminal and runway expansion at HKIA will go to the competition's growth, not CX's. Yield is likely to remain suppressed going forward. Agile cargo competitors will provide excess supply to meet market demand fluctuations. New CX services to secondary markets using the A350 will only strengthen the HK hub to levels already present in the Middle East and elsewhere. Smaller long-haul aircraft like the 787 will continue to offer connectivity between destinations without the use of large hubs like Hong Kong. CX will be reduced to low yield traffic similar to EK, but without the scope of operations to embrace the economies of scale.
That is an excellent assessment of the current situation. I'll add that most of the terminal and runway expansion at HKIA will go to the competition's growth, not CX's. Yield is likely to remain suppressed going forward. Agile cargo competitors will provide excess supply to meet market demand fluctuations. New CX services to secondary markets using the A350 will only strengthen the HK hub to levels already present in the Middle East and elsewhere. Smaller long-haul aircraft like the 787 will continue to offer connectivity between destinations without the use of large hubs like Hong Kong. CX will be reduced to low yield traffic similar to EK, but without the scope of operations to embrace the economies of scale.
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Dan, a pessimistic view on Cathay's future from YOU??? Now that is a surprise. Now I am really getting worried.We are doomed.
Cxorcist, the third runway will open up in what, 10 years? And you already figured out the effect on Cathay's business. Really?
Cxorcist, the third runway will open up in what, 10 years? And you already figured out the effect on Cathay's business. Really?
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What is wrong with all of you? Do you not understand CX made over a 4.8 billion HKD operating profit the first half of 2016? That is one of our best profits in recent memory.
As usual, management is crying wolf and saying how it's the end of the world, how things are so bad, blaming things on anyone or anything besides their management decisions. Yet there is that little footnote of a 4.5 billion HKD fuel gamble they took and lost big on. Might as well go to Macau and place it all on black and double down the 2nd half of the year, it's really the same thing.
The fundamentals are incredibly sound and we are making hand over fist amounts of money. What are you guys even debating about???
As usual, management is crying wolf and saying how it's the end of the world, how things are so bad, blaming things on anyone or anything besides their management decisions. Yet there is that little footnote of a 4.5 billion HKD fuel gamble they took and lost big on. Might as well go to Macau and place it all on black and double down the 2nd half of the year, it's really the same thing.
The fundamentals are incredibly sound and we are making hand over fist amounts of money. What are you guys even debating about???
Making money hand over fist until they lost it on a hedge. That's called losing money my friend. Anyone can say "we were making money until we lost it". Where are the smarts in that?
Business friends travelling from UK to China and Hong Kong go PE with Virgin or BA and if they can go on a 380, they do. One even goes Finnair via Helsinki. Nobody chooses Cathay. Cathay has survived for decades because they had little/no competition. All changing now - and fast. You keep the orchestra playing STW but the CX "Titanic" is still filling up with water................don't think it's flooding the 9th Floor - yet.
Business friends travelling from UK to China and Hong Kong go PE with Virgin or BA and if they can go on a 380, they do. One even goes Finnair via Helsinki. Nobody chooses Cathay. Cathay has survived for decades because they had little/no competition. All changing now - and fast. You keep the orchestra playing STW but the CX "Titanic" is still filling up with water................don't think it's flooding the 9th Floor - yet.
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And don't forget that one happy first class passenger might bring hundreds of business class passengers.
If STW wants 'facts': I know of one CEO from a small company who was so disappointed in his travels with CX that his 20+ employees won't travel with us anymore.
Maybe it's a one off, but probably not.
First class shouldn't be there for the few who can afford it. It should be there so that these select few's hundred of employees keep travelling with us.
On a personal note, I think the ME3 product is way better than ours.
And I happily choose them for ID travel over my own airline.
What do you think passengers choose, when they are cheaper as well?
If STW wants 'facts': I know of one CEO from a small company who was so disappointed in his travels with CX that his 20+ employees won't travel with us anymore.
Maybe it's a one off, but probably not.
First class shouldn't be there for the few who can afford it. It should be there so that these select few's hundred of employees keep travelling with us.
On a personal note, I think the ME3 product is way better than ours.
And I happily choose them for ID travel over my own airline.
What do you think passengers choose, when they are cheaper as well?
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If STW wants 'facts': I know of one CEO from a small company who was so disappointed in his travels with CX that his 20+ employees won't travel with us anymore.
Maybe it's a one off, but probably not.
Maybe it's a one off, but probably not.
That's not a fact, it's one (suspect) observation that you are trying into extrapolate into a long term trend. Let me guess, the CEO is your wife's sister's helper's Godparent's neighbor? I feel like I am dealing with a 5-year old.
@Arfur Dent
I don't know how else to make this any clearer: their core operating profit is huge. They are making a ton of money. Easily enough to give the pilots the working conditions they deserve. We are not asking too much. Now do I think this huge core profit is due to management? NO! Absolutely not, I have made that clear. They made this in spite of themselves.
Hopefully they've learned a lesson regarding their fuel gambling fiasco, but the airline operating fundamentals are as sound as they've ever been, despite all the all management propaganda trying to deflect attention away from their massive fuel gambling screw up.
STL - If you want to be taken seriously, please don't use terms like "hopefully they've learned a lesson" in any sentence relating to Cathay Management.
All they learn is new ways to avoid losing face.
All they learn is new ways to avoid losing face.
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Arfur, Dan, Cxorcist
list 5 things you would do now as our CEO. Not what you of course would/could have done 5 years ago. NOW.
Let's have a laugh.
Zapp,
"And don't forget that one happy first class passenger might bring hundreds of business class passengers."
You really think that's how it works? Like the CEO of JP Morgan buys himself a ticket in First Class, then says to himself: " Oh my, this is rather jolly good, I book my staff on this fine airline from now on!" I mean, seriously, you really really believe that is how it works? Unf@ckingbelievable...
list 5 things you would do now as our CEO. Not what you of course would/could have done 5 years ago. NOW.
Let's have a laugh.
Zapp,
"And don't forget that one happy first class passenger might bring hundreds of business class passengers."
You really think that's how it works? Like the CEO of JP Morgan buys himself a ticket in First Class, then says to himself: " Oh my, this is rather jolly good, I book my staff on this fine airline from now on!" I mean, seriously, you really really believe that is how it works? Unf@ckingbelievable...