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CX is a case study in how most companies fail

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CX is a case study in how most companies fail

Old 11th Mar 2018, 15:56
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CX is a case study in how most companies fail

Cathay Pacific is a case study in how most companies fail in the long run ? if they don?t change | South China Morning Post
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Old 11th Mar 2018, 23:14
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Originally Posted by jetjockey696 View Post
Cathay Pacific is a case study in how most companies fail in the long run ? if they don?t change South China Morning Post
The author of that article might be surprised to learn a significant number of people are more interested in service and comfort than price.
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Old 11th Mar 2018, 23:46
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Yep - in terms of what people actually want, HKA/HKE have it right I think. 3* for long haul, 1* short haul.
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Old 12th Mar 2018, 01:12
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Originally Posted by Freehills View Post
Yep - in terms of what people actually want, HKA/HKE have it right I think. 3* for long haul, 1* short haul.
It's fairly true. All HKA is really missing for longhaul is Wi-Fi (I speak from my YVR r/t over Christmas), and a more thorough selection on IFE. Otherwise, the service is decent in Business Class (lie-flat seat, they even had a stand-up bar, attentive service, etc...). It's not CX, but the price difference was HK$31k r/t on CX and AC, or HK$21k on HX.
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Old 12th Mar 2018, 01:42
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Important point re DFO

From the article, straight to the guts of the problem.

"operates like a traditional, Hong Kong Chinese family- except it has successfully augmented family managers with an extended family of carefully recruited, long term career managers. This may work in certain industries where dominance is more predictably entrenched, like property development or sugar refining, but in a chaotically competitive industry increasingly influenced by state players and budget airlines, talented and ruthless innovation and decision making are needed more than family loyalty. Change isn’t pretty. (and some can't hack it !!)
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Old 12th Mar 2018, 02:34
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Yet the share price is soaring! Don’t these investors know that the sky is falling?
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Old 12th Mar 2018, 02:55
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https://www.bloomberg.com/news/artic...harts-show-why

Looks like results will be better than last year thanks to lower hedging loss. But still a loss. Winning!

Last edited by Freehills; 12th Mar 2018 at 04:45.
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Old 12th Mar 2018, 05:48
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And the reason is ???

Originally Posted by Freehills View Post
https://www.bloomberg.com/news/artic...harts-show-why

Looks like results will be better than last year thanks to lower hedging loss. But still a loss. Winning!
From the article, competition, "Hedging" & "Bloated Employee Costs" reasons for poor performance, funny though, not even a single mention of garbage managers brought in from boat place in Borneo or Coke bottling plant in some other part of the world.
Simple fix, fire an additional 800 staff until that pesky revenue/employee number get's to where they want it - problem solved. Easy. Even the boat guy from Borneo can figure that out.

And now we're in the "Bloated Workforce" column on the spreadsheet.. The Hogman has such a nice way of talking about his employees. Please, tell us how you feel and don't hold back.

Last edited by Flex88; 13th Mar 2018 at 03:37.
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Old 12th Mar 2018, 09:32
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Makes you wonder why he's a former international banker.
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Old 12th Mar 2018, 09:38
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The American gurus don’t like it either...
“Cathay Pacific Airways has Price to Book of 1.00 times, we suggest you validate Cathay Pacific Airways Limited market performance and probability of bankruptcy to make sure the company can sustain itself in the current economic cycle given your prevailing risk tolerance and investing horizon.”
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Old 12th Mar 2018, 11:34
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The reason Cathay are in this ridiculous mess is BECAUSE of these idiot analysts and the unfortunate tendency of our board to follow their meaningless ratios and metrics. Plus the modern day scourge of companies everywhere: the finance department (accountants) and the HR dumb asses (yes you Nick) who have taken control.

If Rupert wants to fix any of this, he needs to use his own brain and common sense. Unfortunately common sense isn't very common with our lot.
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Old 12th Mar 2018, 11:46
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Originally Posted by valhalla634 View Post
Yet the share price is soaring! Don’t these investors know that the sky is falling?
“Soaring” all the way to what? $1.75 USD! Please, the market cap is a mere fraction of what it was 5-10 years ago. Massive amounts of cash have come off the balance sheet as a direct result of upside down fuel and currency hedges.

The (mis-) management has made an absolute mess of the airline, and then they predictably blame employee costs and a challenging revenue environment. Quite literally, the airline would be far better off if the “Management” had just done nothing, which they finally realized and are currently “doing” now that action is required to fix the mess. You just can’t make this stuff up. The current lot of Swire managers are clowns in suits, and they have turned our airline into a circus. Well done
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Old 12th Mar 2018, 13:03
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CX is an insult to the word 'circus'. Most circus's consist of highly trained employees and adept management. Our airline has devolved into something unrecognisable from 25 years ago. It's now a collection of assets that have no idea how to integrate for maximum efficiency, and a management who have myopically focused on attacking one small part of the whole (the pilots), ironically the very part that has the ability to ensure that the overall airline is operated and overseen in an efficient, safe and reliable manner. When you deliberately insult and devalue the people who make the operational COST decisions EVERY DAY, you can absolutely ensure that you have lost the ability to control your costs,never mind the reputational value of your airline. This management has turned me (and every other Captain I know) into someone who now looks at every COST decision we have to make in a much different light than was the case 20 years ago. Now, EVERY decision we make almost assuredly results in an outcome that is the opposite to what we chose in years past. Multiply that by EVERY CAPTAIN, EVERY FLIGHT, EVERY DAY. You looked a bit weathered and worn in that photo RH, and soon, when most of your pilots are leaving in droves, you can add to those lines on your forehead. Unless there is a complete break with the attitudes and behaviour of our management, this situation will end up with CX flat on it's back, with no pilots, and the ones who do stay not caring. What large corporation can survive with those metrics? And all utterly avoidable.

Well, have to run, time to pay the rest of my tax bill. Now, where's that 13th month cash that should be lying around here somewhere.... (which has cost the company that amount and much more already by mid March, with a whole 3/4 of the year left to go...and that only from fuel decisions, no directs, configuring a bit early...I could go on. I work it out every flight what each 'legitimate and justifiable' decision costs. You would be surprised RH just how a petty and vindictive decision in December will cost the same as multiplying the amount by a factor of 10 by the time this year has come and gone, and that's just ONE Captain, never mind the other 1000 of us. Well done . Lesson: don't with us). You have managed to take very dedicated and accomplished professionals and turned every single one of us implacably against you and your management. You can begin to fix this by getting rid of the incompetent members of your senior staff, and no guesses as to where that needs to start. You have lost this entire group, and to even begin to get us back onside will take a herculean effort. Perhaps you might want to get started before there aren't any pilots left to care (anyone calculating the cost to replace and retrain the hundreds (probably over a 1000+) of pilots you are about to lose, all unnecessarily?). Tick tock tick tock...

Last edited by Trafalgar; 12th Mar 2018 at 14:11.
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Old 12th Mar 2018, 15:16
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My experience has been to continue to watch Captains fix CX problems from the cockpit and heroes show up with red lanyards. Just had a hero save a west coast flight. And he was not based.
Never going to win this way.
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Old 12th Mar 2018, 16:58
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And if CX did fail , alot of pilots with families would be stranded, in high cost schools , big debt mortgages.
Its no fun being made redundant , be careful what you wish for. Even if you think you are invincble , the world has moved on .

Loco’s don’t employ many pilots over the age of 40-45, even as DEC. CX ain’t that bad, but its close
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Old 12th Mar 2018, 17:37
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Most of us really don't care anymore. The majority are planning to leave, with hundreds already having interviewed elsewhere over the past 6 months, and awaiting their course dates. CX is toxic, and has lost the trust and concern of their employees. We are entering the largest hiring boom in aviation history. Explain why anyone would condemn they and their families to living in substandard accommodation, below standard wages (especially considering the cost of living in HK), and a management that is capricious, vindictive, irrational and venal? There are better options just about anywhere else. Hence, the great exodus has begun. No matter what CX management says now, the trust is gone and no one with any sense will risk their career potential of the security of their families on a management proven to relentlessly attack their conditions of service. The last person to leave will hopefully turn out the lights...
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Old 12th Mar 2018, 20:00
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The article suggests CX's business model is unsustainable. I think the evidence is in that in fact that is accurate. The tragedy is that the management are myopic and delusional, feeling that somehow attacking their staff will solve their problems. I would argue that it will make the problem worse, much worse. You only have to see how the situation has driven hundreds of pilots to make plans to leave (and many have already left). The cost to the airline's operational integrity is already being felt, and the replacement training costs are ramping up exponentially, far in excess of any 'savings' they had planned on. The problem isn't staff costs (US carriers, QF, others manage to record record profits with much higher average staff costs and higher tax environments), but an inept, inbred and nepotistic senior management mentality that no longer is suited to such a dynamic and ruthless industry. Instead of focusing on expanding and dominating HK, they focused inwards on their staff, in an almost paranoid and myopic fashion. In doing so, they completely missed the rapid growth and entrenchment of serious competitors (HKA and HKE), who have now accumulated so many slots in HK that CX can't expand, and thereby have lost control of the local market. Without expansion, they are doomed, as the extremely low cost carriers in HK, and outside competition will erode and suffocate them, as is in fact now happening.

The most valuable asset they have are their (now lost) once dedicated employees. They held the secret to eventual success (and in fact did provide the foundation of the company's previous success). Now, you have your own employees quietly and deliberately undermining you from the inside out. They don't care anymore, as they have other viable career options. You have alienated the senior staff (epic own goal with the 13th month decision, resulting in every Captain now working against you, every flight), disillusioned the middle ranks who have concluded that they must establish a career elsewhere (HKPA, and it's woeful lifestyle liability for the employee and family as just one reason amongst many), and additionally management have undermined the safety and reputational status of the airline, which is now starting to be established in the press and the general mindset of the HK traveling public. It is a tragic and noteworthy case of business failure. It is doubtful that CX can be saved now. The exodus of skilled staff is probably now unstoppable, particularly when the realisation of the death of CX becomes unassailable. Further, the sheer cost of training woefully inexperienced replacements will cripple the budget of the airline, and never overcome the ever decreasing levels of experience and safety inherent in CX's traditional demographic. In fact, those costs will far outweigh the supposed cost of the ARAPA staff and other higher cost employees (and without expanding bases, don't bleat to us how high our 'costs' are).

The "death spiral" has begun (long predicted), and it is probably too late. Particularly in light of the fact that the HK Govt is fed up with CX, foreign competitors are attacking and the local competition is now of a size and power that will be almost impossible to counter. CX is dead. Rather like the "Walking Dead", there may be physical movement, but in fact it is already too late to save. Eventually we will be reading articles that describe either a sudden collapse, or at best a takeover or break-up. Ironically, the only thing that may survive is the freighter network ("no money in freight"!!). It really doesn't matter. The only thing of any importance to an individual is their own career and the security of their families, and that now clearly lies elsewhere with a different airline.

Ironically, the last best chance of saving CX is for the Swires to go to the HKAOA and offer a proper package to their pilots. Respectful, unambiguous, legally enforceable, that provides security of housing, salaries, rostering, seniority and fleet transfer (you know, all the things that most other airlines provide). Sadly, our management, the ones who got us into this mess are the least capable of seeing that that is what it will take (at a minimum) to get things turned around (oh, while your are at it RH, install a DFO we can respect, who actually knows the first thing about aviation, and doesn't quote mass murderers in her weekly newsletters). Without your technical staff working WITH you instead of AGAINST you on every flight every day, no management 'strategy' will be successful. If you don't come to the table with such an offer, you will find that nearly every pilot in this company will not be worrying about CX and her "legacy". They will safely watch the destruction of this once great airline from a distance. It is over.

(final observation: if you p*ss away almost a BILLION usd in mindless fuel hedge gambling, there is very little the staff can do to help, but we can make it MUCH worse if you goad us too far...and that is what you have done. You can start by paying the 13th month into my account)

Last edited by Trafalgar; 13th Mar 2018 at 05:26.
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Old 12th Mar 2018, 22:36
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So you’re all saying HKA is wonderful because their fares are cheaper and they pay their pilots about 60% of what a B scaler earns. But you want to keep getting paid what you’re on now. And no one can live in Hong Kong on what C scalers get paid but there’s HKA again paying C scale pay.
There is absolutely no logic to the pay us more argument if you’re going to drag HKA into it.
Can you provide figures to support the apparent facts that QF pay better. Haven’t seen any based guys quitting CX to go to QF. CX Australian Payscales are based in part on what QF pays. Enlighten me.

Big thanks to the based guy’s using their legal leverage to force their version of CMP onto the hkg base. 👍
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Old 12th Mar 2018, 22:42
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MorningCoffee. A bit early to be in your management cubicle. I won't enter the debate (the analogy of pigs and mud...), just to say that you missed the comment in the middle of my post, you know, the bit about other airlines paying their pilots more, with better T and C's, and in higher tax environments. Oh, and btw, they have to deal with low cost competition as well...hmm, they seem to be doing very well. Seems the only real difference is that CX obviously has hopeless management, who can't run a child's train set more less an airline. Sorry to let facts get in the way of your obsession to just cut the terms of your pilots. Don't worry, soon you won't have any so the whole issue will be moot. Now, back to your cubicle dwelling.
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Old 12th Mar 2018, 22:49
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Jetstar in Australia is owned by QF so they own the low cost competition. (VB aside). If you read the terms and endearments forum you’ll see that if you spreadsheet a career at BA vs a loco you earn more career wise at the loco. In 2018.
You’re living in 1975.
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