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Profitable 2019. Where is our full 13th month?

Fragrant Harbour A forum for the large number of pilots (expats and locals) based with the various airlines in Hong Kong. Air Traffic Controllers are also warmly welcomed into the forum.

Profitable 2019. Where is our full 13th month?

Old 14th Mar 2020, 03:58
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ron burgandy is on the money

Alan Joyce said it quite rightly so, in aviation it's now "survival of the fittest"

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Old 14th Mar 2020, 04:04
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Well, we are doomed. If anything is clear these past few years, the one thing we can be certain of is we are not led by "the fittest".
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Old 14th Mar 2020, 08:59
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Tone deaf

The CX pilot group is all me me me.
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Old 14th Mar 2020, 10:40
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Originally Posted by Copenhagen View Post
Tone deaf

The CX pilot group is all me me me.
Not most of us, only a select few repeat offenders in here.
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Old 14th Mar 2020, 14:39
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Originally Posted by ACMS View Post
Not most of us, only a select few repeat offenders in here.
What's said here is read widely. You as a group are seen as over paid, overentitled idiots.
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Old 14th Mar 2020, 18:54
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Don't really care how "we are seen". Not relevant (other than to you). What matters is what WE KNOW. And that is a damn sight more than someone not in the company.
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Old 14th Mar 2020, 22:00
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Originally Posted by Apple Tree Yard View Post
Don't really care how "we are seen". Not relevant (other than to you). What matters is what WE KNOW. And that is a damn sight more than someone not in the company.
It will matter to those seeking employment elsewhere.

I'm glad that your ego deems you immune to the world around you. The DB goldfish bowl can shatter at any moment.
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Old 14th Mar 2020, 22:17
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Inane comment of the week.
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Old 14th Mar 2020, 23:43
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You see Pickuptruck, the difference is that Delta has paid out over $4 billion USD in profit share in the last few years. Because of this Iím sure all of its employees will wilfully sign up to any unpaid leave or other measures, and that will help Delta ride this out.

The sad truth is, that at CX, those that signed up to SLS, did so out of intimidation, and fear of retribution, not because they felt obliged to help out a company that has looked after them.
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Old 15th Mar 2020, 04:12
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Originally Posted by Copenhagen View Post
What's said here is read widely. You as a group are seen as over paid, overentitled idiots.
rubbish......most wouldnít even know.
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Old 15th Mar 2020, 11:34
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Two current threads, "Where's my full 13th month" and "Redundancies - Would you take it". I know which one is more applicable in the current climate!
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Old 15th Mar 2020, 11:52
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Originally Posted by Will IB Fayed View Post
Two current threads, "Where's my full 13th month" and "Redundancies - Would you take it". I know which one is more applicable in the current climate!
Rating the relevance of one conversation over another doesnít reduce any secondary discussions to irrelevance.

In fact, theyíre not even related. The redundancy thread is in regards to the COVID-19 issue. The failure to pay ADB has never been explained. The only relevance is that an open and honest company will actually be more likely to generate the assistance of a believing employee. Asking a question canít possibly hurt unless the answer itself is damaging.

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Old 15th Mar 2020, 15:50
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Originally Posted by herewego75 View Post
OK you ALLLLLLL need to calm down!

ACMS / OASIS you both remind me of a low time pilot experiencing his first engine failure! You need to take a breath and calm down!

CX will get through this bad patch, believe me. They have just made 1.7 Billion dollars in profit. That will see us through for a while. They just have saved 3 weeks salary from 27000 employees ( can't believe people fell for that ). That will also see them through for a while!
And the Freighter guys are making us lots and lots of money! I hear they might start putting Freight in the belly of the 777 and 330 = MORE MONEY.

So while all the wives and girlfriends have run back to their home countries leaving all of you behind to work and pay for their holiday - remember the fight is not between us pilots. We have to worry about what this company will do next.

I can't imagine taking SLS or Unpaid leave to help them out. I think everyone was silly to do that in my own opinion. We should of all stood together and said NO! They need pilots to fly the machines that make them money! Remember that....

As for our absolutely useless AOA. They are worst than useless. No leadership at all. A rudderless ship! I bet the 747 guys are thinking how they can better this situation for themselves! (shame because they are working hard! They cry when they don't and now they cry when they do!)
The only time when you hear from the AOA is when they are trying to sue a pilot or when they kicking someone out - because they think that they are the Law. Disgusting!

Thats my rant for the week. Remember every airline in the world is in the same boat - don't think CX is the only one - as much as they make you feel like they are.
I believe we will get through this, some of us lost money and some would of got the same time off will a full pay ;-)
Sometimes I really wonder the intelligence of the people that works for CX...

A HK$1.9 billion profit = a profit margin of 1.6%
That is such a small profit in any measure, especially for an airline the size of CX that is generating the level of revenue, of HK$106billion a year, CX should make at least 10x times the amount of profit to be even consider profitable.

Secondly, how much is actually HK$1.9 billion? That is exactly 6.5 days of CX operating expenses (under normal operating circumstance). YES, 6 and a half freaking days!!!

Just to give people some perspective here:

Letís assume the followings:
1) With a 50%+ capacity reduction in our passenger fleet for Feb and March.
2) Assume cargo is still running 100% but with reduce belly freight, which means a 30-40% reduction in overall capacity.
3) A reduction of Passenger load factor (with the exception of Europe this week, average load factor at the moment are essentially only 30-40% load).

Consider all of the above, CX monthly average revenue will have drop from about HK$8.83billion a month to about HK$2.9billion (I took out any seasonal variation, so this revenue is actually consider high for Feb and March). Thatís a 68% drop in revenue and thatís a conservative number due to the traditionally lower revenue in Feb / March but we did not consider that.

Now take CX cost into perspective:

1) 3 weeks of SLS (letís just make it simple and say everyone took it, which is not the case). Cost reduction spread over 4 months, CX average staff cost went from around HK$1.7 billion per month, down to about HK$1.4 per month.
2) fuel cost with the reduce fuel price is only 28.4% of the airline operating cost in 2019 but with fuel hedging lost, that bring it up to about 30%. Together with 50% less passenger flight, fuel cost each month will drop from HK$2.58billon down to $1.72billion.
3) ATC charges: Normally about 17% of our operating cost, and we will see significant reduction due to reduce flying, as well as some discounting, so that will goes from HK$1.4billion down to about HK$0.7billion per month.
4) customer service cost will also be reduce from less flying to about HK$0.3billion per month.
5) maintenance cost will be hard to estimate as they might try to complete some of the maintenance while the fleet is grounded but letís just assume we will see 50% reduction, that will bring that cost down to about HK$0.5billion per month.
6) Commission, leasing, financial charges / debt and interests repayment, other expenses, this will be a bit hard to avoid, so assuming this stay around the same, about HK$1.7billion per month.

This give a total monthly operating expense of HK$4.92billion a month.

So essentially as an airline, CX is burning around HK$2.02 billion of cash a month.

So, the so call HK$1.9 billion profit will barely cover a month of loss.

Looking at CX cash position and credit line available, that total of around $12 billion.

Essentially CX has enough cash at the current burn rate for about 5-6 months. I bet you CX will not wait another 4-5 months before making further cutting.

I reckon, CX will have until around May before they will have no choice but to make further cuts. By May, their cash position will be down to 3 months of ops, which is uncomfortably low, which means lay-off will probably be consider to reduce the burn rate.

So for those who still live in the ďLa La LandĒ and still think this is not an existential crisis for CX, they really should reconsider the situation that all the airline is facing.

(Note: All numbers are based on the 2019 annual results.)
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Old 15th Mar 2020, 17:34
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Thanks for crunching the numbers, I think thats the end of the discussion.
Let's hope we can put the bellies to good use and fly some cargo instead. I hope they are on the phones underbidding fedex and dhl as we speak!
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Old 15th Mar 2020, 17:37
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Nicely detailed analysis, although not all that I agree with. However, it avoids the simple question: We made a '"reasonable profit", and our 13th month should have been allocated in full on that basis. Don't forget, i'm not even seeking to make a case of a further PF payment that you could argue should also be ours. The Management played fast and loose with the deserved income due their pilots. Now becoming a regular annual thing. It's even random in in its nature (one year only pay back the Captains 90%, the next year pay ONLY the Captains nothing, the next year Pay everyone buy the pilots their full share). The common denominator is a company that cynically has determined that they can do what the want. Why: because they can, they can always manufacture an excuse. It is also important to recognise this issue was outside of the the current virus situation. The decision was made before this latest problem was apparent . No excuse. I would add that the payment of SLS would have hardly made a dent tn the company in the overall scheme of things. Once again, we have left a defense of our contracts wallowing in the mud, and will then rant and rave the next time their is an outrage against our T and C's. Sad.
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Old 15th Mar 2020, 21:10
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You just dont get it ATY, do you. ? Future abuse of C of S. ? Frankly the opportunity to debate it in the future will be a bonus. Thatís assuming thatís there are any airlines left to serve in, other than SOEís, and even theyíre looking dodgy.
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Old 16th Mar 2020, 03:10
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You're right Globo. I "just don't get it". I've been here 25+ years, seen almost that many years of ongoing abuse, but "I just don't get it". What you don't get is when (and yes, we will) get past this current crisis, CX will go straight back to devaluing, attacking and degrading your contract. It seems that is the main thing "you just don't get". This difficult time will pass, CX will still be operating, and you will be no wiser as to why your career is worthless.
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Old 16th Mar 2020, 03:14
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Originally Posted by cxhk View Post
A HK$1.9 billion profit = a profit margin of 1.6%
That is such a small profit in any measure, especially for an airline the size of CX that is generating the level of revenue, of HK$106billion a year, CX should make at least 10x times the amount of profit to be even consider profitable.

Overall a reasonable summary, but one must remember that the reported profit is after Swire have applied their transfer pricing to move money out of whichever companies have higher taxes, greater profit sharing schemes or share holder dividend expectation etc. The reported profit is not a good indicator of the financial health of CX, or any other company in the group.
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Old 16th Mar 2020, 03:28
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I might point out that effectively, the pilots were the ONLY group of employees in the company that didn't receive the equivalent of a full 13th month. I'm sure that was just an oversight on managements part :/
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Old 16th Mar 2020, 06:47
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Originally Posted by Apple Tree Yard View Post
I might point out that effectively, the pilots were the ONLY group of employees in the company that didn't receive the equivalent of a full 13th month. I'm sure that was just an oversight on managements part :/
Maybe if pilots weren't in the perennial contract dispute....

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