Fuel Contracts

[mngmt mole]

Well, I don't "hope" that to be honest (the reality of that is too awful for just about any human being to contemplate), although if I was a betting man the likelihood is high. It is more the case that ultimately their reputations will be ruined. They will always have money at a personal level. I suspect Swire's involvement with CX is drawing to a close. The likelihood of another fuel hedging debacle is high, and I suspect that they will soon have to declare such. There is NO way CX will emerge from this episode as the same airline it was going in.

[8driver]

I don't think it's as bad as last time, it doesn't say what price they hedged it at. And we certainly aren't alone.

​​​​​​https://qz.com/1815376/hedging-strat...most-airlines/

[cxorcist]

You see... in their minds, it’s their money to do with as they please. If they have to backdoor it out of the airline, so be it. They are just planning to leave a debt laden shell when they hand it over to the Mainland. They don’t care one iota about the employees or the other shareholders.

[turnandburn]

If you work at cx look at table on the hub, hedging to end of 2021. 50%-65% $40

[1200firm]

JFC it is "plain sight"

[mngmt mole]

I suspect there is a minimum contractual "buy" each day/week/month/year. The company is likely paying high prices for millions of gallons that they don't currently require. Just a guess, but another epic loss to be announced at a later date. Certainly, the company will likely seek to recoup some of that from their employees, just like the last time.

[Asturias56]

"AA does not hedge fuel at all, their CEO says it is just not worth it in the long run."

Hedging , as a user, does make sense if

a) you can guarantee you'll need x amount of fuel

b) you can guarantee to make enough money to cover the costs (eg if you have a fixed price , long term contract to crank out widgets)

The problem with airlines is that they can't guarantee their income so it just becomes a bet

[cxorcist]

Originally Posted by 1200firm

JFC it is "plain sight"

No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?

[Pickuptruck]

Originally Posted by cxorcist

No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?

Village idiot strikes again.
Easy enough to see, same as any market contract. But doesn’t really matter, at the end of the day. Keep your tinfoil hat on and keep wasting your life with ridiculous conspiracy theories.....

[controlledrest]

Originally Posted by Pickuptruck

Village idiot strikes again.
Easy enough to see, same as any market contract. But doesn’t really matter, at the end of the day. Keep your tinfoil hat on and keep wasting your life with ridiculous conspiracy theories.....

If it is 'easy enough to see' please post details of the market contract and put the 'ridiculous conspiracy' to rest. I asked a senior manager at a fleet forum for details of who the hedge was taken with and if the other party was in any way associated with Swire. He refused to answer.

The $US4 billon loss on the hedge was either a clever way to move money out of CX to Swire without sharing it with other share holders or gross incompetence. Take your pick. And it does really matter. $US4 billon would go a long way keeping us employed! As would competent and moral senior managers.

[1200firm]

Originally Posted by cxorcist

No, it’s not! Who is on the other side of these “hedges”? How much has been lost in the past five years on “hedges”? To whom, specifically?

previous poster had written "plane site". Now deleted that bit.

[Freehills]

Originally Posted by mngmt mole

I suspect there is a minimum contractual "buy" each day/week/month/year. The company is likely paying high prices for millions of gallons that they don't currently require. Just a guess, but another epic loss to be announced at a later date. Certainly, the company will likely seek to recoup some of that from their employees, just like the last time.

something like this - yes. You can’t actually hedge jet fuel/ kerosine, just the underlying crude. And 50-60% hedged would be on forecast fuel needs, so they are almost certainly needing to settle crude oil contracts in excess of fuel burn

[Gnadenburg]

Originally Posted by mngmt mole

The likelihood of another fuel hedging debacle is high, and I suspect that they will soon have to declare such. There is NO way CX will emerge from this episode as the same airline it was going in.

Yes, this is bailout territory now. Was heartening to hear rumours of the ease of credit available recently. But if its paying off a bad fuel hedge bet, rumours of a government intervention requirement plausible and where will Air China play out?

The intent of a more rapid transfiguration of Hong Kong, aided by a crisis, will have implications for a highly visible flagship.

[mngmt mole]

Just read the latest DFO newsletter. Focus on this bit:

" In the next week or two we intend to meet with the HKAOA to discuss how we must achieve savings on the Hong Kong base if we are to survive and compete in future. ".

I don't need to highlight what is probably about to happen.

[controlledrest]

The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

[MENELAUS]

Originally Posted by controlledrest

The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

When might that be ? Assuming we’re all still sat down when the music stops, we will be a far smaller company, if around at all, whilst China Eastern or Air China becomes Hong Kong’s de facto flag carrier. And who would care or indeed stop them. Not the local populace, and shareholders sadly have to suck it up. It has already been admitted that we’ll have 3 or 400 hundred pilots in excess if we get through this.
So downsizing is inevitable. And yesterday’s missive from CK is the usual shot across the bows; expat benefits (due to our failure to ratify them under some illustrious AOA guidance.. clause 7 will shortly appear to be a bargain) are now policy and can be changed as they see fit. The rest of the company ( in fact now in the majority) are not on said benefits (well not to the same extent ) and therefore they have to be more inventive.
My guess would be basic salary ? Which I think we have to agree too ? Unless it’s the ultimate paycut, like our colleagues in VX, VS (?), and Norwegian.

[Asturias56]

"We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again."

I don't think you have a leg to stand on right now and, as Globo points out, it won't be any better in the foreseeable future

[AllWobbly]

Originally Posted by controlledrest

The contracts are clear. Last on, First off. If we have too many pilots, cull from the bottom.

All of these variations to the contract (pay cuts) are allowing the company to avoid redundancy payments and are with the expectation that when times improve they will want all crew so they can make buckets of money. This might be OK if they shared the good times, but withholding 13th month and the utterly pointless profit sharing scheme mean the profits aren't shared.

We should be pushing very hard for a meaningful and enforceable repayment of lost earnings when the company is making money again.

At the risk of sounding defeatist can anybody come up with a cogent plan? Purely a personal opinion but I think “pushing” would be uphill with a pointed stick.

[freightdoggiedog]

I don't think you have a leg to stand on right now and, as Globo points out, it won't be any better in the foreseeable future

“The leg to stand on” is that contracts are legally enforceable in Hong Kong. If they want to make people redundant that’s their prerogative. If instead they want to ask for contractual concessions since times are tough, fine, but these should be temporary, lasting no longer than the crisis itself. Seems to me, when times are good we don’t exactly share in the spoils, but when times are bad suddenly we’re all one team.

This is an extremely serious situation, but the bubonic plague this is not. When (not if) people start travelling again, they will need all those shiny airplanes currently parked and the people who fly them.

Pilots have the tendency to try and solve the airline’s problems for them and we often fancy ourselves managers, but that’s not our job. Our job is to be flight deck professionals, and I might add that we also have a responsibility towards our profession, our colleagues and our families to protect our terms and conditions.

Management only ever have an interest in getting us to work harder for less, whether times are good or bad. If they want us to work for less, that may be quite reasonable in a dramatic time like this, but only as long as the crisis lasts, not as a permanent concession.

[mngmt mole]

I am cutting and pasting from something AllWobbly said on another thread:

"Here’s a direct quote from the employment ordinance website re varying contracts

Under the Employment Ordinance, the five valid reasons for dismissal or variation of the terms of the employment contract are:

1. the conduct of the employee;
2. the capability or qualifications of the employee for performing his work;
3. redundancy or other genuine operational requirements of the business;
4. statutory requirements; or
5. other substantial reasons

It depends whether one thinks grounding almost all of the fleet is a ”substantial” enough reason to vary a contract or that ” requirements of the business “ are such that the company could justify it.

I guess the only way to find out what it really means would be to run it by an employment lawyer or test it"

I have it on good authority that management are resting what is to come on points 3 and 5. It is nice to believe that they will "honour" our contracts on every point, but this time round they are planning to move aggressively to restructure the business once and for all. I know that isn't a palatable thing to hear, but realistically what would we now expect. I don't know specifically what they are planning (only that they are), and they may change their minds prior to implementation, but I think it wise for everyone to prepare themselves for difficult days ahead. Sadly, fear of an invisible bug has caused our entire industry to collapse. Black Swan event indeed.