ron burgandy is on the money

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

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".

Tone deaf

The CX pilot group is all me me me.

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.

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.

Inane comment of the week. :ok:

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 I’m 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.

rubbish......most wouldn’t even know.

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 doesn’t reduce any secondary discussions to irrelevance.

In fact, they’re 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 can’t possibly hurt unless the answer itself is damaging.

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:

Let’s 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). That’s a 68% drop in revenue and that’s 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 (let’s 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 let’s 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 “La La Land” 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.)

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!

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.

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. That’s assuming that’s there are any airlines left to serve in, other than SOE’s, and even they’re looking dodgy.

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.

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.

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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