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LAXintl
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Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:06 pm

Cathay Pacific's losses more than doubled last year because of rising fuel costs and relentless competition, the Hong Kong airline said Wednesday.
The airline posted a 1.26 billion Hong Kong dollar loss for 2017, compared with a HK$575 million loss the year before.

"Fundamental structural changes within the airline industry continued to create a challenging operating environment for our airline businesses," Chairman John Slosar said.

The company has been under pressure from rivals including budget airlines around Asia and state-owned mainland Chinese carriers, which have been competing in key routes and driving down prices.

He said Cathay would continue to focus on its turnround programme this year, and was hopeful the decline in passenger yields would slow “as global economic conditions improve”.


Cathay Pacific Airways loss doubles on intense competition
http://abcnews.go.com/International/wir ... n-53732138

Cathay Pacific posts first consecutive annual loss
https://www.ft.com/content/96a4feee-275 ... 62a39d57a0

=

CX is still hurting from its upside down fuel hedges, though bright spot has been cargo revenues which rebounded nicely in 2017.
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Prost
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:21 pm

How long are their fuel hedge contracts?
 
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mercure1
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:21 pm

LAXintl wrote:
He said Cathay would continue to focus on its turnround programme this year, and was hopeful the decline in passenger yields would slow “as global economic conditions improve”.


:confused: :confused:

Odds are if anything we are likely headed for another global slow down in the next few years.

What will CX do then if they cant make money when the economy is strong?

Seems hardly the most prudent plan to simply wish for a strong economy.
mercure f-wtcc
 
tphuang
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:36 pm

I love flying CX, but it just seems like the lower cost Chinese carriers are crushing them. Their j cabin is great, but on the shorter legs, they are just an overkill and nobody is paying for them. On the longer legs, they are not getting the type of premium needed to be profitable.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:36 pm

So let's face it, HX is affecting things. Seriously. But they could go bust by all reports, Do we trust these reports? If so, Cathay have a window. If not, they have to go into serious review mode.
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:44 pm

NZ321 wrote:
So let's face it, HX is affecting things. Seriously. But they could go bust by all reports, Do we trust these reports? If so, Cathay have a window. If not, they have to go into serious review mode.

CX is a long way from going bust, but there might have to be a high level rethink about their overall role/importance in the Asian landscape as the Chinese carriers expand, especially in the TPac market. It can be a big blow to ones ego if you acknowledge that your “glory days” on the world stage may be behind you and not coming back.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 4:45 pm

Maybe CX should reconsider starting new ULH routes (like HKG-IAD with the A350-1000) and instead focus on their strategy with their current network. If I'm not mistaken, IAD is not the only L/H market coming on line in 2018?
 
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LAXintl
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 5:09 pm

They complain about yield drop, and indeed its been rather serious. Not a single market held steady.

North America -7.7%
Europe -7.3%
Australia/NZ/S Africa -5.1%
India/M.E. -3.6%
North Asia -2.8%
South Asia -2.7%

Longhaul worst performing yield wise
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zakuivcustom
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 5:10 pm

Some more details here:
http://www.scmp.com/news/hong-kong/econ ... ar-history

Especially this:
"Fuel costs, the group’s largest expense at 30.7 per cent of its total, jumped 27 per cent to HK$31.1 billion. This included a HK$6.3 billion loss arising from hedging contracts, although it was 25 per cent smaller than a year ago and was expected to shrink further in 2018."

As usual, the fuel hedges is responsible for a huge part of the loss. Yes, pax yields is down mainly (and especially) due to CN3 flooding the market with cheap tickets, but those should be offset by the cargo gain anyway.

Polot wrote:
NZ321 wrote:
So let's face it, HX is affecting things. Seriously. But they could go bust by all reports, Do we trust these reports? If so, Cathay have a window. If not, they have to go into serious review mode.

CX is a long way from going bust, but there might have to be a high level rethink about their overall role/importance in the Asian landscape as the Chinese carriers expand, especially in the TPac market. It can be a big blow to ones ego if you acknowledge that your “glory days” on the world stage may be behind you and not coming back.


I believe the OP is referring to HX, which is part of HNA Group that literally have no money and is surviving right now only b/c of its guanxi with some high-level CCP officials (i.e. CCP more or less telling bank to continue to lend HNA money so HNA can repay earlier loans :scratchchin: ).

On the other hand:
"Not on the management’s agenda to boost competitiveness however was a merger or acquisition. Hogg batted off suggestions that Cathay buy into rival local carriers Hong Kong Airlines and Hong Kong Express, which are controlled by distressed Chinese conglomerate HNA Group and have billions of US dollars in assets up for sale."

So no CX-HX/UO merger for now, I guess.
 
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Polot
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 5:13 pm

zakuivcustom wrote:
Some more details here:
http://www.scmp.com/news/hong-kong/econ ... ar-history

Especially this:
"Fuel costs, the group’s largest expense at 30.7 per cent of its total, jumped 27 per cent to HK$31.1 billion. This included a HK$6.3 billion loss arising from hedging contracts, although it was 25 per cent smaller than a year ago and was expected to shrink further in 2018."

As usual, the fuel hedges is responsible for a huge part of the loss. Yes, pax yields is down mainly (and especially) due to CN3 flooding the market with cheap tickets, but those should be offset by the cargo gain anyway.

Polot wrote:
NZ321 wrote:
So let's face it, HX is affecting things. Seriously. But they could go bust by all reports, Do we trust these reports? If so, Cathay have a window. If not, they have to go into serious review mode.

CX is a long way from going bust, but there might have to be a high level rethink about their overall role/importance in the Asian landscape as the Chinese carriers expand, especially in the TPac market. It can be a big blow to ones ego if you acknowledge that your “glory days” on the world stage may be behind you and not coming back.


I believe the OP is referring to HX, which is part of HNA Group that literally have no money and is surviving right now only b/c of its guanxi with some high-level CCP officials (i.e. CCP more or less telling bank to continue to lend HNA money so HNA can repay earlier loans :scratchchin: ).

On the other hand:
"Not on the management’s agenda to boost competitiveness however was a merger or acquisition. Hogg batted off suggestions that Cathay buy into rival local carriers Hong Kong Airlines and Hong Kong Express, which are controlled by distressed Chinese conglomerate HNA Group and have billions of US dollars in assets up for sale."

So no CX-HX/UO merger for now, I guess.

Yes you are correct, I misread his post. LAXintl’s numbers definitely showing the impact that the growth of the Chinese carriers are having on CX with their new focus on Europe and especially the US.

CX will always have the benefit of being hubbed in HKG. But there might need to be a greater focus on O&D traffic and less on connecting which would probably mean smaller planes and likely a smaller overall airline.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 5:20 pm

Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.
"We make war that we may live in peace." -- Aristotle
 
hoons90
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 6:17 pm

tphuang wrote:
I love flying CX, but it just seems like the lower cost Chinese carriers are crushing them. Their j cabin is great, but on the shorter legs, they are just an overkill and nobody is paying for them. On the longer legs, they are not getting the type of premium needed to be profitable.


I experienced CX's intra-Asia J class in 2015 and 2017, and I have noticed significant improvements in their soft product, especially in the quality and quantity of the catering. However, they swapped out my 77W for a regional config 773 and while it wasn't as terrible as I thought it would be, I found it much less comfortable than even the angled lie flats KE offer on the same route.
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 6:32 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

No it isn't. Not in the least.

This is what everyone who took a rational view of the evolution of the air transport market EXPECTED.

And why we so often mocked the people who are blindsided by the (ridiculous) notion that perceptions of "service" would somehow immunize Asian (and to a lesser extent, European) carriers against (1) suffering initial losses and then (2) radically devaluing their offerings; in order to combat the hypercompetitive pressures from LoCos, ULCCs, longer nonstops that overfly established hubs, and liberalized bilaterals.

So again, hear it now, and quote it later:
In due time, essentially every scheduled large airline will be "Spirit," in their policies and offerings for coach passengers.

It's only a matter of time.
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william
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 7:00 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

.


Ironic since we are continually told this is and will be the fastest growing region for air travel. So both airlines will be ok, and rise with the tide (if the "experts" are correct) of air traffic lifting all boats. Just not dominant.
 
zakuivcustom
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 7:08 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.


CX pretty much represent modern day HK anyway - still stuck in the old mentality where they were THE only player as the middle-man between mainland China and the rest of the world. With CN3 growing their own network, there goes a large amount of Mainland<->HKG<->"Western World" (or Taiwan, which was one of their large money maker also) traffic. Another one of their niche, Kangaroo route, is facing competition to the west in ME3. Regional routes? Simply can't compete with LCC without depressing their own fare (but with a higher base cost).

At the end, CX has the typical problem of established airline - high cost that they simply can't reduced. I mean, lower salary? Good luck with that. Cutting back on service? Already doing that and is facing backlash for it. Flying more economic plane? You can't get more economical than a bunch of 77W and A359 on long-haul.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 7:26 pm

For HX, I read that HNA have sold their stake to a third party company with unknown background. So how much would HNA's future affect HX will depends on how much stakes HNA actually have on that mysterious company.
janders wrote:
(...)

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.

I don't think there are any law in Hong Kong that would prevent a merger even if that would result in less competition or even monopoly, other than in specific industries with aviation not on the list
 
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LAXintl
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 8:32 pm

Indeed another case of a high cost base legacy airline facing an industry increasingly driven by lower cost producers.

Adjusting can be painful and I am not sure CX has yet to truly accept the reality that it can no longer carry on as always but needs a fundamental strategy overhaul and the potentially difficult changes it will entail.
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 11:17 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Just for the record, SQ has not posted an annual loss.

A rare loss recorded in Q4 FY17 (ended March 2017) triggered a massive turnaround plan. It has since recorded profits in the last three quarters, with a 22% increase in Q1, 192% increase in Q2 and 62% increase in Q3 year-on-year announced just last month, its best performance in Q3 for the last seven years.

Sure, both are "suffering" due to an ever challenging market, but the outcomes on paper are clearly quite distinct.
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Varsity1
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Re: Cathay Pacific Airways loss doubles on intense competition

Wed Mar 14, 2018 11:20 pm

There is too much capacity all over the world.

Side effect of cheap money.
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 12:07 am

huaiwei wrote:
janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Just for the record, SQ has not posted an annual loss.

A rare loss recorded in Q4 FY17 (ended March 2017) triggered a massive turnaround plan. It has since recorded profits in the last three quarters, with a 22% increase in Q1, 192% increase in Q2 and 62% increase in Q3 year-on-year announced just last month, its best performance in Q3 for the last seven years.

Sure, both are "suffering" due to an ever challenging market, but the outcomes on paper are clearly quite distinct.


Well, I doubt the real truth would be known about SQ anyway.....
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infinit
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 12:22 am

I remember 7 years ago when SQ only had a minority stake in Tiger and talked about starting an LCC which became Scoot, CX's CEO arrogantly said they dont need an LCC subsidiary because they're right by the growing Chinese market...

itisi wrote:
huaiwei wrote:
janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Just for the record, SQ has not posted an annual loss.

A rare loss recorded in Q4 FY17 (ended March 2017) triggered a massive turnaround plan. It has since recorded profits in the last three quarters, with a 22% increase in Q1, 192% increase in Q2 and 62% increase in Q3 year-on-year announced just last month, its best performance in Q3 for the last seven years.

Sure, both are "suffering" due to an ever challenging market, but the outcomes on paper are clearly quite distinct.


Well, I doubt the real truth would be known about SQ anyway.....


What do you mean?
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 12:39 am

One of the issues with SIA is that SQ is not the profit champ it once was. Increasing profits is being driven by its subsidiaries including MRO which are producing good margins.
SIA smartly is putting more weight behind growing these subsidiaries, as SQ imo has lost some of its lusters, and like CX is a legacy carrier that is seeing its historic market being nibbled away at.
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PlanesNTrains
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 1:05 am

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.


What about Dragonair?

tphuang wrote:
I love flying CX, but it just seems like the lower cost Chinese carriers are crushing them. Their j cabin is great, but on the shorter legs, they are just an overkill and nobody is paying for them. On the longer legs, they are not getting the type of premium needed to be profitable.


Anecdotal, but I just booked a trip LAX-AKL-MEL-LAX and far and away the cheapest option was China Southern. Were it not for a few inconveniences, I might have chosen that itinerary, but went with ANZ. Regardless, the Chinese carriers obviously are pulling an EK and making 30+ hour one-way itineraries too affordable to pass up for a lot of people.
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 1:45 am

Cathay shares opened today +2.7%, so the markets see future benefits from the cost cutting drive.

HX’s ridiculously low fares to The US and NZ cannot last.
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tphuang
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 1:52 am

PlanesNTrains wrote:
janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.


What about Dragonair?

tphuang wrote:
I love flying CX, but it just seems like the lower cost Chinese carriers are crushing them. Their j cabin is great, but on the shorter legs, they are just an overkill and nobody is paying for them. On the longer legs, they are not getting the type of premium needed to be profitable.


Anecdotal, but I just booked a trip LAX-AKL-MEL-LAX and far and away the cheapest option was China Southern. Were it not for a few inconveniences, I might have chosen that itinerary, but went with ANZ. Regardless, the Chinese carriers obviously are pulling an EK and making 30+ hour one-way itineraries too affordable to pass up for a lot of people.


I do the NYC to Asia thing several times in the past few year and also did a bunch of test searches in my spare time, because that's what I dork I am. MU always turns up with some ridiculous sub $3000 J fare to South East Asia and CZ/CA are in the $3000 range too. And then there is also Xiamen Airline which dips even below $2000, but connection times are terrible. Due to this, you can see CX having to drop their prices a lot. I see them pricing Singapore consistently below $5000, which I would imagine is not enough premium for 19 hours of flying and those amazing lounges in HKG.

And I fly Singapore-Hong Kong a lot. I almost always get upgraded and the J cabin is just completely open. That's probably why they have the regional version of 777. Those 4 class 77W on that route must have always been loosing money.
 
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NeBaNi
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 1:54 am

LAXintl wrote:
They complain about yield drop, and indeed its been rather serious. Not a single market held steady.

North America -7.7%
Europe -7.3%
Australia/NZ/S Africa -5.1%
India/M.E. -3.6%
North Asia -2.8%
South Asia -2.7%

Longhaul worst performing yield wise

I'm a little curious as to why S. Africa is lumped together with Australia/NZ?
 
infinit
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 2:06 am

PlanesNTrains wrote:
What about Dragonair?


Dragonair is not an LCC. It's a full-service regional airline that even has an F Cabin.
Like SQ's Silkair albeit Silkair only operates narrow bodies with J and Y cabins.
CX doesn't have a real LCC the way SQ has Scoot which has expanded sizeably after it integrated with Tiger.
 
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cougar15
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 2:14 am

HKD 500 MIO fine from the EU for cargo price fixing certainly did not help, but me as a freightdog thinks that was well deserved!
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jbs2886
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 2:19 am

NeBaNi wrote:
LAXintl wrote:
They complain about yield drop, and indeed its been rather serious. Not a single market held steady.

North America -7.7%
Europe -7.3%
Australia/NZ/S Africa -5.1%
India/M.E. -3.6%
North Asia -2.8%
South Asia -2.7%

Longhaul worst performing yield wise

I'm a little curious as to why S. Africa is lumped together with Australia/NZ?


Because it doesn't make sense to have a market group of one market?
 
kriskim
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 2:29 am

infinit wrote:
I remember 7 years ago when SQ only had a minority stake in Tiger and talked about starting an LCC which became Scoot, CX's CEO arrogantly said they dont need an LCC subsidiary because they're right by the growing Chinese market...


I too think that CX has too much arrogance overall, I believe that there is some sort of delusion that the current management have, especially thinking that its still a strong brand and a market leader that it once was, obviously something is not working at CX with the past years of losses evident of that.

I think there needs to be a radicle shake up, a major re-think rather than hoping for the economy to be better in the future. This type of wait and see approach could possibly doom the airline. I'm not saying that CX needs a LCC, but a major re-think of its current strategy.

SQ as a group is embracing all segments of the market, Australia is a prime example, you have both SQ and TR flying MEL/SYD/PER-SIN, both airlines are thriving in those markets. However SQ knows how to control and limit the impact of TR, they will not let TR fly more than daily in those markets, this type of dual brand strategy will help the SQ Group ride any economic headaches in the future, whilst capturing all demographics that would otherwise fly with the competition.
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 2:37 am

LAX772LR wrote:
janders wrote:
Ironic to see top carriers like CX and SQ suffer.

No it isn't. Not in the least.

This is what everyone who took a rational view of the evolution of the air transport market EXPECTED.

And why we so often mocked the people who are blindsided by the (ridiculous) notion that perceptions of "service" would somehow immunize Asian (and to a lesser extent, European) carriers against (1) suffering initial losses and then (2) radically devaluing their offerings; in order to combat the hypercompetitive pressures from LoCos, ULCCs, longer nonstops that overfly established hubs, and liberalized bilaterals.

So again, hear it now, and quote it later:
In due time, essentially every scheduled large airline will be "Spirit," in their policies and offerings for coach passengers.

It's only a matter of time.


This is the most sound opinion here. The influence that the LCCs and ULCCs have had has proven to be disruptive and successful. Like it or not, unless you're willing to pay more for what the economy price ticket offers you, you'll be getting what you pay for.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:39 am

tphuang wrote:
PlanesNTrains wrote:
janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.


What about Dragonair?

tphuang wrote:
I love flying CX, but it just seems like the lower cost Chinese carriers are crushing them. Their j cabin is great, but on the shorter legs, they are just an overkill and nobody is paying for them. On the longer legs, they are not getting the type of premium needed to be profitable.


Anecdotal, but I just booked a trip LAX-AKL-MEL-LAX and far and away the cheapest option was China Southern. Were it not for a few inconveniences, I might have chosen that itinerary, but went with ANZ. Regardless, the Chinese carriers obviously are pulling an EK and making 30+ hour one-way itineraries too affordable to pass up for a lot of people.


I do the NYC to Asia thing several times in the past few year and also did a bunch of test searches in my spare time, because that's what I dork I am. MU always turns up with some ridiculous sub $3000 J fare to South East Asia and CZ/CA are in the $3000 range too. And then there is also Xiamen Airline which dips even below $2000, but connection times are terrible. Due to this, you can see CX having to drop their prices a lot. I see them pricing Singapore consistently below $5000, which I would imagine is not enough premium for 19 hours of flying and those amazing lounges in HKG.

And I fly Singapore-Hong Kong a lot. I almost always get upgraded and the J cabin is just completely open. That's probably why they have the regional version of 777. Those 4 class 77W on that route must have always been loosing money.


The FOC flight is largely timed toward FOC O&D with a noontime arrival into JFK. Hainan's arrivals into JFK near midnight are timed toward connections in the Chinese end. I have to ask how much these new nonstops, plus the CZ flight to CAN, have taken away from CX, given that one has more choices into China now. The FOC flight didn't exist until a year ago when Xiamen finally got the equipment needed to operate the flight profitably with a 254t B789 rather than a 352t B77W which operates to CAN.

Also, how are loads on MU and CA affected? For CA in the winter season, CA981/2 had equipment variations instead of always being a B748 and CA819/20 is going down to a B789 but going daily.
 
RichardWelling
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 4:49 am

If QR wasnt hurting right now, this would give them more of a reason to up their stake in CX.
 
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 4:57 am

LHUSA wrote:
Maybe CX should reconsider starting new ULH routes (like HKG-IAD with the A350-1000) and instead focus on their strategy with their current network. If I'm not mistaken, IAD is not the only L/H market coming on line in 2018?


CPH, BRU and DUB are all coming online this year, as well as restarting BCN as a year-round service as opposed to a seasonal one.
 
masA380
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 9:21 am

VRHNM wrote:
LHUSA wrote:
Maybe CX should reconsider starting new ULH routes (like HKG-IAD with the A350-1000) and instead focus on their strategy with their current network. If I'm not mistaken, IAD is not the only L/H market coming on line in 2018?


CPH, BRU and DUB are all coming online this year, as well as restarting BCN as a year-round service as opposed to a seasonal one.


These are mostly ‘secondary’ cities in Europe and I really wonder whether they will last. Axing them too soon if found unprofitable will hurt their pride so good luck on those routes.
 
zakelwe
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 9:42 am

They have now announced conversion to 10 abreast for 777's

https://www.flightglobal.com/news/artic ... ty-446799/
 
VRHNM
Posts: 60
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 10:22 am

masA380 wrote:
VRHNM wrote:
LHUSA wrote:
Maybe CX should reconsider starting new ULH routes (like HKG-IAD with the A350-1000) and instead focus on their strategy with their current network. If I'm not mistaken, IAD is not the only L/H market coming on line in 2018?


CPH, BRU and DUB are all coming online this year, as well as restarting BCN as a year-round service as opposed to a seasonal one.


These are mostly ‘secondary’ cities in Europe and I really wonder whether they will last. Axing them too soon if found unprofitable will hurt their pride so good luck on those routes.


They have been quite aggressive in expanding their European network in recent years. For a long time they only flew to LHR, CDG, FRA, AMS, MXP and FCO.
ZRH was restarted in 2015(?) along with DUS and MAN in a similar period of time. In the next 3 years they added LGW, MAD, BCN as well as TLV, EWR, BOS and a seasonal CHC on their longhaul network. The only destination being axed in this list is DUS and most probably due to the demise of AB (and thus loosing feed from the European end).

Some destinations such as LGW, MAN and TLV were doing so well they went daily rather quickly.
 
masA380
Posts: 16
Joined: Thu Jun 03, 2004 12:54 pm

Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 12:10 pm

VRHNM wrote:
masA380 wrote:
VRHNM wrote:

CPH, BRU and DUB are all coming online this year, as well as restarting BCN as a year-round service as opposed to a seasonal one.


These are mostly ‘secondary’ cities in Europe and I really wonder whether they will last. Axing them too soon if found unprofitable will hurt their pride so good luck on those routes.


They have been quite aggressive in expanding their European network in recent years. For a long time they only flew to LHR, CDG, FRA, AMS, MXP and FCO.
ZRH was restarted in 2015(?) along with DUS and MAN in a similar period of time. In the next 3 years they added LGW, MAD, BCN as well as TLV, EWR, BOS and a seasonal CHC on their longhaul network. The only destination being axed in this list is DUS and most probably due to the demise of AB (and thus loosing feed from the European end).

Some destinations such as LGW, MAN and TLV were doing so well they went daily rather quickly.


LGW and MAN are both UK destinations and given HK is former British colony, I’m not surprised at all those routes perform well. TLV is mainly pilgrimage traffic I suppose. US and Canada will definitely do well due to mass emigration.
 
zakuivcustom
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:06 pm

masA380 wrote:
VRHNM wrote:
masA380 wrote:

These are mostly ‘secondary’ cities in Europe and I really wonder whether they will last. Axing them too soon if found unprofitable will hurt their pride so good luck on those routes.


They have been quite aggressive in expanding their European network in recent years. For a long time they only flew to LHR, CDG, FRA, AMS, MXP and FCO.
ZRH was restarted in 2015(?) along with DUS and MAN in a similar period of time. In the next 3 years they added LGW, MAD, BCN as well as TLV, EWR, BOS and a seasonal CHC on their longhaul network. The only destination being axed in this list is DUS and most probably due to the demise of AB (and thus loosing feed from the European end).

Some destinations such as LGW, MAN and TLV were doing so well they went daily rather quickly.


LGW and MAN are both UK destinations and given HK is former British colony, I’m not surprised at all those routes perform well. TLV is mainly pilgrimage traffic I suppose. US and Canada will definitely do well due to mass emigration.


TLV is actually a fair size business destination also. Yes, pilgrimage traffic probably fill the back of the bus, but up front is where it really matter. (HK is Israel's 2nd largest export partner actually, right after US).

And between CX and LY (Who has fly to HKG for years), CX is still way better despite a perception of a drop in service level on CX.

You're correct on LGW and MAN, though. Colonial past, plus tons of VFR/Student O&D, helps fill those planes. They can take some kangaroo route traffic on those two airports also.
 
infinit
Posts: 1052
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:11 pm

kriskim wrote:
I too think that CX has too much arrogance overall, I believe that there is some sort of delusion that the current management have, especially thinking that its still a strong brand and a market leader that it once was, obviously something is not working at CX with the past years of losses evident of that.

I think there needs to be a radicle shake up, a major re-think rather than hoping for the economy to be better in the future. This type of wait and see approach could possibly doom the airline. I'm not saying that CX needs a LCC, but a major re-think of its current strategy.

SQ as a group is embracing all segments of the market, Australia is a prime example, you have both SQ and TR flying MEL/SYD/PER-SIN, both airlines are thriving in those markets. However SQ knows how to control and limit the impact of TR, they will not let TR fly more than daily in those markets, this type of dual brand strategy will help the SQ Group ride any economic headaches in the future, whilst capturing all demographics that would otherwise fly with the competition.



Exactly!

When Singapore Airlines' profits fell, the response was:
Intensifying competition from budget carriers and full-service airlines alike have put pressure on yields. The flag carrier was therefore prompted in May last year to launch a three-year transformation programme in a drive to go back to its glory days.Mr Goh said in his letter to staff that the airline will "significantly enhance (its) digital capabilities" and create a digital mindset and "digital-first" culture among its employees.

-http://www.businesstimes.com.sg/transport/sia-focuses-on-digital-transformation-to-reclaim-worlds-no-1-spot


Whereas when Cathay Pacific posted a record loss, they responded with:
He said Cathay would continue to focus on its turnround programme this year, and was hopeful the decline in passenger yields would slow “as global economic conditions improve”.
The company said it made a profit of HK$792m in the second half of the year, compared with a loss of HK$928m in the second half of 2016, which it cited as “evidence of progress”.

- https://www.ft.com/content/96a4feee-2757-11e8-b27e-cc62a39d57a0
 
awthompson
Posts: 503
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:18 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.


Where does Cathay Dragon come in then?
 
awthompson
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:25 pm

Someone has already now answered my question about Cathay Dragon. I know it is not comparable with Singapore's Scoot but earlier comments were completely ignoring Cathay Dragon as if it didn't exist.
 
awthompson
Posts: 503
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:36 pm

I flew Cathay Pacific MAN - HKG - CEB - HKG - MAN in mid January which I would have called low season. Service was great. All four flights were packed. HKG airport was thriving. On a world scale I am a lowish earner, yet I found the fares quite acceptable. I wouldn't consider using an LCC from UK to the far east or any airline without good on board service regardless of how low the fare was. So my question is, why are Hong Kong residents who have much more wealth than I have not supporting Cathay and stooping to use lower cost/service airlines for longer routes. I just cannot understand it. For me it will be a sorry day when flying loses any luxury that is left, and just so that people can get silly fares.
 
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Polot
Posts: 8708
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:41 pm

awthompson wrote:
I flew Cathay Pacific MAN - HKG - CEB - HKG - MAN in mid January which I would have called low season. Service was great. All four flights were packed. HKG airport was thriving. On a world scale I am a lowish earner, yet I found the fares quite acceptable. I wouldn't consider using an LCC from UK to the far east or any airline without good on board service regardless of how low the fare was. So my question is, why are Hong Kong residents who have much more wealth than I have not supporting Cathay and stooping to use lower cost/service airlines for longer routes. I just cannot understand it. For me it will be a sorry day when flying loses any luxury that is left, and just so that people can get silly fares.

Because most Hong Kong residents do not have more wealth than you. Wages are high there but so is the cost of living, which is among the highest in the world. Spending your earnings on rent, bills, and groceries is typically the bigger concern than traveling.

Also just because you are wealthy doesn’t mean you are interested in spending a lot of money on air travel or even have that much interest in luxury air travel. Not watching your spending is how “wealthy” people often end up poor and in huge debt.

The super wealthy who don’t have to worry about that would balk at having to fly commercial, even with CX.
 
blooc350
Posts: 77
Joined: Thu Jun 08, 2017 5:10 pm

Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 3:55 pm

janders wrote:
Ironic to see top carriers like CX and SQ suffer.

Largely I see it due their lack of evolution and sticking to old 1990s businesses plan.
Atleast SIA has things like Scoot to try to better segment marketplace but CX only has itself.

As far as comments about merger with HK Express or Hong Kong Airlines, I see it a definite no-no from regulatory point of view. CX should hardly be allowed to gain additional market share in HKG especially when barriers of entry for other airlines are so limited due slot congestion.



SQ's Q2 from 2017 was decent......

https://www.channelnewsasia.com/news/bu ... on-9384148
 
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LAXintl
Topic Author
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 4:13 pm

blooc350 wrote:

SQ's Q2 from 2017 was decent......



That is for SIA Group.

As mentioned before SQ is not the financial star it once was, with other SIA Group subsidiaries generating an ever great share of the group's earnings these days.
From the desert to the sea, to all of Southern California
 
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Dieuwer
Posts: 539
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 4:21 pm

awthompson wrote:
I flew Cathay Pacific MAN - HKG - CEB - HKG - MAN in mid January which I would have called low season. Service was great. All four flights were packed. HKG airport was thriving. On a world scale I am a lowish earner, yet I found the fares quite acceptable. I wouldn't consider using an LCC from UK to the far east or any airline without good on board service regardless of how low the fare was. So my question is, why are Hong Kong residents who have much more wealth than I have not supporting Cathay and stooping to use lower cost/service airlines for longer routes. I just cannot understand it. For me it will be a sorry day when flying loses any luxury that is left, and just so that people can get silly fares.


I flew CX J HKG-BOS in early December of last year. Not sure if this was high or low season, but the plane was packed.
Service was ..."shoddy": It took ages before pre-departure drinks and menus were distributed, after which the crew forgot to collect half of them and did not ask the meal preference of a good chunk of the cabin. Pressing calls buttons did the job though. After placing the order, people once again were waiting forever for the dinner course to arrive. And some AGAIN had to press the call button to let the FAs know if they could get their meal at all. Etc. etc. etc.

All in all I got the impression the FAs were completely overwhelmed and did not know how to schedule their workload.
Contrasting this to my earlier J flight with JAL which was OUTSTANDING, I would say CX is nothing like the "premium carrier" it is proclaimed to be.
 
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Revelation
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 4:37 pm

LAX772LR wrote:
In due time, essentially every scheduled large airline will be "Spirit," in their policies and offerings for coach passengers.

RYANAIR says hi!

Varsity1 wrote:
There is too much capacity all over the world.

Side effect of cheap money.

Yet record backlogs at Airbus and Boeing -- go figure...

BestWestern wrote:
Cathay shares opened today +2.7%, so the markets see future benefits from the cost cutting drive.

HX’s ridiculously low fares to The US and NZ cannot last.

Air Berlin and others show how long a carrier can hang on if they are getting help from outside.
Wake up to find out that you are the eyes of the world
The heart has it's beaches, it's homeland and thoughts of it's own
Wake now, discover that you are the song that the morning brings
The heart has it's seasons, it's evenings and songs of it's own
 
jeffrey0032j
Posts: 466
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 5:22 pm

LAXintl wrote:
blooc350 wrote:

SQ's Q2 from 2017 was decent......



That is for SIA Group.

As mentioned before SQ is not the financial star it once was, with other SIA Group subsidiaries generating an ever great share of the group's earnings these days.

https://www.singaporeair.com/saar5/pdf/ ... fy1718.pdf

Nope, two of the subsidiaries actually posted losses in the latest available quarterly results. SQ Mainline is making money, LF has also increased.
 
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janders
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Re: Cathay Pacific Airways loss doubles on intense competition

Thu Mar 15, 2018 5:58 pm

Take a broader picture and look at SIA annual report -
https://www.singaporeair.com/saar5/pdf/ ... rt1617.pdf

SIA engineerings, Silk, and budget airlines were profitable. Only cargo was loss making. SQ mainline is basically treading water and management commentary indicates the bulk of future growth will be at Silk and budget airlines, not SQ mainline.

A good example of this is that SQ mainline fleet has shrunk over the years - from 108 in 2010 to 106 in 2017. In a few years, the combined Silk and budget fleets will exceed SQ mainline. Hardly ringing endorsement for the legacy SQ operation.
"We make war that we may live in peace." -- Aristotle

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