kaitak
Posts: 8933
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Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 4:48 am

In an internal memo to staff, CX boss Turnbull said that the airline's situation was becoming increasingly serious. Cash was being burned through and the airline may reach a situation where it has to sell planes.

"In the most dramatic warning issued by a regional airline to date, Mr Turnbull wrote in an internal email that the airline's $HK11 billion ($2.18 billion) in cash reserves was being consumed daily. He raised the spectre of having to mortgage or sell aircraft if the SARS (severe acute respiratory syndrome) epidemic did not ease.

Mr Turnbull said Cathay's banks were not easing loan repayments, aircaft manufacturers had offered limited assistance and some suppliers would not help."

----------------------------------------

This last paragraph is particularly interesting - and surprising. Of course, no one knows how it's going to end up, but surely CX is a very good bet once things do pick up. SARS will be dealt with; it's just a matter of time and if one manufacturer were to be particularly supportive of CX during this bad time, wouldn't it reap rewards later. Similarly, if another were not so helpful . . .

I really, really do feel for CX. It would be a tragedy for such a fine airline to be struck down because of something beyond its control and I sincerely hope SARS is dealt with as soon as possible, for the sake of the industry generally.

It's strange that when we went into 2003, UA was on its knees and CX/SQ flying high. Now one might argue that these two are in worse condition than CX/UA.

 
ConcordeBoy
Posts: 16852
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 4:54 am

well, here's to hoping that they get rid of those A346.  Smile/happy/getting dizzy

Seems the 772As might be on their way out as well  Sad
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
na
Posts: 9128
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 5:19 am

Please get rid of those 773s...
 
ConcordeBoy
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Joined: Thu Feb 01, 2001 8:04 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 5:30 am

Hate to break it to you... they actually like the 773s, and still have more on order.

The 772As cannot match the efficiency of the A333s, except perhaps on the longest routes. They'd be the ones to go if a call had to be made for that seat category.

And the A346 are rather worthless: didnt live up to the specifications Cathay expected, and they were bought for a route which (not surprisingly) isnt going to happen any time soon if ever.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
SInGAPORE_AIR
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:17 am

Very intriguing news. Thank you.

Sources also say that the airline is now losing US$5 000 000 which is more than the US$3 million previously quoted by the Director of Flight Operations.

As for the A346 my information is different from that of ConcordeBoy's. Word is that the plane meets specifications, but doesn't live up to promises that Airbus made to Hong Kong's de facto flag carrier - over and above the minimal specs of the plane. So, the airline got what it was supposed to - just not what it really believed it was going to get
Anyone can fly, only the best Soar.
 
SInGAPORE_AIR
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:40 am

Cathay Pacific Airways CEO David Turbull has told staff the "day is coming" when the airline based in Hong Kong Special Administrative Region, China will run out of money.

Mr. Turnbull wrote in an internal memo leaked to The Australian newspaper (Australia) that the airline's cash was being consumed daily. He said that mortgaging or selling aircraft might be necessary and that banks were not easing the loan repayments, Airbus and Boeing were only offering limited help and some suppliers offering none at all.

Such mortaging of aircraft would increase the airline's debt-to-equity ratio (was 0.07 times) and could have to borrow beyong shareholder's funds which was "what companies do before they go bust".

The airline could sell assets like Pan American Airways did. "That is what PanAm did – break up the furniture to keep the fire burning – until they had nothing left of the airline at all. Our financial situation is bad. And although we will not run out of money today or tomorrow, that day is coming and our fortunes will not change soon."

JP Morgan downgraded the airline's profit outlook to a loss of HK$3 500 000 000 / US$448 700 000 from HK$1 billion / US$128 200 000. The airline is expected to save US$70 000 000 from an unpaid leave scheme in which all staff will participate in.

More information at The Australian website

Information was gathered from the above hyperlinked webpage. Full information can be viewed by clicking the above hyperlinked webpage. Information was rephrased and not copied and pasted with the exception of quotes. Currency conversion from Hong Kong Dollars to U.S.A. Dollars courtesy of the Singaporeair.com Currency Converter


[Edited 2003-05-15 23:41:48]
Anyone can fly, only the best Soar.
 
ConcordeBoy
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:43 am

Word is that the plane meets specifications, but doesn't live up to promises that Airbus made to Hong Kong's de facto flag carrier - over and above the minimal specs of the plane

Really... so is that why they were actively investigating the use of 773ER for Europe as opposed to more of the less expensive aircraft they already had?  Nuts
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
SInGAPORE_AIR
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:45 am

Conglomerate Swire Pacific - based in Hong Kong Special Administrative Region, China - has said that it will not inject funds into Cathay Pacific Airways or Hong Kong Dragon Airlines (known commonly as Dragonair) despite the crisis of Severe Acute Respiratory Syndrome.

"We do expect some recovery in the second half of the year. The total losses for the year may amount to close to HK$4 billion. So at this moment, there may not be an immediate need for a cash-raising call, but still longer-term, if things don't improve then it may spell some trouble for Cathay," said Celestial Securities' research director - Herbert Lau. HK$4 000 000 000 = US$512 800 000.

The Association for Asian Pacific Airlines has said that it would take several months before passenger numbers start to come back.

More information at the ChannelNewsAsia website

Information was gathered from the above hyperlinked webpage. Full information can be viewed by clicking the above hyperlinked webpage. Information was rephrased and not copied and pasted with the exception of quotes. Currency conversion from Hong Kong Dollars to U.S.A. Dollars courtesy of the Singaporeair.com Currency Converter
Anyone can fly, only the best Soar.
 
CX Flyboy
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Joined: Sun Dec 26, 1999 6:10 pm

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 11:38 am

Cathay were very close to an order for the 777-300ER before all this happened. When things pick up one day, aircraft acquisition studies will continue where they left off. The 777-300ER has a good chance of joining the fleet.

Selling or mortgaging planes in this climate would be a pretty desperate measure because of the low price this would involve. Cathay do have over a year's worth of money at current rates of loss and considering they have not even sent any planes to the desert yet, it will be a while before anything drastic happens.

This is the week when the company has asked staff to take no-paid leave. Obviously the worse they make it sound, the more persuaded staff will be to join the scheme, so it is in managements best interest to make things sound desperate and drastic, and make no mistake, things are bad, but it is easy for them to just overstate it a little....this week anyway.
 
9V-SVA
Posts: 1747
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 4:28 pm

So CX Flyboy, how is it going so far? Is the situation as bad as it seems(I hope not), as it would be a pain to see HK's de-facto flag carrier collapse under such circumstances.

9V-SVA
9V-SVA | B772ER
 
SInGAPORE_AIR
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 4:34 pm

"Really... so is that why they were actively investigating the use of 773ER for Europe as opposed to more of the less expensive aircraft they already had?"

Intriguing, then again, the person I got that information from could be wrong.
Anyone can fly, only the best Soar.
 
N754PR
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Joined: Mon Oct 04, 1999 10:03 pm

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 5:10 pm

Enough of this de-facto flag carrier crap....

Say "Hong Kong's International carrier, Cathay Pacific"

--------------------------------------------------------


If any aircraft go I see it being the 744's, they are whats being parked up more then anything else.
Bush, your a sad, sad man.
 
MD-11 forever
Posts: 550
Joined: Wed Mar 14, 2001 12:15 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 5:12 pm

To leave all of Concordes "pro 777" wishful thinking away, it seems to me that the 340-300 fleet is serving CX pretty well these days, as I heard that they like to return the planes on ground back to service. CX-flyboy, can you confirm this?

Cheers, Thomas
 
CX Flyboy
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Joined: Sun Dec 26, 1999 6:10 pm

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 5:59 pm

The A340 is a far more efficient plane to operate under these conditions than the 744. Almost none of our destinations cannot sustain service for a 744 at the moment, and although it is still operating some long-haul routes, the usefulness of the 744 has been greatly diminished. As more 744s are parked, more A340s are being used for the longhaul routes.

As N754pr says, if any aircraft go, it will be the 744, as they are begining to get old anyway.

As for the 773ER, these would provide a more suitable longhaul aircraft than the A340-300. The 773ER carries more weight as far as I know, and if our current 777s are anything to go by, it will be the engineering department's dream come true to have them doing a lot of long haul instead of the 744s and A340-300s. The 777 would not be flown ETOPS over the ocean, so the role of the A340-300s would still be there. Where this leaves the oddball A340-600s I don't know.
 
sk
Posts: 72
Joined: Wed Apr 23, 2003 11:04 pm

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:01 pm

But who wants to buy a 747-400 in this situation??
 
CX Flyboy
Posts: 6007
Joined: Sun Dec 26, 1999 6:10 pm

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:09 pm

...no-one, that's the problem, otherwise it wouldn't be a difficult decision.
 
MD-11 forever
Posts: 550
Joined: Wed Mar 14, 2001 12:15 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:31 pm

CX_flyboy

That's what I thought as well concerning the A340 usefullness compared to the 744. To me and my company it's "good" news, as we are involved in maintaining them......

Anyway, I truly hope that things will improve soon at CX as my job is also kind of connected to your compny's fate......

Cheers, Thomas

P.S.: I guess it was about time to add you on my respected users list!!  Smile/happy/getting dizzy
 
CX Flyboy
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 6:41 pm

MD-11 forever,


I too indeed hope that things improve soon. Aviation is all interlinked and when one company does badly...any company, guaranteed there will be others affected too.
I've added you to the additional respected users list, but I'm afraid that until Johan allows more to be added to the proper list, that's it! Sorry!
 
na
Posts: 9128
Joined: Sun Dec 12, 1999 3:52 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 7:07 pm

I reckon CX the best airline I´ve ever flown (all flights on 744s). If there should ever be a time the 744s might be dumped for 773s, CX will be dead for me regardless.
 
ConcordeBoy
Posts: 16852
Joined: Thu Feb 01, 2001 8:04 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 7:28 pm

not to worry CX... I'd quickly fill in where Na left off just for that decision  Big grin
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
jwenting
Posts: 9973
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 8:48 pm

This last paragraph is particularly interesting - and surprising. Of course, no one knows how it's going to end up, but surely CX is a very good bet once things do pick up. SARS will be dealt with; it's just a matter of time and if one manufacturer were to be particularly supportive of CX during this bad time, wouldn't it reap rewards later. Similarly, if another were not so helpful . . .

a major bank here issued a negative investment advise against ALL airline stock, calling them all bad longterm investments.
It went on to say that airlines can be potentially good shortterm investments but not in the current situation (obviously).

As such companies are warranted to be wary of giving airlines credit and rightly so... If the situation goes on or worsens (which could happen quite easily) they stand to loose far more than a company that in the past was a good customer, they stand to loose a lot of money themselves immediately.
I wish I were flying
 
na
Posts: 9128
Joined: Sun Dec 12, 1999 3:52 am

RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 9:09 pm

Thank god, ConcordeBoy,
CX can´t afford to loose any more pax...
 
United Airline
Posts: 8766
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RE: Cathay "may Sell Planes" Due To Crisis

Fri May 16, 2003 11:10 pm

NO WAY. This will not happen in my opinion. CX has always been one of the most profitable airlines in the WORLD.

They were evaluating the B 747-400ER/QLR, the B 777-300ER as well as the A 380. I hope CX as well as other airlines will get some New B 747s one day.
 
hkg82
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RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 1:00 am

I surely hope we don’t get to a point where CX will need to resort to selling aircraft to get extra cash, especially the 744s!

In the right market conditions & on the right routes, the 744s bring in the most amount of money & generate very high yields. A valuable asset. But that is certainly not the case in this environment where demand has collapsed; it’s just too large & uneconomical for the loads that CX is reporting.

But if the SARS crisis is over soon enough and demand picks up quickly (which I think will happen), then this issue of CX selling aircraft will be moot.  Smile

Hkg82.
 
CX Flyboy
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RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 2:35 am

Apparently we now have 22 aircraft parked.....it just gets worse.
 
hkg82
Posts: 1301
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RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 2:46 am

Just know that the worst is over for Hong Kong, that should be of some relief to CX (as well as Dragonair).

What's moral like now, Cx flyboy?

Hkg82.
 
United Airline
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RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 8:09 am

But that is certainly not the case in this environment where demand has collapsed; it’s just too large & uneconomical for the loads that CX is reporting.

Park them for now then........ And bring them back to service when the Economy picks up again

I am sure when the Economy picks up again, we will see orders coming back for the B 747. Besides, I doubt the A 340-600, as well as B 777-300ER will become the flagship of CX. They might order a mixture of A 380, as well as new B 747s and B777s.
 
Red Panda
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RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 11:30 am

having experienced the painful SARS event, CX may take extra caution in considering buying big acfts like A380s. What do you guys think?

r panda
 
CX Flyboy
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Joined: Sun Dec 26, 1999 6:10 pm

RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 11:33 am

Cathay will definately remember this and plan accordingly for the future. We are a very conservative airline when it comes to expansion and spending money and whereas I, for one have always ctitisized that, it looks like their conservatism has paid off with money in the bank for the extreme rainy day that we are having.
 
buckfifty
Posts: 1278
Joined: Tue Oct 16, 2001 4:05 pm

RE: Cathay "may Sell Planes" Due To Crisis

Sat May 17, 2003 12:31 pm

I still have a job. That's enough for me at this stage...