<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by oneworld Fan:
B Waston,
You've got to be joking asking me about how CX has been a cash cow for Swire. Just look at the 10 year results and you will know. If CX was not a profitable enterprise, then Swire would not bother with its stakeholding.
CX has constantly been one of the most profitable airlines in the world and with the SARS crisis, this has temporarily taken a hit on the airline. Once the demand picks up, then you will see a good performance. Their is nothing wrong with the CX model - it's SARS stupid!
Look at the US carriers, their problem is their business model - no wonder UA, AC are now in bankruptcy.
I think you guys need to take Finance 101 and understand how to read the financial reports better. It seems like people on this thread (including the moderator) lack the understanding in this area.
Before we open our mouths wide and loud, consider this fact for a minute, CX has more than adequate liquid cash with a strong balance sheet. Now, how many airlines can claim this fact.</font>
Ignoring the name calling for the moment, I am not talking about the financial viability of CX - their unrestricted cash is significant but their ability to leverage other assets is even greater so no, CX is not going to go out of business and I have nether said nor implied that in my comments.
However, you have said that CX is a cash cow for Swire - I think you are a bit confused about their role here. CX does not have a piggy bank that Swire gets to go break into when they want some cash - they are a MINORITY shareholder in the company. While they are the single largest shareholder, let me say again, they are a MINORITY shareholder.
CX's profits, assets, etc belong to ALL shareholders prorata. Swire gets its dividend and enjoys share appreciation (well not at the moment) from this successful holding - but they do not get to go down and grab money when they need it. If this were to happen, a few Swire directors would find themselves in prison - not a very attractive position.
A simple 30 second analysis of the Swire statement of cashflows would show you that CX contributes NO CASH of any kind other than dividends (thus, cash COW is really not a good phrase)
Further, Swire would not automatically support CX from its own financial resources as has been implied - they would need to obtain favorable terms that would enhance SWIRE shareholders value - once again, Swire cash is not a piggy bank for CX to come raid either.
As I have said on the UA board during several bankruptcy discussions, I really wish that people on FT would leave financial analysis to those of us who have done so for a living for 20 years.
The ABOVE comments are mine personally, Now as the moderator I would ask that you refrain from any further personal insults directed at any member of this board. It will simply not be tolerated in this community.