CX Annual Results 2019 -27.9% to $1.69B

Old Mar 10, 20, 11:22 pm
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CX Annual Results 2019 -27.9% to $1.69B

*CATHAY PAC AIR 2019 NP -27.9% to $1.69B; Nil 2nd Interim Div
*CATHAY PAC AIR 2019 NP -27.9% to $1.69B; Nil 2nd Interim Div AASTOCKS Financial News - Latest News

Huge profit warning https://www1.hkexnews.hk/listedco/li...0031100277.pdf

“Despite these measures we expect to incur a substantial loss for the first half of 2020.

We expect our passenger business to be under severe pressure this year and that our cargo business will continue to face headwinds. However, we are cautiously optimistic about cargo following the recent reduction in US-China trade tensions and we have maintained our cargo capacity intact. The US dollar is expected to remain strong in 2020, and intense competition, especially in long-haul economy class, will continue to place significant pressure on yields.”

”16. Event after the reporting period
The outbreak of COVID-19 since January 2020 has resulted in a challenging operational environment, and will adversely impact the Group's financial performance and liquidity position. Travel demand has dropped substantially and the Group has taken a number of short-term measures in response, including aggressive reduction of passenger capacity measured in Available Seat Kilometres (ASK) by approximately 30% for February and 65% for March and April, with frequencies cut approximately 65% and 75% over the same periods. Substantial passenger capacity and frequency reduction is also likely for May as we continue to monitor and match market demand. As at the end of February, passenger load factor had declined to approximately 50% and year-on-year yield had also fallen significantly. It is difficult to predict when these conditions will improve. However, the Group is expected to incur a substantial loss for the first half of 2020. The Group’s available unrestricted liquidity as at 31st December 2019 was HK$20.0 billion. The Directors believe that with the cost saving measures being taken, the Group’s strong vendor relationships, as well as the Group's liquidity position and availability of sources of funds, the Group will remain a going concern.”
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Old Mar 10, 20, 11:37 pm
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“The financial performance in 2019 beat the expectations of six analysts surveyed by the Post, who estimated a second half loss. Cathay’s revenue was just shy of the target at HK$107 billion.”

https://amp.scmp.com/news/hong-kong/transport/article/3074610/cathay-pacific-posts-surprise-hk344-million-profit-despite

Apple also has a good breakdown https://s.nextmedia.com/realtime/a.p...342&a=60698293

Last edited by percysmith; Mar 11, 20 at 12:03 am
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Old Mar 11, 20, 12:25 am
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Any mention of how much the profit warning is attributable to their fuel hedging? With the current plunge in oil I’m sure it’s not put them in a good place.
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Old Mar 11, 20, 12:28 am
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Originally Posted by percysmith View Post
the Group has taken a number of short-term measures in response, including aggressive reduction of passenger capacity measured in Available Seat Kilometres (ASK) by approximately 30% for February and 65% for March and April, with frequencies cut approximately 65% and 75% over the same periods. Substantial passenger capacity and frequency reduction is also likely for May as we continue to monitor and match market demand
So, it's just a matter of time before more April and May flights are cancelled. And, it's probably time to start worrying about my flight in June.

For a bit of perspective from United Airlines: https://viewfromthewing.com/holy-smo...lready-down-70
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Old Mar 11, 20, 12:42 am
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Originally Posted by sxc View Post
Any mention of how much the profit warning is attributable to their fuel hedging? With the current plunge in oil I’m sure it’s not put them in a good place.
Apple: 燃油成本按年減少12%至298.12億元,其中,去年燃油對沖虧損按年大幅減少93%,錄1.01億元。 燃油成本淨額是集團最大的成本,佔營業成本28.4%。公司預期今年第一季及第二季的耗油量受武漢肺炎疫情 影響而下降,因此上半年的對沖比率將會增加。截至去年底,今年首三季有40%燃油以每桶64美 元作對沖。
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Old Mar 11, 20, 3:15 am
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Without digging into the numbers, I must admit CX reporting a profit in 2019 was quite remarkable. Either they're the best run airline in the world or it's that easy to make money in HK once there's scale
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Old Mar 11, 20, 3:21 am
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2020 is nothing like 2019. The big issue is whether CX will remain a going concern as stressed by the Directors.

I don't know how many pax CX will transport in March. But with cuts in flights around 70% and plane loads very light, one could venture 10 to 20% of normal traffic. And that is not going to improve with the new travel restrictions imposed by some countries. Furthermore, there are very few new bookings among those 10 to 20%, so CX is getting little cash. CX probably has negative ticket cash flows with all the refunds on cancellations.
Typical monthly revenue is in the order of HKD10 billion in good times. Monthly costs are in the same ballpark. Nowadays, there is still cargo revenue. But liquidity at 20 billion at the end of 2019 is not going to be sufficient to cover many months in the current situation.
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Old Mar 11, 20, 5:16 am
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Originally Posted by brunos View Post
Typical monthly revenue is in the order of HKD10 billion in good times. Monthly costs are in the same ballpark. Nowadays, there is still cargo revenue. But liquidity at 20 billion at the end of 2019 is not going to be sufficient to cover many months in the current situation.
Perhaps that's why they are allowing pax to fly anytime till next year.
Pay now, fly anytime!
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Old Mar 11, 20, 5:31 am
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Originally Posted by sparkj View Post
Perhaps that's why they are allowing pax to fly anytime till next year.
Pay now, fly anytime!
Indeed. Many other airlines have adopted this "travel in confidence" policy.
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Old Mar 11, 20, 6:49 am
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Politics of any debt/ equity swap would be interesting- due to the ownership restrictions.
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Old Mar 11, 20, 10:29 am
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Martin Murray to be replaced as CFO - is he retiring, resigning or being pushed?
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Old Mar 12, 20, 9:04 pm
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SCMP: Cathay Pacific’s surprise HK$344 million profit tempered...

https://www.scmp.com/news/hong-kong/...profit-despite

Excerpts that should surprise absolutely no one:
"Hong Kong’s flag carrier on Wednesday warned of damaging financial consequences from the
coronavirus epidemic that had left the global aviation industry reeling."

"During the Covid-19 crisis, the Cathay group is carrying 20,000 passengers daily in March, down 81 per cent, and had parked up to 150 planes a day, the airline said."

"Cathay said capacity would be reduced by 65 per cent in March and April, more than double the rate in February. That amounts to slashing three-quarters of flights this month and the next."

"Based on departures from Hong Kong, there will be 35 instead of 120 daily Cathay Pacific flights, 15 rather than 80 at Asia-focused Cathay Dragon and budget unit HK Express running five flights instead of 34."

"Further substantial reductions in May were also likely, the airline said. There was also the prospect of some cuts in June."

"Cathay said up to the end of February, its load factors, which measure how full flights are, had declined by around 50 per cent and year on year, the yield – how much money the airline makes on air tickets – “had also fallen significantly”.
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Old Mar 14, 20, 6:58 am
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Originally Posted by sxc View Post
Any mention of how much the profit warning is attributable to their fuel hedging? With the current plunge in oil I’m sure it’s not put them in a good place.
They (CX) are better placed than Singapore Airlines as the former has contracts at high levels until 2025 and CX has low levels beyond 2020. With SQ taking slower actions on their capacity cuts, they will be hard hit with all the restrictions coming through in Europe and more recently in India and New Zealand (where they have large presence).
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Old Mar 14, 20, 7:01 am
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Originally Posted by infinitium View Post
https://www.scmp.com/news/hong-kong/...profit-despite

Excerpts that should surprise absolutely no one:
"Hong Kong’s flag carrier on Wednesday warned of damaging financial consequences from the
coronavirus epidemic that had left the global aviation industry reeling."

"During the Covid-19 crisis, the Cathay group is carrying 20,000 passengers daily in March, down 81 per cent, and had parked up to 150 planes a day, the airline said."

"Cathay said capacity would be reduced by 65 per cent in March and April, more than double the rate in February. That amounts to slashing three-quarters of flights this month and the next."

"Based on departures from Hong Kong, there will be 35 instead of 120 daily Cathay Pacific flights, 15 rather than 80 at Asia-focused Cathay Dragon and budget unit HK Express running five flights instead of 34."

"Further substantial reductions in May were also likely, the airline said. There was also the prospect of some cuts in June."

"Cathay said up to the end of February, its load factors, which measure how full flights are, had declined by around 50 per cent and year on year, the yield – how much money the airline makes on air tickets – “had also fallen significantly”.
Don't forget that they have cargo and with China factories opening up and the backlog with freight, CX/KA will benefit with using pax planes parked at the moment to use them as freight flights across its network. Any rebound will be good news for generating cashflow and with their strong balance sheet and gearing, they have an advantage over its competitors.
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Old Mar 14, 20, 7:02 am
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Originally Posted by Isochronous View Post
Martin Murray to be replaced as CFO - is he retiring, resigning or being pushed?
I heard he is being moved to Swire.
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