Good and bad news about airlines hog the headlines
OVER the last two weeks, we have had so much news about airlines. They include the crash of the Ethiopian Airlines’ Boeing 737, Cathay Pacific announcing its results on its latest turnaround plan and Prime Minister Tun Dr Mahathir Mohamad’s announcement on the possible closure of Malaysia Airlines Bhd (MAS).
Cathay Pacific has announced its latest financial results for 2018, with the airline making a profit of 2.1% on a sales revenue of HK$111bil. In only its second year of a three-year turnaround plan, it has reversed its losses incurred in 2017. Net profit margins are thin, though, almost like the hypermarket retail business.
Meanwhile, back home, AirAsia X Bhd has been incurring losses for five consecutive quarters. AirAsia Group Bhd, however, turned in a profit for its full-year 2018 despite incurring a loss in the last quarter of 2018.
The airline business is notoriously tough, with high capital expenditure (capex) , volatile fuel prices and stiff competition driving down ticket prices. Airline operators need to drive down CASK – cost per available seat km – while at the same time driving up RASK –revenue per available seat km. Operating profit can only be achieved if RASK is higher than CASK. Simple as that.
...
The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.
Related Stocks
Comments