Hong Kong Airlines Soar

Buoyed by a hopefully stronger yuan as well as positive reports from the Singapore Airshow on Chinese airline strength, Hong Kong Listed Airlines soared.  Short-term gains look impressive until it’s noted how far they’ve fallen from their 52-week highs.  Cathay Pacific, with the highest p/e thanks to some of the best traffic growth, had less of a spurt thanks to its Hong Kong location and currency which has felt downdrafts from currencies in Australia, S. Africa,  Canada, Europe, New Zealand, and the UK.

Airlines Hong Kong

Whether these gains are warranted remains to be seen.  All four have felt the economic softness in their cargo business.  All four have committed to airline purchases in dollars, which makes a strong, stable yuan critical for China Southern, China Eastern and Air China. These four airlines are highly leveraged, relying heavily on short-term debt with CA/CL’S well below 1. Their saving grace has been low fuel costs along with government support.

 

Airlines Current Ratios

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s