AIRLINE STOCKS -- NO COMPARISON  

During late 1988, when the Canadian government and market brokers were flogging stock in Air Canada, I wrote a column pointing out that while Air Canada was making $46 million with their fleet of 109 planes and Canadian Airlines around $29 million from their 78 aircraft, Cathay Pacific Airways was making $500 million from only 25 aircraft ... 50 times more profit per plane than either major Canadian airline carrier. It was also more profit than all the American airlines combined that year!

At the time (I had just spent four days at the Boeing plant in Renton, Washington watching the first Cathay Boeing 747-400 series being built). "In investing in airline stocks, patriotism may be financially fatal", I wrote. Air Canada stock today is running around $4, down from the $12 price offered at that time. Meanwhile back in Hong Kong, Cathay Pacific Airways stock jumped another 70 cents to HK $12.60 in mid-1992 as the Hongkong and Shanghai Banking Corp. sold -- for $438 million -- their last 10 percent of Cathay shares to the China National Aviation Corp and the China Travel Service of Hong Kong (five percent each). Swire Pacific Ltd. controls Cathay through 51 percent holdings in this profitable publicly-traded company. The Hongkong and Shanghai Bank was an early investor in the original Air Cathay line, founded after World War II by Texan, Roy Farrell and Australian, Sid De Kantzow. In 1983, Hongkong Bank owned 30 percent of the shares. The airline, according to respected Asian journalist Rodney Nutt, now ranks alongside Japan Air Lines and KLM. The International Air Transport Association lists Cathay among the top 10 world airlines. Twenty years ago it was but a struggling regional carrier.

Recent agreements between Cathay Pacific and Russia and China will allow the airline to fly over their countries, resulting in huge savings in time and fuel and making Cathay even more competitive on such global routes. At the moment CP's high flying technology has not quite reached the point were Cathay Pacific could offer a 14.5 hour nonstop flight from Hong Kong to New York, or vice-versa, which would shave perhaps six hours off the current flying time. But, when that small improvement becomes available, watch them use it! Flying times from the Orient to Europe would also drop about one hour if Cathay flew over Russia rather than via the Middle East.

According to Rodney Nutt, Sun Hang Kai Securities are estimating Cathay Pacific profits to run to US$450 million both in 1992 and 1993 and to jump to $620 million in 1994. By then, they likely could buy Air Canada with one year's earnings. So much for our national carrier. When a publicly-traded airline makes $20 million per plane, per year, and our government airline makes but half a million it's time to put your nationalistic feelings aside and use our heads. Cathay Pacific continues to lead world airlines in innovation. Their latest: Flight check-in by fax for First, Business Class or Marco Polo Club members in Hong Kong. Cathay now has ten 747-400s in the air with another ten scheduled for 1992 to 1995 delivery dates.

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