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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: allen menglin chen who wrote (1144)	1/22/1998 3:14:00 AM
From: Tom	Read Replies (1) \| Respond to of 2951

Allen: I worked with the airline industry for several years. My first thought is of operating margins. China's air carriers will have to compete regionally in order to succeed, long-term. The competition is formidable...SIA, SilkAir, JAL, then Lufthansa, SwissAir and the American carriers. What have their margins looked like in the past? If the margins were narrow, were they at least constant? For example: Cathay Pacific's operating margin has been down by roundly 3% per year since 1987. Though they've improved their competitiveness over the past two years, there has been a detectable trend. Why? Also, does their balance sheet indicate they are equipped to meet the competition? Just how viable are they? There are many other factors to be sure, but these are the first that come to mind. Last I heard, CNAC had an ex-aviation director on its payroll. So, there is the guanxi to contend with. I see also where the opening of Chek Lap Kok has been pushed back again, and the current HK facility is already operating at capacity. The airline stocks, whatever the country, are too tough for me. Best of luck to you, should you decide to pursue them further. Tom