Jetstar Asia for sale
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Jetstar Asia for sale
SINGAPORE, July 14 (Reuters) - Indonesia's Lion Air Group is in talks with Qantas Airways Ltd about buying the Australian carrier's stake in the Singapore-based affiliate of its budget airline Jetstar, a person familiar with the matter told Reuters.
Remember, this is the 49% that Qantas owns. Not the 51% that Qantas "owns" by proxy through Singaporean Dennis Choo.
I wonder how much of a loss that would be and if it would then add to the awful results due out on 28 August?
What's an airline worth if it has never made a profit unless you include incentives and subsidies as is the case with Jetstar Asia. It lost 1.6 million in 2013 financial year and has never ever made money on the capital invested. It's all beginning to unwind. Jetstar Asia financial report is available but most Journos choose not to look for it. No Jetstar HK and no Jetstar Asia. Great strategy!
What do you mean "Loss"
That wouldn't be a loss, it would be a "writedown" as a result of "restructuring"
needed to "liquidate" some "Capital" in order to meet "challenges" of the changing "Global Aviation environment" that will make Qantas "stronger".
Back slaps and bonuses all round.
That wouldn't be a loss, it would be a "writedown" as a result of "restructuring"
needed to "liquidate" some "Capital" in order to meet "challenges" of the changing "Global Aviation environment" that will make Qantas "stronger".
Back slaps and bonuses all round.
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Is that the section of Qantas that has all those A320s sitting around France?
More: Jetstar Hong Kong
More: Airbus A320-232 More: Toulouse - Blagnac (TLS / LFBO)
More: France, October 25, 2013
Airliners.net
No, those aircraft are for the wildly profitable Hong Kong franchise.
Meanwhile, things in Japan are just "Peachy" (intended)
More: Jetstar Japan
More: Airbus A320-232 More: In Flight
More: Japan, December 19, 2013
Back slaps and bonuses all round.
1) Giving up probably shows just how bad the finances are
2) Wirthless (or someone equally as inexperienced and shifty) will be working on draft press releases something along the lines of 'After a successful launch and decade long history of assisting more than 120m passengers travel the globe, it has been decided the time is ripe to maximise the Group's Return on Investment by selling its share in Jetstar xxxx (insert losing venture name here) to xxxxx of (Chinese/Sin govt?) and continue to focus on our core business (losing money?). Obviously this success did not come overnight and the amaaaazzzzing business owes much to xxx, xxxx, xxxx and xxxx without whose help none of this would be possible'
Of course a successful sale means not a write down, but a profit (especially of such a successful business) and obviously more bonuses.
However they extract their idiot selves (and the long suffering staff with them) it would be at least something positive. I am deeply concerned about how little is left and what can be done with it to fix the 15 year history of total mismanagement, but here's hoping.
After 5 years of 'they know what hey are doing', 5 years of 'are they really that stupid?' And five years of 'these idiots should be shot!!!' It is very nice to finally see a rumour of a sensible decision. I think it is the first positive thing I have heard of QF doing in about that time.... Is it too late?? What has made blind Freddy finally see?
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Didn't Joyce say the airlines future is in Asia?
What about exploiting Asian markets & the rivers of gold?
I'm hoping the Insto's have finally woken up to these clowns.
Rumour has it, there was already an offer for the QF Chairman's position which has been politely declined. The search continues.
MC
What about exploiting Asian markets & the rivers of gold?
I'm hoping the Insto's have finally woken up to these clowns.
Rumour has it, there was already an offer for the QF Chairman's position which has been politely declined. The search continues.
MC
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How Qantas can turn it around
Date January 16, 2014 Tony Webber
Every man and his dog have a view about the problems facing Qantas but little has been said about the strategies that can turn the business around.
The first ten things that I would do are as follows.
Fresh Eyes
The business needs fresh sets of eyes on both the Board and Executive Committee. Airline finances are so complex and pivotal to earnings that the top jobs should go to persons with a strong finance background and deep insights into aviation strategy.
I would have Peter Gregg or Colin Storrie as CEO’s. I’ve worked for both and they are the smartest aviation financiers and strategists going around. I suspect the horse has bolted for both.
Market Share Target
Qantas should bite the bullet and admit that its 65% market share target is wrong.
Removing the market share target will free-up the airline’s capacity decisions and enable it to better align its capacity with the economic cycle.
Jet Fuel Prices
In the 80’s and 90’s the oil and jet fuel prices cycled around a fixed mean of US$20. In this world capacity grew profitably at 5 per cent per annum.
Since early 2000, jet fuel prices have cycled around an upward trend of 14 per cent per annum yet airlines have continued to grow at 5 per cent.
Most airlines worldwide have focussed their capacity decisions on expectations about demand but they have ‘dropped the ball’ in relation to how capacity responds to surges in cost. Qantas can lead the way in adopting processes that will enable it to better adjust capacity to both costs and demand.
International Business
The airline should give up on the notion that the international business will return to profitability in private hands. The only thing that international airlines are consistently good at is destroying shareholder value.
Outside of nationalising the international business which is unlikely to happen, Qantas should replicate Virgin Australia by creating a virtual international network. This involves Qantas selling onto international services operated by carriers that have an equivalent if not superior product.
Jetstar Domestic
Jetstar domestic capacity expansion is hurting the mainline carrier. The Qantas group needs significantly greater analytical rigour in understanding the optimal mix of Qantas and Jetstar. There is a place for Jetstar in the Qantas group but this shouldn’t be at the expense of Qantas mainline.
Jetstar in Asia
This venture has been a failure for the Group. Jetstar Japan and Hong Kong have an enormous amount of capital tied up in aircraft that are sitting idle, while Jetstar Asia and Jetstar Pacific haven’t made sufficient returns.
While underlying demand for air travel is growing quickly in Asia the competition is too aggressive. The airline should re-focus its energy on the domestic business and minimise the Asian distraction.
Ageing Demographic
Qantas’ core demographic is an older business-purpose traveller that has ‘grown-up’ travelling with Qantas. This segment of the market is slowly dying.
In its place a younger, hip, tech-savvy, convenience-driven demographic is emerging that has grown into an aviation sector with a wider variety of choice. This new demographic is not a natural fit to the current Qantas product, which must change.
Yield Management
A 2 per cent improvement in revenue can earn the company $300m per annum. One of the ways to achieve this involves de-complicating and improving yield management systems.
Current systems have resulted in planes that are flying full but at poor yields. One of the reasons for this is that the forecasts on which the systems rely are not tied to the economic environment and competitor capacity decisions.
Integrated Strategies
Yield management won’t work effectively if there is excess capacity. The network planners and yield management analysts must work closely to ensure capacity decisions meet yield targets. Qantas should be targeting yield growth of 2 to 3 per percent per annum.
The analysts working on yield management need to be the ‘rock stars’ of Qantas. They must be highly analytical and in touch with how external economic forces and competitors influence the demand and supply dynamics. This needs to be mixed with experienced aviation people.
Workforce
The Qantas workforce is heavily disengaged. The bad news cycles every 3 to 6 months has weighed heavily on their productivity. When your workforce is not in a good headspace the result is a lack of information sharing, job-rivals ‘white-anting’ each other, and people looking for other jobs while trying to do their own.
The problem with Qantas’ people strategies is that every earnings issue the airline encounters results in a headcount reduction. If the fuel price goes up, if yields are weak, or if the company wants to improve productivity, the headcount must fall.
The company has been far too aggressive on the headcount lever.
Returning the company to its former glory is not going to be easy and will take some time. But it’s possible.
Tony Webber was Qantas Group chief economist between 2004 and 2011. He is now managing director of Webber Quantitative Consulting and Associate Professor at the University of Sydney Business School, and contributed this article to BusinessDay
Date January 16, 2014 Tony Webber
Every man and his dog have a view about the problems facing Qantas but little has been said about the strategies that can turn the business around.
The first ten things that I would do are as follows.
Fresh Eyes
The business needs fresh sets of eyes on both the Board and Executive Committee. Airline finances are so complex and pivotal to earnings that the top jobs should go to persons with a strong finance background and deep insights into aviation strategy.
I would have Peter Gregg or Colin Storrie as CEO’s. I’ve worked for both and they are the smartest aviation financiers and strategists going around. I suspect the horse has bolted for both.
Market Share Target
Qantas should bite the bullet and admit that its 65% market share target is wrong.
Removing the market share target will free-up the airline’s capacity decisions and enable it to better align its capacity with the economic cycle.
Jet Fuel Prices
In the 80’s and 90’s the oil and jet fuel prices cycled around a fixed mean of US$20. In this world capacity grew profitably at 5 per cent per annum.
Since early 2000, jet fuel prices have cycled around an upward trend of 14 per cent per annum yet airlines have continued to grow at 5 per cent.
Most airlines worldwide have focussed their capacity decisions on expectations about demand but they have ‘dropped the ball’ in relation to how capacity responds to surges in cost. Qantas can lead the way in adopting processes that will enable it to better adjust capacity to both costs and demand.
International Business
The airline should give up on the notion that the international business will return to profitability in private hands. The only thing that international airlines are consistently good at is destroying shareholder value.
Outside of nationalising the international business which is unlikely to happen, Qantas should replicate Virgin Australia by creating a virtual international network. This involves Qantas selling onto international services operated by carriers that have an equivalent if not superior product.
Jetstar Domestic
Jetstar domestic capacity expansion is hurting the mainline carrier. The Qantas group needs significantly greater analytical rigour in understanding the optimal mix of Qantas and Jetstar. There is a place for Jetstar in the Qantas group but this shouldn’t be at the expense of Qantas mainline.
Jetstar in Asia
This venture has been a failure for the Group. Jetstar Japan and Hong Kong have an enormous amount of capital tied up in aircraft that are sitting idle, while Jetstar Asia and Jetstar Pacific haven’t made sufficient returns.
While underlying demand for air travel is growing quickly in Asia the competition is too aggressive. The airline should re-focus its energy on the domestic business and minimise the Asian distraction.
Ageing Demographic
Qantas’ core demographic is an older business-purpose traveller that has ‘grown-up’ travelling with Qantas. This segment of the market is slowly dying.
In its place a younger, hip, tech-savvy, convenience-driven demographic is emerging that has grown into an aviation sector with a wider variety of choice. This new demographic is not a natural fit to the current Qantas product, which must change.
Yield Management
A 2 per cent improvement in revenue can earn the company $300m per annum. One of the ways to achieve this involves de-complicating and improving yield management systems.
Current systems have resulted in planes that are flying full but at poor yields. One of the reasons for this is that the forecasts on which the systems rely are not tied to the economic environment and competitor capacity decisions.
Integrated Strategies
Yield management won’t work effectively if there is excess capacity. The network planners and yield management analysts must work closely to ensure capacity decisions meet yield targets. Qantas should be targeting yield growth of 2 to 3 per percent per annum.
The analysts working on yield management need to be the ‘rock stars’ of Qantas. They must be highly analytical and in touch with how external economic forces and competitors influence the demand and supply dynamics. This needs to be mixed with experienced aviation people.
Workforce
The Qantas workforce is heavily disengaged. The bad news cycles every 3 to 6 months has weighed heavily on their productivity. When your workforce is not in a good headspace the result is a lack of information sharing, job-rivals ‘white-anting’ each other, and people looking for other jobs while trying to do their own.
The problem with Qantas’ people strategies is that every earnings issue the airline encounters results in a headcount reduction. If the fuel price goes up, if yields are weak, or if the company wants to improve productivity, the headcount must fall.
The company has been far too aggressive on the headcount lever.
Returning the company to its former glory is not going to be easy and will take some time. But it’s possible.
Tony Webber was Qantas Group chief economist between 2004 and 2011. He is now managing director of Webber Quantitative Consulting and Associate Professor at the University of Sydney Business School, and contributed this article to BusinessDay
rebuttal
ARMCHAIR EXPERTS IN THE COCKPIT
24 January 2014
It’s been said that for every complex problem there is an answer that is clear, simple, and wrong.
There is a never a shortage of armchair experts with theories on how to run Qantas, and the cabin has been especially crowded recently.
Over the past five years, Qantas has been navigating through a complex and cutthroat environment. Oil prices have reached record levels. The world economy has been subdued. We’ve seen Asian and Middle Eastern carriers, who can do things a lot cheaper, expand aggressively into our markets.
We’ve plotted a course through these challenges and we’ve adjusted it as circumstances shifted. But the reality is that the airline our passengers experience is one of the best in the world and we have a strategy to keep it that way.
For many on the sidelines, it seems few businesses are easier to run than the national carrier.
They include Tony Webber, a former Qantas finance employee, who was retrenched several years ago. His comments on the aviation world come from a one dimensional view of supply and demand that ignore how a multifaceted market actually works.
One of his recommendations during his time at Qantas was to significantly shrink our regional operations so prices and profits would rise. Apart from ignoring our role in the community such a move would also have rolled out the red carpet for our competitors to fill the space.
Commentators are, of course, welcome to their views. But their more serious claims cannot go unchallenged, because they are based on a fundamental misunderstanding of the aviation market and Qantas itself.
The first claim is that Qantas is a ‘lazy’ company seeking a government handout, to be categorised with Holden.
This could not be further from the truth.
The Qantas Group has reduced unit costs by almost 20 per cent over five years, renewed its fleet with 130 new aircraft, innovated with technology, and lifted customer satisfaction to record levels.
Few Australian business have done more in the post-GFC period to reform in the face of permanent, structural economic change.
We acknowledge that there is more work to do. In December, we announced the acceleration of this program to deliver a further $2 billion of savings over three years.
We are not asking for government subsidy. We simply argue that action is needed to level what all sides of politics agree is a distorted playing field.
The second myth is that Qantas and Jetstar should stop targeting a combined, profit-maximising 65 per cent share of the Australian domestic market.
The 65 per cent strategy is about giving our customers a market-leading choice of destinations, frequencies and seats at the times they want to travel. That scale is part of the premium service we offer and the fares we sell, and it reflects the investment we have made over many years in our regional operations and in building a national low-fares network with Jetstar. It is prized by our customers and it is a very real competitive advantage that allows us to maximise earnings in even the toughest market conditions.
Stepping back from the 65 per cent would effectively be waving the white flag, not to mention abandoning our role in regional Australia and betraying the loyalty of our frequent flyers. Imagine someone saying Woolworths should start closing stores in response to the threat from Coles. Anyone who advocates this kind of approach simply does not understand the way business works. We plan to keep improving and strengthening our competitive advantages, not walking away from them.
The third myth is that Jetstar has somehow ‘hurt’ Qantas.
Jetstar Australia is a business that has been profitable in every year of its existence, opening up low cost air travel for Australians and creating a new market alongside Qantas as part of a uniquely successful two-brand strategy. We coordinate which brand flies which route to best serve our customers and to maximise the return for the Qantas Group. If Qantas hadn’t created Jetstar, someone else would have – and Qantas would have been the loser.
Many Australian businesses would love to have Jetstar’s profile in Asia. Our total equity investment in these businesses has been less than the outlay on a single A380. That’s far less than the inflated figures tossed around by those who would rather scapegoat Jetstar – the same people who seize on any setback experienced by these start-up ventures as the ‘real issue’ facing Qantas.
In truth, the value of these airlines is already significantly more than their foundation capital, and it will increase as the Asian middle class drives nearly half the world’s air traffic growth over the next 20 years. It takes breathtaking small-mindedness to dismiss this growth as an ‘Asian distraction’.
The final myth is about Qantas employees being disengaged.
No-one is more passionate about Qantas than its people. Engagement levels are up across the business and at record levels in some areas. The transformation of Qantas is being led by employees, and they are the reason for the record customer satisfaction scores we’re earning and the awards we’re winning.
But it is true that change is never easy. Our people have seen the aviation market change first hand, and to them, it is barely recognisable from ten or even five years ago.
Aviation is a difficult business and the challenges facing Qantas are anything but straightforward. Some of them have been around for decades. We have a strategy to build a stronger Qantas Group for the long term – but the reality is more complex than the armchair experts sitting next to you will let on.
Gareth Evans
Chief Financial Officer, Qantas Group
24 January 2014
It’s been said that for every complex problem there is an answer that is clear, simple, and wrong.
There is a never a shortage of armchair experts with theories on how to run Qantas, and the cabin has been especially crowded recently.
Over the past five years, Qantas has been navigating through a complex and cutthroat environment. Oil prices have reached record levels. The world economy has been subdued. We’ve seen Asian and Middle Eastern carriers, who can do things a lot cheaper, expand aggressively into our markets.
We’ve plotted a course through these challenges and we’ve adjusted it as circumstances shifted. But the reality is that the airline our passengers experience is one of the best in the world and we have a strategy to keep it that way.
For many on the sidelines, it seems few businesses are easier to run than the national carrier.
They include Tony Webber, a former Qantas finance employee, who was retrenched several years ago. His comments on the aviation world come from a one dimensional view of supply and demand that ignore how a multifaceted market actually works.
One of his recommendations during his time at Qantas was to significantly shrink our regional operations so prices and profits would rise. Apart from ignoring our role in the community such a move would also have rolled out the red carpet for our competitors to fill the space.
Commentators are, of course, welcome to their views. But their more serious claims cannot go unchallenged, because they are based on a fundamental misunderstanding of the aviation market and Qantas itself.
The first claim is that Qantas is a ‘lazy’ company seeking a government handout, to be categorised with Holden.
This could not be further from the truth.
The Qantas Group has reduced unit costs by almost 20 per cent over five years, renewed its fleet with 130 new aircraft, innovated with technology, and lifted customer satisfaction to record levels.
Few Australian business have done more in the post-GFC period to reform in the face of permanent, structural economic change.
We acknowledge that there is more work to do. In December, we announced the acceleration of this program to deliver a further $2 billion of savings over three years.
We are not asking for government subsidy. We simply argue that action is needed to level what all sides of politics agree is a distorted playing field.
The second myth is that Qantas and Jetstar should stop targeting a combined, profit-maximising 65 per cent share of the Australian domestic market.
The 65 per cent strategy is about giving our customers a market-leading choice of destinations, frequencies and seats at the times they want to travel. That scale is part of the premium service we offer and the fares we sell, and it reflects the investment we have made over many years in our regional operations and in building a national low-fares network with Jetstar. It is prized by our customers and it is a very real competitive advantage that allows us to maximise earnings in even the toughest market conditions.
Stepping back from the 65 per cent would effectively be waving the white flag, not to mention abandoning our role in regional Australia and betraying the loyalty of our frequent flyers. Imagine someone saying Woolworths should start closing stores in response to the threat from Coles. Anyone who advocates this kind of approach simply does not understand the way business works. We plan to keep improving and strengthening our competitive advantages, not walking away from them.
The third myth is that Jetstar has somehow ‘hurt’ Qantas.
Jetstar Australia is a business that has been profitable in every year of its existence, opening up low cost air travel for Australians and creating a new market alongside Qantas as part of a uniquely successful two-brand strategy. We coordinate which brand flies which route to best serve our customers and to maximise the return for the Qantas Group. If Qantas hadn’t created Jetstar, someone else would have – and Qantas would have been the loser.
Many Australian businesses would love to have Jetstar’s profile in Asia. Our total equity investment in these businesses has been less than the outlay on a single A380. That’s far less than the inflated figures tossed around by those who would rather scapegoat Jetstar – the same people who seize on any setback experienced by these start-up ventures as the ‘real issue’ facing Qantas.
In truth, the value of these airlines is already significantly more than their foundation capital, and it will increase as the Asian middle class drives nearly half the world’s air traffic growth over the next 20 years. It takes breathtaking small-mindedness to dismiss this growth as an ‘Asian distraction’.
The final myth is about Qantas employees being disengaged.
No-one is more passionate about Qantas than its people. Engagement levels are up across the business and at record levels in some areas. The transformation of Qantas is being led by employees, and they are the reason for the record customer satisfaction scores we’re earning and the awards we’re winning.
But it is true that change is never easy. Our people have seen the aviation market change first hand, and to them, it is barely recognisable from ten or even five years ago.
Aviation is a difficult business and the challenges facing Qantas are anything but straightforward. Some of them have been around for decades. We have a strategy to build a stronger Qantas Group for the long term – but the reality is more complex than the armchair experts sitting next to you will let on.
Gareth Evans
Chief Financial Officer, Qantas Group
- 65% Line in the sand? GONE
- Jetstar Asia? GOING
Never fight a land war in asia
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As much as I despise Darth, when he, and Jimmy Bow tie before him were running QF there was a measure of stability in regards to destinations, strategy, direction and planning. Joyce has delivered on nothing. Ventures come and go, announcements are made and then reversed, very few strategies that are announced come with a documented framework or planning stats and figures. He jumps about more than a honeymoon bride with bipolar.
The only thing Jetstar Asia has produced is some nice earnings and bonuses for executive management! As for the shareholders, the employees and the group in general there has been nothing but doubt, uncertainty and even laughter as Joyce achieves jack****!
Clowns, muppets and imbeciles
The only thing Jetstar Asia has produced is some nice earnings and bonuses for executive management! As for the shareholders, the employees and the group in general there has been nothing but doubt, uncertainty and even laughter as Joyce achieves jack****!
Clowns, muppets and imbeciles
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Very few strategies that are announced come with a documented framework or planning stats and figures
An aircraft went U/S, towed to the hangar & sat there with no engineers available to fix it.
They had to fly 12 engineers to Melbourne from interstate to cover the work.
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Told you so. Lion Air or someone else in Asia will buy it for a pittance.
I bet he wishes he'd had accepted the offer.
Add that to his list of failures.
Thread Starter
Same goes for one of their heavy metal delayed extensively this morning to LA..
Falling apart down at the red rat MEL HQ by the sounds of it..
Falling apart down at the red rat MEL HQ by the sounds of it..