Where is the revenue Alan? (EK alliance)
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Some interesting replies to the original thread. Most are based on hearsay and opinion only, some could be a cut and paste from the QF social media department's recruitment brochure but can anyone answer the question from TM's post #12?
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Presumably the statutory accounts show exactly the leverage (financial) obtained through the EK alliance. Can someone tell me which revenue line it is in the accounts?
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Bula-
Bula, an associate entity is a 'minority' one, and one that is controlled is not a minority entity under AASB128? JQ Asia may be a 'minority' entity but strangely QF choose to report it in JQ Group, therefore they consider it effectively under the control of the group. The only 'minority' (thus associate entities) reported under AASB 128 are JQ Vietnam and JQ Japan. I suspect you know this already...
JQ Asia is only minority owned by the QANTAS group, as is all the other JQ "franchises".
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Domestic oncarriage from EK also would have been major compared to BA as mentioned (~100 flights/week compared to ?7).
EK pax bookings on QF domestically went through the roof compared with the BA arrangement, something like a whole year worth of BA bookings in one month from EK pax.
I don't have the info at hand but could probably find the quotes and the stats.
I cannot see any financial upside in the P&L...How much was it?
It was a declining operation financially (evidenced by the fact that NONE of the major Euro carriers that used to operate here do so any more) and was not going to be able to sustain itself in the long term, so recognising the change and a competitor with links to many more EU cities, they dropped their own service and got the benefit of oncarriage which steadied the ship before reducing profit to a point that it put the whole group into loss. I thought is was quite proactive and you can't use the line that they are giving away stuff to a competitor because they were giving AA all their US mid and east traffic until they started operating to DFW and JFK in their own right so the 'steady decline' argument doesn't work either.
Bottom line it was a business decision to ensure continued return before the previous situation declined too far. The result being that yes, the P&L don't appear to have changed but they would have had this move not been made.
Tim Clark has made it clear on multiple occasions that he expects QF to operate more aircraft through DXB such as the 787 and to take up some of the DXB-EUR flying and he doesn't tend to be someone who says something and doesn't mean it.
Last edited by AerialPerspective; 17th Apr 2017 at 01:44. Reason: sp
Yes, I've often wondered if I ever have a lazy $2K lying around it might be worth buying 10,000 shares in VAH (and for discolsure sake, I don't work for them nor am I associated with them in any way just in case ASIC is monitoring LOL) because if the 'inference' that has been drawn from that SMH article today about JT, they could go up if/when JB eventually departs and someone with a track record takes over.
AP, I've been doing the same. Looked into their books and from my humble perspective let's just say if we are approaching Australia's financial shakeup, VA can cover 1x their interest repayments. I can't see the major stake holders throwing good money after bad, especially with change in Etihad CEO and CFO causing them to look long at hard at their overseas investments.
Keg, fair enough. From my poor recollection I stand corrected. Though I have an itching sensation that the merging of the books occurred under GD when Airline Partners Australia were on the hunt.
TM, I get what you're saying. My point is they divested ownership to manage risk in the grand JQ Asia pivot by having other stake holders to help carry the burden.
Keg, fair enough. From my poor recollection I stand corrected. Though I have an itching sensation that the merging of the books occurred under GD when Airline Partners Australia were on the hunt.
TM, I get what you're saying. My point is they divested ownership to manage risk in the grand JQ Asia pivot by having other stake holders to help carry the burden.
Last edited by Bula; 17th Apr 2017 at 07:39.
Aerial Perspective: Under Australian Accounting Rules (AASB 8) there is NO requirement to report Route Profitability hence nothing Qantas reports is believable except for total profit and loss, nothing else makes sense and/or is provable! The Singapore alternative has been well and truly taken over by other carriers(BA for one) and 57% of premium QF passengers prefer to go through Asia and guess what they go through the ME. And Keg not once has Qantas reported Jetstar segments separately! No-one has broken the law here, the problem is the regulators (AISC) have never been diligent enough to protect Shareholder's Interests and the words "Misleading and deceptive" have been words to describe behaviour that lead to the Global Financial Crisis but never has it been taken seriously in Australia. Remember only one person went the jail after that debacle and what was worse the banks were asked to "help the US Government" in the recovery, talk about letting the wolves into the henhouse! Facts are QF's total revenue has stagnated around $15 billion for the last 9 years. Shareholder funds are 48% of what they were in 2008. Nothing has been transformed because the business needs a huge amount of capital to be spent on replacing aging fuel-hungry aircraft like the B744 and ultimately the A380. Remember QF ordered the B787, originally the board approved 8 B788s to replace the B767 and 6 for Jetstar and a total of 115 including 65 options in 2005 and mainline will finally get them in 2017. The A330s were "given" back to Qantas to be reconfigured at Qantas' expense and are getting long in the tooth as well. The final share buyback has been completed this month so it will be interesting to see the share price now. Remember QF has spent over $1.5 billion buying back their own shares when they desperately need new aircraft! As for the EK agreement in December 2014 EK decided to give QF 10c in every dollar for QF to carry their passengers with the words "Sue us" if you are not happy. IATA agreements typically allow 27c in the dollar for airlines that carry fellow IATA airline passengers. The original agreement between QF and EK was 18%. No wonder whenever questioned the reply is alway that this is "commercially sensitive".
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My point is they divested ownership to manage risk in the grand JQ Asia pivot by having other stake holders to help carry the burden.
Mr. Perspective,
they dropped their own service and got the benefit of oncarriage which steadied the ship
As Kerrie Packer said, you only get one Alan (Bond) or was it Joyce
As for share buy backs, they rarely if ever benefit the shareholder, but insiders with huge options written when Qantas was 'terminal' may have a substantial upside!
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Presumably the agreement is up for renewal at some point (or perhaps has some break clauses), so the decision makers at QF/EK must have some spreadsheets giving them numbers to justify wether to carry on. It would be interesting to see those numbers and how they are calculated.
From an Australian or European passengers point of view, many places in Australia/NZ connected to many places in Europe via one-stop is great.
I think where the arrangement sucks is the perceived inequity in that QF is only flying MEL-DXB, SYD-DXB once a day whilst EK has multiple frequencies and BNE, ADL, PER as well. If the flying DXB-Oz was split 50/50 then I suspect any negativity around the arrangement would be lessened.
From an Australian or European passengers point of view, many places in Australia/NZ connected to many places in Europe via one-stop is great.
I think where the arrangement sucks is the perceived inequity in that QF is only flying MEL-DXB, SYD-DXB once a day whilst EK has multiple frequencies and BNE, ADL, PER as well. If the flying DXB-Oz was split 50/50 then I suspect any negativity around the arrangement would be lessened.
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Interesting rumour doing the rounds amongst QF cabin crew.
Allegedly sourced from a HR insider , Glorious Leader is considering an early retirement sometime this year , allegedly coinciding with the next tranche of executive bonuses maturing. Figures of $100 million were expressed.
Rats leaving the ship?
Getting out before the big worldwide correction ?
No more money left to artificially prop up the share price through buy backs?
Interesting !
Allegedly sourced from a HR insider , Glorious Leader is considering an early retirement sometime this year , allegedly coinciding with the next tranche of executive bonuses maturing. Figures of $100 million were expressed.
Rats leaving the ship?
Getting out before the big worldwide correction ?
No more money left to artificially prop up the share price through buy backs?
Interesting !
I think where the arrangement sucks is the perceived inequity in that QF is only flying MEL-DXB, SYD-DXB once a day whilst EK has multiple frequencies and BNE, ADL, PER as well. If the flying DXB-Oz was split 50/50 then I suspect any negativity around the arrangement would be lessened.
From the same date EK has announced it will upgrade all its 3x daily MEL-DXB services to A380s instead of a mix of B777/A380 !!
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Presumably the agreement is up for renewal at some point (or perhaps has some break clauses), so the decision makers at QF/EK must have some spreadsheets giving them numbers to justify wether to carry on. It would be interesting to see those numbers and how they are calculated.
Remember in 2018 the Accounting rules change so that all the Leases come onto the balance sheet. Maybe Alan will leave before this adds another $3-4 billion to the Debt/Equity of the airline!
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busdriver007
Absolutely agree.
The treatment of lease exposure and the discretionary subjective inclusions has been an issue for an extended period providing substantial cover to actual gearing.
Have pondered for a considerable period whether lease transparency would finish the little fella.If you consider the composition of the QF board and many other airlines, the flying business is simply a shopfront for the back end of re-hypothecation of aircraft ownership. Many boards have little aviation experience, but substantial lease exposure, think Ward and Allco, Clifford and Barclays, Meaney and TPG...Other than that, Tshirt Todd and Freehills IR fleas that is it..
Remember the JQ Asia lease shell game?
One may find short interest in QAN and other airlines grows comes the new standard...
Absolutely agree.
The treatment of lease exposure and the discretionary subjective inclusions has been an issue for an extended period providing substantial cover to actual gearing.
Have pondered for a considerable period whether lease transparency would finish the little fella.If you consider the composition of the QF board and many other airlines, the flying business is simply a shopfront for the back end of re-hypothecation of aircraft ownership. Many boards have little aviation experience, but substantial lease exposure, think Ward and Allco, Clifford and Barclays, Meaney and TPG...Other than that, Tshirt Todd and Freehills IR fleas that is it..
Remember the JQ Asia lease shell game?
One may find short interest in QAN and other airlines grows comes the new standard...
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How much was spent on share buy backs to support the share price, which in turn supported the Long Term Incentive Plan (LTIP) bonus (page 33) for the CEO?
I'm sure that could have been better used to bolster the balance sheet for the lease accounting changes. Here is a nice summary: New leases standard requires virtually all leases to be capitalised on the balance sheet.
I'm sure the upcoming disclosures will make interesting reading & give a little more visibility into the internal accounting machinations.
I'm sure that could have been better used to bolster the balance sheet for the lease accounting changes. Here is a nice summary: New leases standard requires virtually all leases to be capitalised on the balance sheet.
I'm sure the upcoming disclosures will make interesting reading & give a little more visibility into the internal accounting machinations.
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Intellectually if one supposes share buy backs are a result of 'good times' for the shareholder, the EXPECTATION is better times ahead...
Qantas have given no forward earnings guidance, and the AUD$1.7 ish billion could be a fleet of 787
Encumbering a business with cheap debt to pop a share price target isn't long term strategic thinking but it sure makes a lot of money for those on the inside.
Have a read of what Forbes thinks of enriching insiders
https://www.forbes.com/sites/stevedenning/2015/06/09/how-share-buybacks-hurt-shareholders-and-society/#553be5e3496c
Qantas have given no forward earnings guidance, and the AUD$1.7 ish billion could be a fleet of 787
Encumbering a business with cheap debt to pop a share price target isn't long term strategic thinking but it sure makes a lot of money for those on the inside.
Have a read of what Forbes thinks of enriching insiders
https://www.forbes.com/sites/stevedenning/2015/06/09/how-share-buybacks-hurt-shareholders-and-society/#553be5e3496c
Last edited by Tuck Mach; 1st May 2017 at 01:58.
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Yes coaldemon, the entire industry uses the same veil..
The problem is that Qantas went from 'terminal' to transformed in three years...With Joyce stating categorically when the business was going to be profitable...With any more than empty suits at ASIC that statement would have been probed..
The problem is that Qantas went from 'terminal' to transformed in three years...With Joyce stating categorically when the business was going to be profitable...With any more than empty suits at ASIC that statement would have been probed..