Originally Posted by
dragon man
Interesting, I wonder if the above helps explain staff travel ticket prices increasing about 20% and domestic freight prices to Darwin from Sydney by over 100% ( I suspect elsewhere as well, but I had one from 3 months ago to compare) . I think they are under the pump and are gouging where they can.
To understand how big an impact consider
rough this rule of thumb:
For a US$10 rise in the price of a barrel of WTI/Brent crude, an airline can expect an increase of between USD$100m to $300m in their fuel expense, industry wide give or take.
For an airline with a predominantly four engine international fleet, that is a substantial exposure. As as the 'turn around' Qantas profit in FY15 details, of the $975 million PBT, $597 million was reduced fuel expense from falling oil prices. (Most of the the remaining amount was depreciation change; Qantas wrote off the fleet)
- The order of magnitude fuel saving) was big on the way down and could whip saw expense on the way up.
- A weakening terms of trade (falling AUD) and a rising USD could accelerate a down turn.
- Yields are declining (consider rising fuel prices leading to taper off of demand)
Additionally with all the cheap debt sloshing around, Qantas like many other corporates used it to buy back shares. Such 'strategy' may sugar hit the company share price, but does not change fundamentals.That money could comfortably have covered a big chunk of the 787 purchase. Hopefully the term structure of the new debt is locked in as interest rates rise. Otherwise the tide may go out quicker than little Napoleon hoped. Seems self evident, given most of their competitors re-equipped years ago.
Qantas need a new fleet