To be constantly trying to trash talk Qantas’ business metrics while they are pumping out bumper profit after bumper profit in stark contrast to their only local competitor, makes it look like you don’t understand the business as well as you pretend to.
What is the source of the bumper profit?
How about a little balanced research?
If domestic market dominance is the source of the profit, does it necessarily mean the international business 'transformed'?
What precise metrics changed to deliver the transformation of Qantas International in FY15?
- Fuel
- Depreciation
These two measures combined in FY15 for the turn-around profit. One was dumb luck the other management and audit timed.
Now as the company witnesses higher fuel expense again as it did, prior to 'transformation' the international business chops $416 million in higher fuel expense.
That the domestic business is market dominant domestically is one thing but the QF International segment is exposed. Wonder why.
We can agree that Qantas need to make profit, but as others have pointed out the profit ought be sustainable. Selling terminals, head office and catering businesses, deferring aircraft expenditures all increase profit, at least in the short term. Paradoxically the legislative requirement also stipulates directors act in the long term interest of the company shareholders.
There is one further point that perhaps is lost. There is profit and there is profit.
A reduction in depreciation of $326 million isn't tangible, it is a book figure. That was the 'benefit' in FY15.
That fuel prices fell in FY15, meant less Operating Cost (fuel) amounting to $597 million.
As Little Napoleon correctly stated:
"Higher oil prices were a significant headwind and we moved quickly to recover as much of the fuel cost as we could," Mr Joyce said."That's easier to achieve in the domestic market than on long international routes where fuel is a much larger factor.
Thus the QF International business is exposed to fuel volatility. Having been lucky in FY15, Little Napoleon has admitted they are still very vulnerable (orders of magnitude) to fuel expense in their international segment.
He also went on to say that he
hopes that lower fuel prices will mean they will 'recover' that expense (transform) in 2H19.
Is that strategy or luck?