Originally Posted by
Tuner 2
RD,
What your analysis and oft-repeated slogan of Qantas need a new fleet completely ignores is that new aircraft need to be paid for.and new jets are not exactly cheap Much of the current fleet is paid for and unencumbered. It is true that a new fleet would have less fuel burn, but the real question is would a new fleet have a higher operating margin and make a sufficient ROIC once you allow for the purchase price using forecast revenue over the 20 odd year life cycle of the aircraft taking into account revenue predictions in an ever-increasing competitive market? The total after tax profit reported last week is about enough to buy 2 787s.
As Lezzeno stated, share buy backs are preferred use of net cash flow.
Share buy backs benefit certain insiders, usually those with a lot of stock in the company. An amazing coincidence that management have been rewarded millions of share options
Isn't Little Napoleon a substantial shareholder?
With over $2.3 billion spent on concentrating the EPS, via share buybacks (yet another KPI management performance metric, amazing coincidence) could that capital have been better spent reducing the fuel included CASK and preserving the Net Operating Margin and be put to purchasing a new fleet?
Then again the Stream Lead would have to selectively chose some other metric to convince his 'colleagues' that the business is in trouble again...