“It was Rated who turned this into a discussion about fleet metrics and buy backs about 10 or 12 posts above, not me.”
It is the fleet composition that is responsible for the declining EBIT and Operating Margin, something that the Stream lead neglected to mention. Delivering the HY19 results, Little Napoleon noted that the International business spent more on fuel, flying the longer distances.That the Operating margin declined to 2.4% is not at issue, what is challenged is why did it drop: Qantas spend more on fuel for their fleet than other airlines, as they lack sufficient widebody twin engine aircraft.
That the company is the more than the sum of the parts is intuitive.
On first principles this is the reason why corporates tend to look for synergies horizontally and vertically integrating things like supply chains.
The value of the Frequent Flyer business without an international flight redemption option is marginal. Qantas now know this. A frequent flyer business doesn't do so well converting points for groceries. The analysts recognise this too. . Little Napoleon previously stated that International had shrunk as far as it effectively could. (paraphrase) In part the reasoning may well be this reality: Cut anymore and a rush of redemption of points may follow.
Simply put, International needs domestic, domestic needs international. Were Qantas to choose to provide more clarity, there is likely a co-dependence between some Jetstar and Qantas intersegment sales.
The business as a whole is better than each individually.
Thus to focus on one segment at the expense of the other is disingenuous, although it is a well tested IR strategy.
After all, JQ International isn't even reported as a segment..Wonder why?
Yet IR hope that pilots forget all this
They and the new Manager of Pilot Performance, hope also that pilots have forgotten that the ‘terminal decline’ of Qantas International took everybody by surprise.
Terminal itself is an interesting word, suggestive there is only one outcome., Yet amazingly after a grounding and a big write down of fleet, Qantas was transformed. Coincident was the fear and uncertainty that this series of events engendered in staff and customers alike. IR like this as it is where they wedge people; drive fear and concessions follow.
That the staff signed up for pay freezes, as did their managers, is to be applauded. Qantas had its 'biggest loss' in FY14. One might posit though that the loss was on paper.That the business was 'transformed' a year later shades a rather important point: Whilst pay freezes were served by the staff they did not benefit from the huge amounts of share options with 'curious' vesting dates. The managers did.
Mr Oldmeadow made his fortune changing sides and has for decades directed IR at Qantas, he still does, although these days he remains behind the curtain. There are new faces.
That the Stream Lead sits opposite the pilots he once purported to represent, claiming that Qantas International is in trouble again (as the Operating Margin has declined) is designed, right on cue to drive another fear, uncertainty and doubt campaign.
Precisely on message, right on time it emerges, just as he is selected to lead an IR negotiation. Is this a surprise?
With leisure travel perks ranking with those of the most senior flight operations officer like the DFO, it is rather obvious that there is a new paymaster:IR.
Ethically, perhaps it is time an open and transparent dialogue about personal conflict and motivation is needed. That way the relative merit of any financial commentary offered by the new IR manager can be weighed against his discretionary personal benefit (bonus), which like his leisure travel category, will likely eclipse most, if not all the Flight Operations senior managers.
Last edited by Rated De; 4th Mar 2019 at 04:50.
Reason: horrible structure