Originally Posted by
T-Vasis
Rated D - what about the impact of capital cost or lease cost incurred to 'reequip' the Qantas fleet. This is a financial consideration that has not been discussed. It is easy to say cASK is lowered by more fuel-efficient aircraft, but to reequip also incurs considerable expense. Would Qantas not consider these factors in its decision to invest now or hold?
The original narrative that the fossil Clifford pushed was the QSA 1992 was the reason for the lack of re-equipment, it is a little disingenuous to say capital was hard to find when they spent over AUD $2.5 billion buying back their own shares, which is not surprising given the vesting dates of all the management options.
Arguably, better use can be made of capital than enriching the insiders.
Qantas have deferred fleet decisions preferring to engage in social discourse, identity politics and advance the agenda held by the CEO, running an efficient airline ranked nowhere near its list of priorities.
- The A330 is likely beyond a mid life airframe. What is to replace these?
- The A380 is likely at book value way in excess of the actual realised sale value (second hand)
- The 747 (with the exception) of the ER (6) aircraft are aged and have substantial CASK inefficiency.
- The oldest of the 737 fleet are in excess of 17 years.
That the committed to re-equipping the entire Jetstar fleet without battering an eye lid is perhaps indicative of their intent, costing AUD $9.5 billion.
Whether that business can deliver an IR nirvana and an adequate ROIC is debatable.
A 'transformed' Qantas has no doubt improved the CASK, a replacement of international fleet would improve their fuel included CASK by a considerable margin.
It ought improve operating margins.
That they do not do this perhaps has something to do with ideology rather than economics.