That an airline generates operating revenue from flying RTK from A to B ought to be self-evident.Doing so
efficiently ought to mean that the cost to the shareholder and indeed the environment is minimised. After all Qantas have made a big noise about bio-fuel purchases, removing plastic cutlery and optimised flight plans. The total “savings” in fuel consumption, expense and CO2 the cost of a few weeks’ transits across the Pacific.The rest of the year Qantas burn more fuel per seat, per passenger than their competitors. Fortunately, fuel is, at the present time, relatively cheap. However, all airlines benefit from cheap fuel. Such that the question ought to be asked whether the fuel spend per passenger RPK is higher or lower than competitors: It is substantially higher. As is the output of CO2, fortunately for the likes of Qantas there is no price on excess emission. As the ICCT reported Qantas spend 64% more generating their RPK across the Pacific than their competitors. That is some “transformation”
https://www.abc.net.au/news/2018-01-...-study/9333616
The original statements made by the long retired and almost completely forgotten relic, Leigh Clifford claimed that the QSA 1992 made re-equipment hard. Around AUD$2.5 billion and counting was spent buying back shares. Strange that no better use for capital could be found than enriching insiders like CEO and top 20 shareholder, Alan Joseph Joyce. It is the fleet metrics that start to tell a story of waste. This is the point UBS referred to and the fund manager, Mr Montgomery highlighted. Just to keep the fleet age where it is (and provision for increasing maintenance and ageing aircraft issues) requires a capital expenditure of AUD $1.7 billion per year. Reducing the fleet age back to what the taxpayer gifted them at privatisation will require a very large capital expenditure.
In addition to benefitting from cheaper fuel, cash flows have also been boosted by a strategy that has allowed the fleet to age. The most expensive part of running an airline is replacing old cheap planes with newer and more expensive models. Airlines cannot escape this capital expenditure lest passengers jump to competing airlines with fancier entertainment offerings and more comfortable seats, bars and beds. You can call it a disciplined approach to capital spending or you could say the board might prefer to see the share price go up now, maximise share price-related incentives for current management and leave the reality of replacing planes to the next guy.
https://www.livewiremarkets.com/wire...ext-for-qantas
So:
- · A mid-late life A330 fleet
- · A to be retired B747 fleet
- · A B737 fleet where the oldest aircraft are 17-18 years old.
- · An A380 fleet of debatable book value.
Of course more expenditure on fleet for JQ could be undertaken, although the revenue generated for a segment as large as the parent indicates that the business is well over scale: ASK flown versus revenue generated is horrible! Little Napoleon claimed he could spend more on Frequent Flyer instead of fleet. Hard to imagine what tangible value a Frequent Flyer business has without an airline.
How big is the required CAP EX? $15-$20 billion? How long does it take to scope, order and find a slot then take delivery of a new fleet?
Does the company issue new equity or continue to gear the company?
Are there production slots?
That Little Napoleon spend his time with social discourse and social engineering while the fleet over which he has presided for 11 years
continues to burn more hydrocarbon fuel than necessary, emitting more CO2 than competitors while costing the shareholders more per flight than the competitors is hardly transformative. It is at best negligent.
Someone is going to have to spend the money, Qantas need a fuel efficient and lower emitting fleet.