Originally Posted by
Derfred
So my question stands... What are Bain going to do to change what JB failed to do?
Just two changes that have come about will have a disproportionately large impact on the bottomline;
- Shuttering international, and
- Resolving the unsecured notes.
International had long been a drag on the business. It had basically not returned anything by way of profit and had a fairly large cost line associated with it (half of the aircraft lease costs incurred by the business were from international). Just taking international out of the frame should put about $50 million net back onto the bottomline.
The coupon payments on the unsecured notes were around $160 million a year (that was about one quarter of the business's total annual finance costs). Taking that cost line off the books is a huge benefit. Of course, the corollary is to note how damaging last year's notes issues were to not just the balance sheet but also the P&L.
Originally Posted by
Derfred
Change the EBA’s? That remains to be seen (or voted upon).
The EBAs, while doubtlessly important, are not big financial levers when compared to the far more basic (and brutal) labour cost lever, headcount. Removing one third of the workforce (perhaps more, I am acutely aware of the repeated use of the caveat phrase 'when the market recovers' whenever headcount is mentioned) is the big kicker to the bottomline.
What Bain will be looking for in the EBAs is flexibility that supports productivity. I don't know enough about the Virgin EBAs to comment on how they stand up in that regard. What I did note, from memory, was that the Virgin EBAs tended to have lower annual wages escalators than Qantas - don't expect that to change.