Management is the problem
Management is the real problem and that includes oversight of management by the QF Board. Alphaload is correct in focusing on the financial health of QF. He is what Roger Montgomery of Montgomery Investment Management said in an ABC interview on Wednesday:
"BRONWYN HERBERT: Roger Montgomery is the managing director of Montgomery Investment Management.
He questions Qantas' financial health.
ROGER MONTGOMERY: Well the company has increased the amount of equity that it's had employed.
So in other words it's gone to its shareholders and asked them for additional money and about $2.5 billion over the last 10 years.
They've also gone to the banks and they've asked for another three - almost $3 billion or $2.5 billion again in debt.
Now this is in addition to the money that they already had and the debt that they already had.
So they've massively increased - they've almost doubled the debt that they had. They've almost doubled the amount of money that's been contributed to the company by shareholders.
Despite that there's a very small increase in profit over the last 10 years and the recent announcement, or today's announcement, makes things even worse.
BRONWYN HERBERT: Does that raise the question that they would then seek out more funds from potential investors?
ROGER MONTGOMERY: If they keep going the way they've been going - with the amount of planes that they've got, the amount of staff that they've got, the routes that they've got and the prices that they've got - then yes they'll have to keep increasing the amount of money that's contributed to the business.
So it's very altruistic shareholders and lenders to keep this business afloat.
BRONWYN HERBERT: Qantas' boss Alan Joyce says it's still too early to estimate the total impact of all of these significant events on financial year results."
Safe Flying