There is cognitive dissonance at work here. This does not add up.
Does Chairman Clifford distinguish between "return on Capital" and "return on funds employed". Which is it? There is, alas, again no explanation of what the number actually is. This in itself has always been highly suspicious. Just what do the major shareholders want? 200% per annum? The risk adjusted premium over the long term bond rate?
1. Jetstar is supposedly making a profit by selling tea and muffins. That isn't going to produce an "acceptable return" ever.
2. We hear rumours that QF mainline has been loaded up to the eyeballs with Jetstar costs. We also know that internal cost allocation practices can be used to make any part of any company profitable by the stroke of a pen.
The answer to that is to perform contribution analysis which looks at gross profit before overheads are allocated. If Chairman Clifford was able to produce this, and show that each section of the business was carrying its fair share of the load, this would make his argument stronger.
3. Qantas invested in 20(?) A 380 aircraft for its international division. Presumably this investment was made with the full knowledge of fuel price inflation and maintenance costs? You cannot tell me that this investment was predicated on driving the engineering, cabin crew and pilot workforce into penury?
4. If a company is in such a parlous state that merely maintaining the purchasing power of its employees wages (which is all that is apparently sought) is beyond it, then God help the business and its shareholders.
5. Finally, what have the major shareholders been briefed on that is not common knowledge among small shareholders?
I'm sorry, but this just doesn't satisfy.
If the company decides it needs to outsource overseas, then I think that the travelling public had better start pushing for an open skies policy.
To put it another way; Qantas has charged Australians a premium to fly on an Australian owned and operated airline for some Thirty plus years. That premium was to do with the fact that Qantas was perceived to be operated by Pilots, cabin crew and engineers that had superior training and experience to the rest.
If that is not the case, and Chairman Clifford indicates that it isn't to be in future, then the public has every right to demand a more competitive market.
To put it another way; The Qantas brand was built by demonstrably superior crew and engineering performance. It was not built by management, in fact it would appear that QF's performance these days is maintained despite managements attempts to destroy the business
To put it yet another way; exactly why is the Board struggling so mightily in the seemingly impossible (according to them) task of bailing out the Titanic?
This situation is starting to smell like the APA bid.
Lindsay Fox? Solly Lew? Jamie Packer? What is going on here?