Qantas - Board And Management Have To Go.
On 6 May 2007 the private APA bid for Qantas, at $5.60 per share, failed as shareholders refused to sell. The general concensus among small investors apparently being that there was more value inherent in the company than the Board supported bid implied.
As at the market close on 7 June 2012, Five years, one month and one day after the failure of the APA bid, Qantas shares closed at $1.06. What are the possible explanations for the consistent destruction of shareholder value that has occurred since October 26 2007 when the share price reached $6.01?
I fail to understand how the mere invocation of "market forces" could possibly be responsible. Australian labor was expensive in 2007, as was jet fuel. The Australian dollar was over 90 cents for most of 2007. There was ferocious international competition. Virgin Australia had been in existence since 2000 and was chewing into Qantas market share. Jetstar had been formed in 2003. The Australian mining boom had yet to occur.
Given that catastrophic economic conditions cannot be claimed as the reason for the apocalyptic fall in the value of Qantas share price only leaves Three other possible reasons; Government action or political turmoil is out; war, pestilence and civil commotion ditto. Unless I am mistaken, this leaves us with only one possible conclusion - the actions, or inactions, of the Board and Management of the airline are responsible for its current results, as implied also in the payment of bonuses to senior management.
Now before making a final pronoucement we need to formally jettison one possible explanation for the current situation - that it a desired result. That fanciful line of argument follows from the conspiracy theory that the original APA bidders still wish to acquire the airline and have conspired with its management to drive its price down. I do not believe this is the case.
That leaves us with the unfortunate final deduction to be made: If the Board and managers are not knaves, then can we be forgiven for thinking that they must be fools? A consistent pattern of stupid management decisions, lovingly catalogued on the pages of Pprune, appears to suggest that this might be the case.
Last edited by Sunfish; 7th Jun 2012 at 21:41.