QF from Frankfurt

[QFinsider]

A persistent rumour doing the network is that we will lose another international port from the Network.
In the last few years alone ports are closed..

They tell you in the misinformation departments that it isn't profitable enough.
Ironically it is impossible to obtain any information on the cost structures of these so called less profitable routes. Any attempts to obtain through internal channels are met with the usual bureacratic insolence. Sometimes even follow up comments from a fleet manager about why you are wanting the information?

So to the chase, Frankfurt is rumoured to go.

On th back of stagnant revenue growth and plenty of hidden costs in the group operations, another port is destined to go the way of others. You heard it first here.

So in effect it will be an operation to LA and London.
Clever thinking management will again ignore investment 101 and concentrate all thier efforts into maximising short term gain. Should a shock occur in either of these two ports the result will be catastrophic.

returning to the analysis I would like to see the opinions of any analysts that have an interest in aviation..My analysis of the Rat based on the inside of it, is a company in a disarray. Employee relations adversarial, product delivery failing due continued cost cutting.
Fat must be trimmed but when saving money impacts upon the ability of the segments to deliver the promised product it is very worrying!

I wonder what the strategy is?
It is my contention, it is such a short term grab. there is no strategy in the long term, other than to shrink mainline in order to place more business with Australian and Jetstar. Geoffrey this will certainly lower the cost base of your so called "legacy carrier" The only legacy is the mess in which it will be when you and your bunch of goons parachute out.The more analysis I do of the Rat the more I beleive it is doomed. I wonder if we will be able to bring that CEO to heel for his negligence, hold that idiot ChairDame to account and pursue the rest of those errant visitors to pay for their negligence.


Rome
Paris
:mad:

[Sunfish]

Oh Gaawd! If this is true, I wonder if it is possible that QF bean counters are making elementary accounting mistake #1?

You should never EVER analyse a segment of a business operation by the "profit" it makes. You do it by looking at its contribution to overall revenue (contribution margin). This is calculated by subtracting direct costs (crew, fuel, food) from revenue.

The reason for this is extremely simple. Indirect fixed costs (like management, training ,IT, insurance, publications, marketing etc. etc.) are allocated to each segment to arrive at a supposed "Total" cost of an operation from which you can calculate a "profit" - which is a notional figure.

This allocation process is the accounting equivalent of metaphysics and theology. Its arbitrary, subject to endless argument and discussion - especially in airlines.

The danger of "closing" something on the basis of "Profit" is that while the direct costs disappear (ie, no fuel, crew or other direct costs), the fixed costs are still there. You still need management, HR and all the rest.

Tp put it another way, you have Barbara at reception, Marge in PR and betty in the canteen. You downsize your business by 10%, the payroll for these three does not drop by 10%.

It gets worse. These fixed costs now have to be spread over a smaller number of operations - resulting in higher costs and less profits. This is the accounting equivalent of a spin.

I saw a Public Company do this once and they wondered why their profit was even less after they had closed an "unprofitable " division.

I don't really think QF would possibly do this. Sorry for the rant.

[rescue 1]

Ansett employees said that it would never go broke - it did, and QF could well go the same way.

I think you will see continued pressure on work rules, and if cooperation doesn't occur you will see greater use of contractors eg Addeco (Jetconnect) and London base. Case in point: Addeco crew get 24hrs in Frankfurt vs QF main 48hrs. Why?
I am surprised that Mr Dickson has not already applied/tried this formula to the Techies.


What's the answer - I'm not sure, but $1 fares will not pay the mega bucks for the shiny new A380.

As Corrigan said during the week, its time to take the gloves off and get back fare levels to a realistic level - no doubt a sensible first step. That will ensure a sustainable future, balanced against realistic and equitable work practices, and we can all live happily ever after.

[QFinsider]

Sunfish, sorry to say it but they did it with Rome! But you are onto exactly where my investigation is taking me
Big loads consistent demand yet the port was in their shiny management speak "unsustainable"

Cost apportionment is the key. Hidden in the financials are the reasons why Geoffrey calls it a legacy carrier. And the very way he and his cronies can be taken to task, but as alluded to in other topics a broker/analyst is interested in volume churns.
Let's take a simple example.

In the financial data are costs fror QF and for group.
On the surface these seems straightforward, the key is the internal transfer pricing and by what formula they apportion the cost to respective cost centres.. Try and find out how apportionment takes place is harder than finding the cure for cancer. Understanding cost appoortionment is as fundamental as performing rudimentary ratio analysis on the numbers the company "serve" up in their financials.

Let's look at the simulator centre to illustrate my point.
Dash 8 simulator, in the Qantas building. Asset owned by?, operating overheads paid by? Technicians etc paid by? Just how is this asset registered, how are its costs split between the users AND HOW DO THESE NUMBERS SHOW UP IN THE ACCOUNTS????

Geoffrey refers to the legacy carrier..It isn't necessarily a legacy carrier, it is the accounting treatment of the mainline company and the apportionment of costs to the entities in the group that makes mainline look stagnant.
J* just has to be LC-otherwise it wouldn't be the runaway success they claim it to be. How much infrastructure, specialist manpower and other TANGIBLE resources continue to be borrowed from mainline?? And I bet thet don't show up at a market transfer price in the P and L(profit and loss) of J*


To understand they way they spin their crap you just cut through their jargon
:mad:

[Ron & Edna Johns]

I asked someone high up (only a couple of levels from GOD) what the company's vision is. He said it's not clear (surprise, surprise) but something along the lines of being "the premier Asia-Pacific airline." He went on to say that there are some people who are trying to rationalise LONDON even within such a vision.................................

God help us because GOD won't.

[The_Cutest_of_Borg]

Another case in point would be the internal accounting done by the transfer of pilots to AO.

A fully trained 767 FO "costs" AO 100k to be paid to mainline. The value of that FO depreciates depending on how much time he spends in AO before he returns to mainline.

AO is owned and operated by QF, but it is regarded as a separate airline for AOC purposes. Whatever the financial advantage of the above arrangement it is indicative of the way costs can be manipulated to make any point Dixon requires...

[VH-Cheer Up]

But didn't QF recently get delivered a series of weighty tomes from the bluest of blue-chip management consulting firms, McKinsey & Co?

So surely they would by now have implemented their recommended strategies, wouldn't they?

I mean, McKinsey & Co couldn't get the stratgey wrong would they?

Didn't John Elliott start off at McKinsey which was where he got the idea to buy up Henry Jones IXL, a small Tasmanian jam-maker? He did pretty well, didn't he? Got himself a small jet of his own painted like a blue beer can. Haven't heard much about him lately though.

Back to QF. QFInsider, SunFish, surely QF would have a clear way of communicating their strategy to all employees, otherwise, if everyone didn't know what the strategy was, how would they know what they were supposed to be doing each day?

I mean, aren't the business strategies supposed to drive the tactics?

Got me.

VHCU

[TurbineDreamer]

VH-Cheer Up

From my experience in both aviation, corporate world, government etc, strategy is often the last thing the workers know about.
From my observations, management don't want the workers thinking, they want them doing what they are told.
I think this is the wrong way to go about it, because how can an employee sell an idea, a service or a product if it is not fully explained to them.
Management just want to sit in back rooms and get the employees to work and let them deal with strategy. In general, management don't think much of workers anywhere.

If you involved employees more, and made them as part owners of a business idea or direction, you might find more success.

[Eastwest Loco]

From my limited view, all I can see is a once mighty Airline being reduced to scrap by nasty little men.

My best call on this would be for management to pull their heads in, leave a successful model in place, pay commissions so you are not ignored for others that do and get on wih it.

I am totally over the Rat, and will stay that way until such time as they grow up.

EWL

[Animalclub]

Marginal routes should be marginal costed. The fixed costs per aircraft are there whether 1 or 51 or 101 hours are flown. If you can cover direct operating costs on marginal routes (if other routes are profitable) on a long term basis - your fixed costs reduce per hour the more hours flown... so keep the marginal routes.

Mind you - if you could do it cheaper with a subsidiary...............

[QFinsider]

Ron and Edna, it certainly doesn't suprise me, the ship is rudderless. I'm certainly no cadet basher, but the flight operations management is permeated by a bunch of "class of XX". these people are QF born and bred, most of them can't get an external perspective because they never have been external. That fact disempowers flight operations. They have no perspective. Whilst they may be talented pilots, it doesnt necessarily mean they are talented managers, the two aren't co-dependant. Find any of the management stream and ask them where they will be in 10 years, all the bean counters will be somewhere else
- it is merely a ticket punch. With Flight Ops management mere babes in the woods, it's no wonder that the lack of direction continues without intervention.
It is where the A330-200 debarcle came from(all $100m of it), it means that we as the flight crew have minimal input of the flying operation, by the time decisions get to flight operations it is long ago sealed. You only need look at the corporate heirachy to see where the CP and the flight operations management sit...It wouldn't be tolerated by CASA in a GA company!

All information flows down hill...The management provides lip service to improvements and changes submitted to them from the shop floor. This is not just in flight operations..

The "door might always be open" but they ain't listening. Nor do they care, they count thier bonuses.

anyway back to the topic
Exactly Borg...

These are the type of conjuring tricks I refer to. Everything gets loaded back to mainline!! I'll bet my last buck on the fact that an AO F/O is costed in such a way as to protect "the small profit" AO makes. After all, QF trained and paid for him/her in his initial
767 endorsement. The sim belongs to Qf, so do the buildings in which they are housed, the maintenance techies...etc LCC will always stay low cost why the bean counters and thier slick suits prepare statements with so much chaff, they become impossible to dissect.

Want me to beleive the cr@p, then produce financial results for each of the segmented businesses entities.. They told the market they wanted to identify profit centres..Let the market (and us employees) see them. Show me what the training costs at AO are, or what price J* pays for borrowed infrastructre and people (ie scheduling people from QF to help J*-bet we still paid the salaries??)

Then maybe, once it is transparent you will have me believe that mainline is a legacy carrier, once of course i have checked the "accounting treatment" of items costed to mainline.

[captainrats]

This has been discussed elsewhere a few weeks ago.The latest info is Frankfurt is to be removed from the schedule around the end of June

[jettlager]

FRA based head of European sales was on board heading back to FRA a couple of days ago.

He knew nothing of the rumour and pointed out that the operation was making "good" money at the moment.
J/C cabins full on the way up and 70% on the way back with no shortage of Saphire, Emerald ect.

FWIW LHR, [for sales and operational intents] is NOT considered to be a part of Europe.

It would be a very sad day to see the rat pull out of it's sole remaining European port..........

Jettlager

[Capt Fathom]

"FRA based head of European sales was on board heading back to FRA a couple of days ago.
He knew nothing of the rumour......"

And the first time the Manager Shanghai knew of the Shanghai pullout (a few years back) was when he saw it on the news.

The flights to Shanghai were full, as were the Vancouver flights. That didn't stop them from going. Makes you wonder!

[Keg]

Everything gets loaded back to mainline!!

Rumour has it that AO is charged half the rate that other airlines are charged for their LAME inspection in Sydney (and elsewhere QF blokes sign out AO aircraft). Another example of mainline 'subsidising' the 'low cost' carrier! :yuk:

Of course, when the numbers are crunched, AO looks pretty slick whilst QF's costs are shown to not be as good as they could be. Thus, pressure can be applied to the mainline guys because they aren't 'competitive'. :mad:

[QFinsider]

Keg my boy, you got it in one.

That is the point of this post. There are literally 1,000's of these little transfer pricing cost apportioning issues hidden in the accounts...If the markets start looking harder rather than the old fundamental analysis that most of the kids do, they may ask the questions!

The numbers are pretty rubbery, management know it. Which is why management will jump on heads if the troops start asking questions! (and they do)

They wont stop the questions though, it's legitimate it's of concern and it affects the longevity of the company.

I'm beginning to suspect that maybe they are looking at growing the other areas and sacrificing mainline. This will bring the unions to heel, drive down the costs by switching larger numbers of contractors to the new lower cost entities!

It aint a conspiracy if they are out to get you!:E

[fartsock]

Great post Keg.

Nice to see you not smoking managements pole for a change.

Insider - this is the most accurate thread I have seen for the last 12 months or so.

Keep up the good work

[Sunfish]

If the accounts are being "managed" the way you say they are QFinsider, then QF management is in very deep trouble on a number of levels.

Not the least of these troubles could be an ACCC investigation into Jetstar for predatory pricing, although I don't give the ACCC much hope of succeeding unless a QF bean counter spills the beans.

This old conspiracy theorist suspects that Dixon is being allowed to do drive the company into the dirt, at which time the current investors will do their dough and a "white night" will suddenly appear to take the brand name (and not much else) off their hands for a pittance.

Dixon's current strategy J*Asia, J* itself, indiscriminate cost cutting, closing routes and focussing on London and Los Angeles seems to me to be highly risky and not very transparent.

Its generally regarded as a good strategy to stick to your knitting and build defendable competitive advantage.

QF's competitive advantages have been:
- Safety Record
- Government Guaranteed
- Monopoly
- National pride
- excellent Service

Three of those have disappeared and the other two are rapidly evaporating.

[Crusty Demon]

Sometimes you need to spend money to make money. For a frequent flyer, limited destinations means more transfers through London, LA etc. No wonder several of my associates now travel with other airlines so as to get to their destination quicker (direct). These are people who used to loyally depart with their dollars to QF, but due to a shrinking network, now spend them elsewhere.

[Keg]

Nice to see you not smoking managements pole for a change.

Moron! :* :yuk:

[B A Lert]

LCC's like Australian and both Jetstars have their bottom lines propped up by more than flawed transfer pricing from their parent. How much do they collect by way of subsidy or straight-out grant by desparate airport owners and authorities happy to have them 'serve' (term used very loosely) their airports?

There is a bidding war in Asia, esp. between the Malaysians and the Singaporeans - were Australian and JetStar Asia beneficiaries of handouts by using Changi? What loot was handed over to lure Australian to base itself in Cairns, or to venture to Sabah? Has Dixon found another revenue stream not available to Qantas mainline? What happens when the gravy train stops?

[VH-Cheer Up]

From my experience in both aviation, corporate world, government etc, strategy is often the last thing the workers know about. (TurbineDreamer, this thread, 5 Feb)

Not sure how much corporate experience you've had, but mine tells me that the truly great companies (not just good companies) make it their business to ensure all the key employees - usually everyone - know what the strategy is.

One of the simplest ways of doing this is to tell them in briefing meetings and with a simple drawing called a Strategy Map.

Having said that... If the definition of a great company is one using Strategy Maps - there are not very many GREAT companies.

Pity, because these tools are out there in the public arena, don't require huge expenditure to implement, and actually make the manager's job easier.

Part of the problem is that to get the company strategy so clearly thought through that it can be portrayed as a simple diagram - or set of diagrams - the management has to think really hard about the business and what is important.

Maybe that's the barrier.

You'd think though, a company trying to make a buck in a highly competitive environment would have a sufficiently clear idea about its strategy to be able to draw up a simple strategy map, wouldn't you?

Not having one is about as useful as approach plates left back in the car, fuel reserves left in the truck, runway behind you and altitude above you.

Ah well... She'll be right...

VHCU

[Sunfish]

Exactly B A Lert. Its called putting all your eggs in one basket.

My uninformed and totally speculative thought is that QFf seems to voting with its cheque book for its Sydney hubbing and spoke model with the large A380.

Boeing is apparently going the other way - building an aircraft that can operate profitably on city to city pairs and stay clear of hubs.

To this idiot that seems a more attractive solution. It is a pain in the **** flying into or out of Sydney either domestically or internationally because there are always delays for one reason or another all apparently related to congestion and curfews.

I guess it is worse in the U.S. remembering the delays right across the U.S. when Chicago was closed by a series of thunderstorms one summers day.

Maybe the hub and spoke business model has seen its best days? If it has, then Qantas are going to be very hard hit.

[MrWooby]

On a different note, has anybody noticed a subtle change in the domestic inflight intertainment product recently. On a flight I was on a few weeks ago the passengers were treated to a highly entertaining documentary about wild life in Africa. And today, the program consisted entirely of continuous images from the Qantas "Sharing the spirit" advertisment. I suppose its just another area were some accountant believes they can save a few dollars.

[QFinsider]

My sources tell me that the staff in Frankfurt have been given their marching orders.

Am waiting anxiously for the PBL assisted spin as to why this port couldn't make money!!

Go on Geoff show us the investment me and the other owners make in you, and prove to me why it dont work...

[Ron & Edna Johns]

But hang on, CM has just written a burst to us all, in it he considers two options: either shrinking and becoming just a regional player or expanding and growing...... He contends the second option is the way to go. So we cannot be pulling out of yet another European destination..... right? But then again, just how many different hands are tugging on the tiller of the good ship Qantas? Just what is the vision of this airline? Where is it now, where does it want to be, how will it get there? If there is such a vision then the vast majority at the coal-face have absolutely no idea what it is. One thing's for sure, if you don't know where you want to go, any road will take you there.

[QFinsider]

I hope I am wrong on this one I surely do...
I don't think CM can as a 'class of XX' and fully "institutionalised" member ACTUALLY have an independent thought, unless of course it is QF ordained. (I think I am being a little harsh, maybe he can count his bonus when he is alone):E
(He once said he was finding it difficult to communicate with pilots, as they can't read n spell so well.) Given his clear superior intellect, maybe that's why he is just another political figurehead.


One need look no further than the management tree to see how far down the list he lives, as I said in the original post CASA would not allow this in a GA company!!!

Returning to the post, I hope some brokers/analysts have a read of this...Coz the truth about QF is that hidden in the numbers are some many little about the cost apportionment, that if the market understood the trades in company shares would head where the company is going...down

Cmon Geoff, you tell us we are valued, share your vision of the company, give us the real numbers and let us analyse them...

:E

[Sunfish]

Ron And Edna, DR. Sunfish believes the Chairman and the CEO are both sufferers of narcissistic personality disorder. They don't care for anyone but themselves and constantly filling their ever leaking self esteem buckets.

The most obvious symptom is a complete and total lack of empathy with anyone. They literally cannot empathise. To them we are no more than dogs that can talk and are treated accordingly. We will be used when it is convenient and discarded the minute the usefulness ceases or if we make trouble.

Often they will do things that are quite clever. They are intelligent and hard working, but the driving force is a personal demon. They are totally ruthless. They will lie, cheat, and steal because they have this sense of entitlement. Laws do not apply to them.

Any time a high profile person goes on trial for something and you find yourself asking "How could someone of such wealth and achievement do such a dumb thing?" you are probably looking at a narcissist, especially if they are known for grandstanding. Rene Rivkin is a classic, so is the guy who ran HIH (lavish entertainment). So is Martha Stewart (now in jail in the U.S. for insider trading) and the classic of them all was Leona Hemsley - "Only Little people pay taxes".

Two dead giveaways - Dixon appointing himself chairman of J* Asia (J* is a vehicle so GD could be a chairman of something, nothing more).

The second and most obvious was the $500 bottles of wine as Christmas presents for the selected few. That demonstrated a complete and total lack of empathy with staff who are being asked to cut costs - by Jackson for doing it, and by Dixon for letting her get away with it. The real purpose of the gift was to demonstrate Jackson's power and position as deputy chairman of Penfolds (Southcorp).

Dixon is oblivious to the fact that people are asking how the most profitable airline in the world is making its money and at the same time crying poor. He doesn't see any anomally because he cannot empathise.

Don't expect a coherent corporate strategy, there isn't one. The only strategies that count are the short term ego boosting ideas of the Chairman and CEO.

For what its worth, closing Frankfurt may simply be a one off accounting trick to boost next years profit.

[QFinsider]

As Ron and Edna stated, there isnt a clear vision.

We don't have a defendable market advantage, it has been given away. I am reluctant to say it, but I firmly hold the contention that if a practical way could be found to knock off all flight cabin and engineering crew, sell all the aircraft the bean counters would. That is not to say Qantas would not exist it would...Millions of letter head would be out there, with all the "marketing support" for the brand and in the meanwhile every QF flight would be code shared with anybody they could find. All the assets sales would further increase the current and long term assets on the balance sheet! Imagine how the ratio analysis would look then?

The market would be oh so happy, more bonuses all around...Most importantly for the bean counters their jobs would be protected as it takes a massive bureacratic structure to manage this sort of virtual airline...

Yes Sunfish!!

The self esteem issue helps understand why they do these things, at least in part..When combined with lack of checks and balances it is catastrophic.

You could well be right, closing Frankfurt throws an extra seven flights a week somewhere else, which should help next years' bonus figures before somebody else gets onto the pacific and cuts what's left of the icon to pieces...

In days gone past this sort of crimanal gross negligence would be accompanied by public stonings.

They will do it anyway, but there are not enough people in the organisation who have the knoweledge to counter the "accountancy spin" . I don't buy their lame excuses, you can't fool all the people all the time. The really sad thing is that there are 1000's who rely on the company. I know Ansett was the same!!

Look who benefitted most from Ansett's demise...The two Mark's 3 years and still counting, not bad for a couple of accountants!


Just how is the cost apportioned in the group? Good old AIPA boss went to a company financial briefing, he saw how profitable each segment isvery informative he said (end quote) Betya he didn't ask on the cost apportionment, he wouldn't know! Bless his little company beating heart!

[Three Bars]

Here's the corporate vision:

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

[Sunfish]

Its generally accepted in business that it is unwise to earn your income from only one or two big "customers". If one of them stops buying then your business is in deep trouble immediately.

By concentrating on LHR and LAX I wonder if QF is making the same mistake? Any disruption of those two markets is going to cause big trouble for them. I would have thought it might be better to spread their risk a little.

The managers goal: "Maximise return on investment in the LONG term"

By the way. Does the ATO know anything about the workings of the IATA clearing house in Montreal?

[fartsock]

Insider.

As said before - excellent thread. Woomera should sticky it.

One other transparent aspect of GD's 'strategy' is to compromise and control as many of the unions as possible.

By this I mean that members of various union committee's of management act in a manner inimical to their members interests. In some cases this behaviour is openly corrupt.

I have read with interest recent threads on the ALAEA.

So any ability QF staff have had (as in the past) to inform the shareholders & travelling public of the reality of QF's current management & work practices is lost.

Word is that flight ops management is 'rushing' to get as many changes in under the current regime in AIPA - fearing that the next COM elections with be a bloodbath, and the will lose 'their' men.

The EBA about to be presented to the troops is absolute crap from all reports.

[QFinsider]

Peoples, the compromise of the unions is ongoing. You should see how much is dished out when pilots mention the fact the com should be legally restrained from taking management position for 3-5 years! The only thing the "institutionalised" members have is rank. And they try and pull it even in a bar!
:E

The EBA will be all smoke and mirrors with a few magic beans!

Again if the AIPA company man goes to a briefing on the financial performance, all he does is tell us he went!
There is no analysis, no figures and he prolly got a nice belly rub..

Flight operations is staffed by the class of xx- they are babes in the woods corporate wise. Most of em are like the nodding dogs that sit in the back windows of cars...But they get bonuses and titles, which fluffs their egos. Unfortunately there isn't much else. Provide a legacy, provide leadership, give junior pilots a standard to admire, and most importantly leave it in better shape than you found it(and all other employees)- all sadly lacking...

Hence let's see the costs Geoffrey or even Peter Gregg..Show us the figures particularly how you arrived at them. JUST HOW ARE COSTS APPORTIONED? Maybe if Frankfurt goes it's because mainline is struggling under the weight of all the peripheral business units that cost shove back to mainline!!! Share the vision and your workforce may follow if there is more to it than rubbery figures and hollow words..

Oh and by the way, the "staff engagement survey" results are out...There will be briefings by the communications manager and flight operations management-can't wait for that one...mind you the result was supposed to be announced after three months! (some six months ago)The CP had to repeatedly assure the great unwashed it was secure and confidential, many staff with whom i come into contact aren't so sure!
They would have been working hard to put a positive spin on it

:E

[Sunfish]

where have I heard that word engagement before? Who did the survey and what was it supposedly about?

Many many years ago little Sunfish almost worked for McKinsey & Co, and I have seen them in action a few times since. Sometimes they do impresssive work, sometimes not.

My guess (and this is a lot of guessing) is that McKinsey was asked how to restructure the company. Now there is always a big argument in MBA circles;- does structure follow strategy or does strategy follow structure? The two are inextricably interlinked.

The problems facing QF include the following:-

- Huge beaureaucracy, a legacy of Government ownership. Too many levels of management full of brave talking souls like Mr. Qantas. with very limited skill sets. "Silo" thinking (ie to be in marketing you must be an ex FA, once an engineeer always an engineer, etc.)

- entrenched unions with all sorts of perks etc.

- Entrenched attitudes and a corporate culture not conducive to rapid change.

- A history of entitlement arising from government ownership (The National Airline).

- An inability to compete - QF has had a monopoly of capacity.

- Sunfish\'s favourite - the Sydneycentric attitudes of QF that have coloured its decision making for decades, to QF\'s own cost.


Those are the internal factors. Then there are the external factors;

- increasing competition.

- Lower cost operators using the latest technology to increase competition.


- Growing perception by Australian public that they have been screwed for decades by QF and deciding not to put up with it.

- demands of investors.

- attractiveness of QF\'s brand name.

- attractiveness of QF\'s huge international cash flows to certain "persons".


QF has some issues to face as well.

It cannot make as effective use of new technology as its younger competitors because of entrenched work practices that are highly resistant to change.

All state governments except NSW are heartily sick of QF because direct flight availability (AND capacity) impacts their tourism and overseas investment strategies.

Its political "connectedness" works both ways and restricts its options.


So the issue to me is "do you fix it? or do you break it first and then fix it?" I have a funny feeling that the answer may be the latter.

You would do this by building up J* and J* Asia and progressively dismembering and "starving" the mainline, this is often euphemistically called a "harvesting" strategy. Eventually you close the mainline because of poor performance, and perform "life boat drill" - which is where you invite a few of the youngest and fittest to join you in a new lean mean operation.

You protect your brand by renaming j* as "Qantas J*" during the transition period.

By the way, has QF surrendered in rights to fly into Rome etc.? Who is going to own the new A380\'s? I\'ll bet it will be a shelf company somewhere.

[Crusty Demon]

Maximise dollars in the short term (ie this year) to fatten up the coming bonus. That is the goal of anyone in management - not their fault, just the way the incentive system works. If I could make a million or two in bonus payments in the next year or two, I would find it a hard carrot to ignore.

Unfortunately, they probably think they can make a bit more money per aircraft using them on other routes short term, so why go to FRA which is probably making money, when you could make a bit more going elsewhere. Unfortunately, competition will increase in a year or two, but the problem of declining profits, costs to bring in and set up a new base in a destination previously served, and not so fat bonuses will all be the headache of the next management group.

Plus it will take a few months for the frequent flyers to realise they can't go direct to where they want and go elsewhere. There is one vision for the company - maximise the next management bonus.

[crystalballwannabe]

One of the key findings of S11, the war on terror, the Asian economic crisis, the Bali bombings and especially SARS, was QF needed to develop a “strategically diversified route network that minimised the airlines exposure to individual markets and allowed the quick reallocation and readjustment of capacity”. I cannot think of one positive step taken in this direction.

As time goes by EK, SQ and CX will make it extremely difficult for QF to pioneer any new, exciting and highly profitable international routes. Maybe the slogan “I still call Australia Home” was a subliminal message! Except for those to be based in London!!!!!!!!!!!!!
:D :D :D :D :D

[Buckshot]

By dropping FRA, QF is already showing that it is unable to compete against the likes of EK. If you want to go to Germany or the continent, why fly QF to FRA when you can choose from four daily destinations within Germany alone if you go on EK (Hamburg, Frankfurt, Dusseldorf or Munich) - not to mention any of their 21 other destinations in Europe, all one-stop from PER, MEL, SYD or BNE???

So, in the last ten years or so we've seen the loss of:

- Manchester
- Rome
- Paris (twice?)
- Harare
- Kuala Lumpur
- Beijing
- Seoul
- Taipai
- Ho Chi Minh
- various ports in Japan (4?)
- Port Moresby
- Papeete
- Vancouver
- Toronto
- Mumbai (reinstated)

Have I missed any?

[surfside6]

Buenos Aires(in the last couple of years)
Extend the time frame a little and you can take out:
San Francisco
Amsterdam
Athens
Bahrain
Fiji
Tahiti
Why would anyone use QF?Frequent flyers can`t use their points to go much of any where.
You know if it wasn`t for the aircraft and the employees Qantas would be the perfect airline...Wouldn`t it Geoff?Imagine the bonuses generated by removing both.Watch this space!!

[QFinsider]

This is exactly what I'm talking about..In the Qantas news Geoff refers to his highly unionised workforce, the fact that every three years x amount of EBA's need to be renegotiated...yadda yadda

Legacy airline this, legacy that

As we withdraw, we get isolated, mainline continues to struggle, load it up with apportioned cost. Eventually it collapses and they reinvent it in a much cheaper form, offering with their white knight, who knows maybe kerry and his cronies employment at vastly reduced rates. An induced shock generated from the inside...Only problem is that a few have cottoned on to it. (As sunfish pointed out this could be the game plan)

In the absence of hard figures there is no justification, however we are watching Geoffrey, hopefully in the interim the market moves your precious stock to a divest rating from the moderate hold or neutral they now suggest..:E

[jetjockey7]

The theory speculated upon requires both complicity and stupidity.Complicity with institutional investors,Federal Government and the relevant regulatory authorities.Or is it perhaps stupidity from these groups?Once a brand is destroyed its extremely difficult(impossible?)to resurrect.Not to mention the destruction of shareholder value?(Surely Criminal)Is the eradication of the unions within QF worth destroying the brand?How much profit is enough?A billion is a pretty tidy number.The current management are a pretty intellectually bankrupt lot,with the possible exception of Peter Gregg.Perhaps they are just stupid enough to create a mess without any particular agenda.
Most of the "visitors"won`t be here in two or three years and certainly not long enough to complete any agenda.
American Airlines has always been a possible suitor and indeed Citigroup is still sitting on a sizable tranche of QF shares from the brokering of the BA sale.Are these being being ringfenced for somebody?Packer vying for some contol/ownership doesn`t seem to fit with rest of his core business activities.
Perhaps this lot are stupid and just milking mainline for the benefit of their own pockets?
Whatever the reason there is definitely something rotten at Mascot

[Eastwest Loco]

Despit the size of their fleet, the rat is starting to become challenged with destinations. The drop in commission levels from 9 to 7% has far from endeared them th the Travel industry as well.

I find myself selling bucketloads of CX OS and EK, simply on a price base. MH and MH/KL codeshare has well and truly come to the fore as well recently. QF/BA need to take a tiny peek over their shoulders. Things are not as rosy as they may have thought.

Best all

EWL

[Keg]

Whilst I agree with the general thrust of these comments, can I throw in one piece of contrary information which won't quit.

Rumours persist (and they're VERY strong from multiple sources) about the acquisition of new aircraft and not just to replace old capacity but to expand the network in a significant fashion. Some of the numbers being thrown around for promotions over the next 1-3 years are impressive and they are more than what would be thrown up by the acquisition of the A380! Sure, believe nothing until you see it in writing and the crews on the line (although surely the same logic applies to the rumours of us pulling out of FRA! :E ) but it would appear that we are shortly to go on a significant expansion of our operation.

Perhaps the 777-200LR with its long legs and good numbers may prove the vehicle to start to tackle some of those longer thinner routes. SYD- Vienna anyone?

I remain an optimist about the aircraft acquisitions as expansion flying and not continual turn over of the older aircraft. If we're pulling out of FRA then it is my hope (although I hold no confidence in this hope) that it is because we are trying to hold SIA out of the Pacific by adding capacity there and that when new aircraft arrive early next year that we will again return to Frankfurt, Paris, Rome, SFO, VVR, etc, etc, etc.

Dreams are free.

[gaunty]

Keg onya mate.:ok:

Frankfurt, Paris, Rome,Amsterdam one day we'll get the old Peter Stuyvesant ad going again.:} :=

I still think that one day Australia will buy QF back, we wont be the only country to do so and we'll return to the something like the "flag carrier" system of old.

We wont need Singapore anymore and we will be able to go most places non stop.

So you can all fall about laughing now.:uhoh: but just think about the scenarios where it might just be necessary.
:{

[Taildragger67]

Buckshot...

Agreed. I was speaking with an EK staffer a couple of years back who said that they noticed early on how tough it was for the sub-continental communities in the UK/Europe to get back to their old countries and vice-versa... firm bilateral agreements, horrible scheduling, etc. that they decided they could make zillions by connecting all the major cities in that region to Dubai, then lots of runs up from DXB, especially to the UK.

Well, EK now have SEVEN daily runs up to London alone, TWO dailies to Manchester and single dailies to Birmingham & Glasgow.

This was before the non-stop DXB-SYDs but the 345s were on the way & he told me to just wait & see what happened when that caper kicked off... Sure enough, EK will shortly be adding a second daily to SYD (ok, not non-stop but that probably won't be far off).

Point is, EK have made it work in spades. They took their successful sub-continent strategy and thought, 'Gee, this might work further afield with longer-range aircraft' - and it has.

I recently went up to London via Vienna with Austrian/Lauda, in J. Not a great product, but I was initially kinda surprised to see J/C FULL (so pretty much paying for the operation), whilst Y/C would've been lucky to be 60%. Speaking to a few fellow punters, they said they always used to fly the Rat but they were going to points in Germany and France and did NOT want to travel backwards from London - so Vienna was great, as OS had recently made big strides in getting connections tight at VIE. The point was also made that getting points bookings on QF had become such a nightmare that they were happier in a Star FF programme, eg. if they wanted to take the fam pretty much anywhere in Asia-Pac, there was usually choice on the main runs. So that was clearly premium traffic which the Rat had just given away but not fully understanding what & where its punters wanted.

Keg - maybe you're right - maybe getting 777s & dumping the older 744s would introduce a bit more fleet flexibility, opening up thinner routes. Maybe, using 777LRs going through DXB, BAH, BOM, MLE, KUL etc. to European cities would be a way of relieving the reliance on SIN, and so weaken Singapore's bargaining position to get West Coast USA routes - and open up the Continental ports again (crewed by London-based crew??!!). But, SIN remains a good hub to aggregate from other Australian cities for LHR, so it won't disappear just yet. I've suggested before that QF go to such intermediate ports & connect with BA runs to those ports - no need for extra LHR slots or LR/ER aircraft.

But if all the 744s went, what would happen to JNB? Would it have sufficient loads to fill a 380? SYD-JNB is outside even 207 min ETOPS by great circle.

TD67

[Sunfish]

Jeez, I know this is all pure speculation, and I didn't realise QF had pulled out of so many places. Question is, is it a permanent pull out? Does QF still have rights to fly to those places? Are those rights transferable to another Australian carrier? Are they saleable? That might give us an indication.

Jetjockey, with respect "stupidity and complicity" are not necessary. The only thing necessary is to keep the QF brand name intact throughout whatever process they intend submitting you to.

I didn't realise that Dixon was spouting about QF being a "legacy airline" that is code for "you have no future". Being a marketer, he understands the value of the brand name and will do everything he can to preserve it. If he really is spouting about "legacy airline" that is both bad news and pure stupidity.

The use of the silly "legacy" word was first applied in business speak to computer systems as in "legacy system", which meant something you inherited, but couldn't turn off because its replacement hadn't been built yet. In addition it was usually impossible to easily interface the legacy system to the new systems or find any programmers who even knew the computer language. Needless to say many "legacy" systems have outlived the "new improved" systems and are still running just fine today, albeit in a slightly tidied up form - thats why its a silly term.

The sad part is that if Dixon is using this word, then he probably has the Board convinced as well (ever heard of groupthink?), and it will totally color their thinking. Thats why there is no strategy for QF - QF in the Boards eyes, has no future, their strategy is to "harvest" it, keep the good bits, screw the last drop of blood out of the rest of it before throwing it away. J* has strategy because its part of the future.


I'm not sure any signifigant institutions are holding QF shares as a blue chip investment grade product, they may well be holding shares for tactical reasons including warehousing them for someone. A simple brieifing about the necessity of euthanising the "Legacy airline", some platitudes about shareholder value being in the brand name and some blue sky pronouncements and the institutions will roll over and go back to sleep.

As for the Federal Government, it is completely possible that they have already had a briefing about QF's strategy to de-unionise, which is music to their ears anyway. They will deny everything as usual and look the other way, exactly as they did when Patrick's busted open the Melbourne waterfront with men with dogs and black balaclavas.



The commission drop would be explainable by a "harvesting" strategy - which is simply squeeze every last drop of value out of the "legacy airline" before euthanising it. Don't worry about long term relationships with travel agents, there is no "long term".

As for A380's and other acquisitions, I would be surprised if he would inflict a unionised workforce on them. That means that there would be no heavy maintenance done here. Question:- Does the A380 initial provisioning include a full swag of heavy maintenance spares? More than one set of flaps? Undercarriage? Are you setting up to maintain this stuff? I suspect not, but then Sunfish is just idly speculating about all this anyway. Its probably all a mirage, business will continue as normal. One should not see conspiracy where happenings can be explained by simple stupidity.

[BUNYA]

Deja-vu ain't what it used to be?

Anyone have this feeling we've heard it all before?

When?

How about 2001 from our gallant AN brethren. "Management is pulling our pud..they're telling porkies to make their bottom line look better , up their bonuses etc etc"

Well I say what if they're not?

What if there is a good chance that QF International will disappear somewhere north of here in the next five years? It certainly ain't growing is it?

Many groups of pilots over the years have found the bar and PPRuNe much quieter when their jobs and their company disappear.

Are you prepared to gamble your future on the bar-talk being right this time?

[crystalballwannabe]

The reality:

Even if Qantas orders 787’s or 777’s, by the time they arrive, it is very unlikely they will be able to use them to establish new international routes. They will only be able to compete with existing carriers.

It is kind of ironic (some would say amusing) that the carrier that founded its success on Australia’s geographic isolation is now being hurt by it. Of course they will have to pull out of long haul ports when the only aircraft they send on the route is the B744!!! There is simply too much competition using more appropriate aircraft with lower cost bases. The idea QF can go back and re-establish itself in these places profitably in years to come is hilarious. You snooze, you lose.

The Asian carriers to the north are geographically positioned to become posterchild’s for Boeings “point to point” theory of the future. QF should have ordered the 777 and introduced A330 long haul services a very long time ago to at least delay being squeezed out of the European marketplace.

With carriers like Air Asia making even the “backyard” difficult, let’s all now watch “Australian Airlines” get thrown all the marginal Asian routes while Qantas retreats even further whilst still remaining the “most profitable airline in the world”.

All that begins has an end.

[Animalclub]

Buckshot

You're not quite right in what you say. QF still fly to quite a few ports that you mention... they just don't use QF aircraft.

As East West Loco points out there are quite a few QF code share flights out there... only Australian travel agents can't afford to sell the QF side of the codeshare due to the low commission.

Just imagine if all the flights from Australia were code share. We'd end up with a brand name only, with no substance behind it... trouble is that it would make money and create a lot of unemployment in Australia. We don't need that.

[firepussy]

Should I start looking for another job and get a start on the other 30 thousand who will be(out of the Q) in the Q?

[Buckshot]

Animalclub,

That's exactly the point - withdrawing from a port is exactly that. It cannot be disguised by offering code shares. Do you think that punters who now fly Air France to Paris on QF codeshare really think they've flown on QF? This gives the brand zero presence in the market.
Twenty-odd ports in ten years must be some kind of record.....

[Sunfish]

By buying eight A380, it appears to me that QF is still wedded to the idea that Australia begins and ends in Sydney.

In my untutored opinion, they would have been better off buying a stack of smaller aircraft and doing the city pair thing and reinventing themselves, but no.

QF management seems wedded to the idea that air travel is going to become a commodity ie: QF is a price taker not a price maker, cost is everything. However the dysfunctional part of their strategy is the idea that people will be prepared to travel via Sydney to obtain this commodity. That is just stupid.

People who buy commodities expect it delivered to their door. They do not put up with inconvenience to get it. In other words, I go to the nearest petrol station to fill up.

In addition, I do not want to have to board and pass through immigration and customs with 800 of my colleagues either. Do you really think that the Commonwealth immigration department is going to double the size of midnight to 8.00am shift or whatever to accomodate one A380 arrival?

I guess the benefit for QF is that at least they will keep the Sydney based market. However the rest of us not based in Sydney will choose to fly direct to our intended destination and bypass Sydney and QF.

I guess QF will have justified the A380 in part on the business market, businsss and first class yadda yadda. Well I have news for you sunshine. I gave my staff the option on trips longer than twelve hours take business or take economy and have a two day break before doing business and on the way back. Guess which way most chose to travel?

I might fly QF domestically, but only if VB doesn't have seats. I have a stack of frequent flyer points, but I can't be bothered with the aggravation and hassle of trying to find a seat.

Airport lounges are not an issue, if I want to use the VB one I'll pay for it and the airports I use normally don't have QF lounges anyway.

Last trip to Singapore was by SQ A340 - a direct fast pleasant no nonsense trip with no hassles. Sure the service is impersonal, so what? Would I get any better on QF? The answer is no, in fact it would probably be worse.

Lauda to Vienna much the same. Their bonhomie is a little forced and Austrians are pushy, but would I get any better on QF? I don't think so.

Last two QF flights were disappointments as far as service went. Both Business class because I was really pushed for time and those electric seats really do allow you to get a little sleep, once to Paris via Sydney and the other direct MEL- LAX until a leaking spoiler actuator on pushback turned it into a flight via Sydney and a five hour delay.

Flying QF = Disappointment.

There is a thing in six sigma quality assurance about "delighting your customers". QF used to do that once.

[Don Esson]

Sunfish old chap: you are spoiling some of the good things you write by you unabated obsession about Melburnians having to travel via Sydney. This is simply untrue, as we have pointed out to you in other posts.

As for your MEL/LAX travel, you had chosen a direct flight but owing to an unfortunate mechanical problem, Qantas took you via Sydney with a resultant five hour delay. They could have chosen to leave the flight operate MEL/LAX non-stop after aircraft serviceability or new crew obtained but I am sure the delay and inconvenience would have been much worse than actually experienced. Note too that Qantas' competitors on the Pacific - United and air New Zealand - operate their flights to Los Angeles via Sydney and Auckland respectively. So on this route Qantas doesn't look too bad eh?

With your travel to Paris, I'd be looking for a new travel agent or PA to arrange my travel. QF9 from Melbourne to Singapore is designed to hub at Singapore with Qantas services to Europe, currently to Frankfurt but also to Paris when Paris was served by Qantas. Why would anyone with half a brain opt to travel Melbourne-Sydney-Singapore-Paris when they could reduce their journey time by several hours and eliminate one stop by instead travelling Melbourne-Singapore-Paris.

If you have such an insight into the various Australian aviation markets, why don't you offer your thoughts to Qantas? Better still, offer yourself for election as a director at QFs next AGM. Surely you would add more to the place than Son of Kerry????

[Sunfish]

Yeah you are right Don, I shouldn't bother with QF, I don't have to use them now anyway.

[QFinsider]

It seems like with most things aviation we have lost the premise of the original post.

Frankfurt is being touted as an unsustainable port. Having done the run quite a few times I can't see how a full aircraft can't make money. That is of course unless that aircraft is required to support a huge bureacracy of accountants, marketers administrators and others.. People so far removed from the operation of aircraft that they wouldn't know the difference between a 747 and a double decker bus.

Then roll into the equation a number of regional interests and LCC and you start to see why. The cost of running an airline is not only staff. Depsite what GD maintains they are not simply a cost. Mainline touted as a "legacy carrier"( he likes it so much) but why?

Sure there are efficiencies in all departments, i would suggest that as they relate to flight operations and aircraft operations they have been reduced significantly. The product promised by marketers fails to materialise so often that it is my assertion it is time to spend money repairing the brand, because if the tree is pruned much more, it will in fact die.

So why isn't Frankfurt making money, or Rome. Paris itself had frequency issues, but you got Orly just down road a bit how about developing another port?

The secret lies in the accounts. As I and others have said, the competing units J* AO don't pay full price for transferred services and equipment. In particular with no financial information available on their performance it is easy for GD to assert mainline is a "legacy" In order to develop leverage on the heavily unionised workforce that causes GD so much grief, he continually points to the threat LCC's represent. But how much of a threat is J* if it paid its own way on infrastructure, fuel and people. If a specialist employee is seconded for a year does J* pay for the provision of sick leave, long service, holidays and wages for example.

GD is quick to point out that emirates or Singapore enjoy significant benefits that mean the playing field is less than ideal, from depreciation to government support. How much financial support is in the numbers that we don't see which continues the myth that J* is so lean and QF so fat?

Go look for the information, it isn't there. Financial accounts are by law required by be a true representation of the company. If transfer pricing means that COSTS are loaded onto mainline, then the accounts are not accurate and do not represent a true and proper picture. Mind you it serves GD's agenda very well.

So let's see J* opened up and presented to the investor and staff. Let us ask why do they not pay market price for things they use from mainline....If after due dilligence it is clear they do stand alone as an excellent business model with accurately reported costs of business, then I'm satisfied.

I somehow suspect as this is the key to the crap spouted by management and not likely to see the light of day!

Mind you the staff engagement survey results might make them wonder a bit:E

[Ex QF]

Hi this is my 1st post. I'm an Ex QF employee (18 years - so a little bit of experience and heaps more gained in the business world since leaving in 91). Thought the news on the wire about HP yesterday was interesting. Perhaps QF shareholders (staff are shareholders) and employees need to raise their voices.

HEWLETT-PACKARD overnight ousted its chairman and chief executive, Carly Fiorina, the architect of a controversial merger with Compaq Computer that never produced the promised results.

Fiorina, 50, resigned after a showdown yesterday, ending a tumultuous five-and-a-half-year reign characterised by an employee and shareholder revolt over the company's direction.
Recognized as one of the most powerful women in business, she had been the only female CEO of a component of the Dow Jones industrial average.
Her ouster came after "weeks and more" of meetings in which directors, together with outside legal and corporate governance advisers, took issue with her inconsistent track record of executing on HP's strategy, board members said.

Now - lets look at this and QF:

QANTAS overnight ousted both it's chairperson and chief executive, the Dame and GOD, the architects of a controversial policy that saw the mainline carrier being downsized considerably in favour of subsidiary companies such as Australian Airlines and JetStar. This downsize saw the once proud QANTAS name flying to only a handful of destinations in their own right, whilst senior management through lack of experience listened to GOD and agreed with every spoken word plus the fact that their own greed stood in the way.

Both the Dame and GOD resigned after a showdown yesterday, ending a tumultous 3 year reign together characterised by an employee and shareholder revolt over the company's direction. resigned. Further to this was the fact that passenger loads have dropped to as low as 30% because of complaints about frequent flyer scheme and where or where they can't fly to on both the domestic and international routes.

The Dame was recognised as one of the most powerful women in business however she saw the writing on the wall after weeks and weeks of meeting by board members to which she was not invited.
GOD was recognised as a ver clever marketing man but unfortunately no prior experience at being the head honcho - he too had not been invited to any meeting recently coupled with the fact that he no longer could arrange 747's to fly him to Wagga Wagga as the ground staff, pilots and cabin crew have started to show some aggression of late. In addition, a large team of senior staff led by a powerful number of pilots sought outside legal and corporate governance advisors who were all shocked with the reported findings and took issue with his very inconsistent track record of late.

In further development is has been announced that a new domestic airline will be created called Australian Airlines and based in Melboune. This will replace JetStar and see Australian compete on all routes currently flown by Virgin Blue and providing identical service, if and when Virgin introduce a frequent flyer scheme, Australian will immediately follow. This provides the Australian public with the duolopy that they once had and wish to have again. Qantas is currently in talks with Patricks to ensure that prices are identical for all seats on all routes. This ensures that pax will only have to decide what carrier to fly with. JetStar staff will be offered a job in Melboure except the CEO who will be taking up a position in a pub in Dublin. Qantas will feed into Australian Airlines from their international operations. Australian will cease to fly any international operations and Qantas will resume these services in their own right. Qantas will continue to run the Qantas Link services themselves.

The acting chairman Rene Rivkin has apoligised for the demise of Qantas over the past 3 years and hopes that the share price can improve from it's current 10 cents a share to $20 a share in the near future.

Acting CEO a Jimmy Bow-Tie hopes to paint more aircraft in the Aboriginal paint scheme or covered in lycra and pink as they once again start flying into previousl destinations such as, LHR, ROM, FRA, PAR, ATH, SIN, BKK, DPS, TYO, HKG, LAX, SFO & YVR.Now - lets look at this and QF: Now - lets look at this and QF:

[Sunfish]

A good start, but this is the one I'd like to see.

"30 December 2010.

Qantas was today named airline of the year ending Emirates record seven year run and capping a stellar corporate recovery by its management team led by CEO Wirraway.

In 2005 Qantas almost collapsed under the weight of an ACCC investigation of predatory pricing, "anomalies" in its accounts, decliining passenger numbers, and a public perception that it was an obstacle to the development of the Australian tourist industry as well as "not being Australian any more" as one child put it.

The final straw was the Governments announcement of its "open skies" policy that saw Qantas stripped of the capacity advantages that underpinned its international market share.

Massive industrial unrest by its 36,000 staff was followed by a hostile takeover offer. The takeover offer was withdrawn after investigating accountants discovered that the corporation's accounts had been gutted to produce its previous "record" profits and that the airline operations were now barely sustainable.


The Chairman and CEO resigned and the remaining Directors announced their intention not to renominate, leaving the airline rudderless. At this point a loose coalition of airline staff (the pprune group) aided by creditors, existing stockholders and merchant banks mounted a rescue operation that was eventually accepted by all shareholders, leading to the appointment of Wirrawy and his management team.

Among the the terms of this agreement was a staff shareholding scheme providing for staff to own up to 49% of the airline, the creation of a single staff union, a moratorium on industrial action, pay cuts for a specified period, agreements providing for development of flexible work procedures and a commitment that safety would remain the ultimate consideration in all matters.

"Qantas is going to fight back" announced Wirraway, "we are going to prove that no one, with or without Government backing, can produce a safer, friendlier, more convenient, and excellent transport product for the money than Qantas".

These proved to be prophetic words. Wirraway's first luck was the finessing of the sale of its A380 aircraft production slots and the negotiation of contracts to purchase 200 smaller aircraft at a profit of $500 million that was enough to address its most pressing financial needs.

This sale was necessitated by the new Qantas strategic direction of abandoning its Sydney based hubbing strategy and flying smaller aircraft more frequently to direct city to city pairs from its new bases in each capital city.

Economies came from the merging of the international and domestic operations and aircraft fleets that provided enough workload to support the multi base strategy, and extremely sophisticated scheduling and route management (some would say almost magical). "There are no domestic and international divisions anymore," stated Wirraway," there is just Qantas. You want to fly from Adelaide to Athens or Alice Springs? Makes no difference. We will take you door to door with no unnecessary stopovers".

Further economies came from the sale of much of its Sydney based heavy maintenance facilities that were moved to country NSW. This proved popular with staff who liked the more relaxed lifestyle and cheaper cost of housing.

Outsourcing was discarded except for things for which mass markets already existed "People pay to fly on airplanes piloted by Australians, crewed by Australians, and maintained by Australians. We promise we will always give them that Australian expereince. Its what makes Qantas what it is." said Wirraway.

Management was rejigged to provide a very small head office function, located at Sydney Airport itself and the distribution of administrative and training areas to bases with cheaper real estate.

Although initially sceptical, domestic and international customers eventually warmed to the Qantas marketing campaign freindly service - (Qantas, its Australian for "Great!" ), smaller aircraft with larger crews - (Qantas, say hello to your fellow passengers) as well as its now renowned flawless ability to deliver passengers with minimal disruption to their final destination.

Qantas pitched itself towards the higher cost end of the market explained Wirraway;"we ask for a slight premium on the ticket price" he explained, "but we give you more seat room and better service, a choice of more direct daily daily flights to your destination. There are cheaper airlines out there, but they are not as good value for money as we are." This paved the way for the triumphant return of Qantas to the 150 ports it now flies to.

At the time, the city to city strategy was seen as risky, but that was before we had experienced the A380 phenomenon and the creation of Air rage riot squads at hubs to deal with dynamics of 700 or so frustrated passengers.

Qantas declared profits of $5 billion dollars last year and its 80,000 staff stand to share approximately half of its recently declared 2 billion dollar dividend.

[Icarus2001]

the new Qantas strategic direction of abandoning its Sydney based hubbing strategy Sunfish, it has already been demonstrated that this "hubbing" exists only in your mind.

It is possible to fly overseas directly with QF from many Australian airports without "hubbing" through Sydney. Therefore there is no "hubbing".

Just because you found it hard to make a booking shows the popularity of the route.

[Three Bars]

A little footnote to the tale of the dumped female CEO of HP:

She left with a severance package of $21 million US!!!!

Now that's what management is about these days!!!!

:yuk: :mad: :* :mad: :mad: :yuk:

[Going Boeing]

I suspect that the original thrust of this thread is incorrect in that Frankfurt patterns are not available for flight attendants from the middle of the year as they will be crewed by F/A's from the new UK base. I do not believe that GOD wants to close the FRA route at a time when he is publicly telling the Australian government that he wants greater access for Qantas to European destinations.

[DEFCON4]

Friend in Rez says seats are not being sold to /from FRA from the middle of June

[jettlager]

Bookings can still be made on the internet for June and after?????

[DEFCON4]

You can still book flights from KIX but QF don`t fly there.
Codeshare probably out of FRA.

[gaunty]

Icarus2001

Just because you found it hard to make a booking shows the popularity of the route.

Doesn't that also reveal the real problem?

Why isn't there more capacity on that route then?

If you are adjusting schedules or types to maintain full aircraft then by definition you are missing out on a definable amount of traffic apart from p!ssing off your regular clients who did not have the foresight to book 2 weeks in advance and maybe decide to take pot luck with whoever is available on the day or worse no go or be able to go.

Ergo: you are full up with cheap seats and your yield goes out the window.
Enter Jetstar where you can p!ss everybody off equally, to contain the revenue bleeding.

Need I go on.

When I were a lad the basic principle behind the granting of an RPT license was that the Govt licensed a carrier or carriers across a given route in accordance with the capacity a condition of which was that you were required to fly at the advertised times with a reasonable chance of there being seats available up to the time of departure, win lose or draw. You then constructed your fares accordingly and sold off excess capacity on an opportunity basis only.

If we are going to throw that idea out the window and make the whole thing open to any airline who cares to step up and take the finite risk that they'll ALL go broke on it and we all have to go back to driving :rolleyes:, then perhaps the Government should go back to monitoring the capacity and manage the route load factor to say =< 67%. What price to the nation otherwise.

The other issue that has so far not been defined is how much of the business world decides out of sheer frustration to do it by conference call or videomeeting because it is just too hard.
Belts, watches wallets and shoes off walk through the thingy holding up you trousers:mad: , some lout in the shell suit or mother with the whining child next to you,:yuk: disenchanted cabin crew.:(
Lets try "J" class then, we have to go to this really important meeting, oh sorry no seats, how about tomorrow night. :{

We have actually just come round in a big circle to find that the Oz market is still only big enough for two to make money with maybe room for a third LCC (Jet*)

Mr Corrigan gets it right when he says Virgin have to lift their revenue beyond where they are if they are to survive. Why should his or indeed QF shareholders subsidise our travel.
We do not have a right to $69 fares say PER/MEL.

GOD and the fairy Godmother do really need to study the history of deregulation in the US for the lessons in trying to be a Premium and LCC at once and the Perils of Pauline in the HP case if they think that the brand name on its own is the beginning and the end without the product that made it so standing behind.

Harvard Business School has a a lot to answer for.

[Icarus2001]

Gaunty, the problem is we can theorise all we like but without the data to analyse we do not have the full picture. Do you really think QF would NOT put on more flights if the loads (and yields) were good? An obvious observation would be that it is better to fly one aircraft full four times a week than partly full seven times a week.

There has been so much armchair commentary, I think we need to assume that management A) Have a strategy and B) Know what they are doing.

We on PPRUNE cannot hope to know all the variables. As an example the decision on NJS/Jetstar for the B717 work. One would have thought that with the type and number of people who populate these forums we would have known a little before an official company press release but we did not.

GOD obviously generates a lot of antagonism but let him do his job. If the board and or shareholders view his actions harshly then they will deal with him. Yes he is overpaid and yes he will parachute out with a bucket of money. Like a good deal of CEOs.

Posters on PPRUNE like Sunfish can rant against him on various levels as they have but only QF management know what game they are playing and who is winning.

QF are making money and paying their way. If the service was truly awful all the time then it would affect KPIs and something would be done. For the record I have had good and bad on QF, SIA and Cathay. VB also varies a great deal depending on the group of FAs. Who has not been to a restaurant on different occasions and received greatly different service?

As to government control/monitoring of loads/routes well the brave new world of economic rationalism and capitalist theory rules at present so no goverment of either persuasion is going to jump in. Interesting to see that over in the West the State government has "protected" some routes. I would think this would be found to be illegal if challenged but who wants to compete on thin routes anyway? Didn't WA miss out on competition payments worth multi millions of dollars because they would not deregulate shopping hours? They were happy to miss out on the dosh to follow an ideology (or maybe small business votes!) But I digress.

QF has competition on international routes and does okay so I don't think you can really ask...how much of the business world decides out of sheer frustration to do it by conference call or videomeeting because it is just too hard.

We have actually just come round in a big circle to find that the Oz market is still only big enough for two to make money with maybe room for a third LCC (Jet*) That just about sums it up. The East coast has room for a Jetstar and other regionals. Even Jetstar with the deep QF pockets behind them have been very tentative about leaving the J curve. The only change may be newer types coming on to the market that would allow previously unviable operations to pop up.

I believe you have been in the Real Estate industry for some years? Supply and demand operates freely in this industry with plenty of builders going broke and owing contractors. Government control is limited to land release and interest rates isn't it. Life goes on.We do not have a right to $69 fares say PER/MEL. Yes I agree but QF and Ansett were not entitled to $1500 Perth - Sydney either? The pendulum ALWAYS swings too far in one direction before gravity overcomes inertia and we return closer to the middle ground.

[Jackneville]

Are we pulling out of FRA ? I suggest that that the people who will tell you before anyone else will are the hotel staff, worked for me in SFO nearly two months before an "official " announcement was made.

Cheers.

[QFinsider]

Yes Icarus management may have a strategy, but they sure as hell don't communicate it to the troops. With stagnant revenue for the last two years and the only real changes being the savage cost cutting undertaken by GD, I want them to communicate the long term strategic plan to their people. If they continue to lack a basic vision, continue to cost cut I would suggest they are simply short term focused on their hip pocket..

So to return to Frankfurt, with an aircraft going every day, that is pretty close to chock-a-block in either direction, how come it doesn't make money?
Funnily enough Rome had excellent loads as well. Try and find out what actually prompted the decision and you are stonewalled...

It is the contention that the cost is being loaded back to mainline. From training to personnel, to borrowed equipment who knows what else. They want me to believe a full 747-400 doesn't make money then show me why. Again I assert it is because of COST APPORTIONMENT. Study the available financial information, the information is presented as QF mainline and then group, no breakdown of individual entities. Last year GD stated he wanted to see how individual segments operated...I want to see how the costs are recorded at J* or AO. Till then the crap espoused about the legacy carrier that we are is just that:E

[Keg]

...Rome had excellent loads as well. Try and find out what actually prompted the decision and you are stonewalled...


I got an answer to that one albeit it'll never be an official one. It was 'better return on investment by sending additional capacity to '. In short it's the same reason we pulled the 767 capacity out of VVR and Toronto. Not because we were making money but we could make more money elsewhere. Now, I'm all for making more money but it'd be nice if we actually increased capacity in the flleet so we can [i]continue to make money on other places beside LHR, LAX and HKG! :rolleyes:

Lets hope the next 3-10 weeks brings an announcement about how we're going to do that! :ok:

[jettlager]

Flight ops insider suggests first 777 to be delivered 21 November.......................................???

[gaunty]

Icarus2001

An obvious observation would be that it is better to fly one aircraft full four times a week than partly full seven times a week.

Airline economics 101; 1st Law, Freqency, freqency, freqency. If you follow your hypothesis there will be a reduction in total numbers, that is a statistical fact of life.

Bit like the Real estate business opf location location location eh, BTW, so there is no confusion my family have been and still are in the real estate and construction business since the 1870's my brothers and I are the 4 th generation.

There has been so much armchair commentary, I think we need to assume that management A) Have a strategy and B) Know what they are doing. , is exactly what the analysts and the late great?? Andersons Accounting firm said about Enron. There is an ex airline example even closer to home.

We on PPRUNE cannot hope to know all the variables. As an example the decision on NJS/Jetstar for the B717 work. One would have thought that with the type and number of people who populate these forums we would have known a little before an official company press release but we did not. I can guarantee you that this was not so, but hey there are of the type and number of people who populate these forums some who would actually understand the extreme sensitivity of the negotiations.

I must check with Ms Condoleeza for the goss on the latest negotiaions.:rolleyes: Posters on PPRUNE like Sunfish can rant against him on various levels as they have but only QF management know what game they are playing and who is winning. see above PPRuNe is monitored closely by those in the know.
As these are anonymous forums the origins of the contributions may be opposite to what may be apparent. In fact the press may use it, or the unscrupulous, to elicit certain reactions.,


QF are making money and paying their way. If the service was truly awful all the time then it would affect KPIs and something would be done. For the record I have had good and bad on QF, SIA and Cathay. VB also varies a great deal depending on the group of FAs. Who has not been to a restaurant on different occasions and received greatly different service? if you are a QF insider or apologist then we are in trouble. I don't get paid if I have a bad hair days or I'm not feeling up to it occasionally and it goes straight to the bottom line. Consistency and exceeding expectations are the difference between the merely good and truly great organisations. That goes straight to the bottom line too.
As to government control/monitoring of loads/routes well the brave new world of economic rationalism and capitalist theory rules at present so no goverment of either persuasion is going to jump in. and they don't currently on international routes.??

Interesting to see that over in the West the State government has "protected" some routes. I would think this would be found to be illegal if challenged but who wants to compete on thin routes anyway? it's all in the Australian Constitution old chap. TheCommonwealth can only have jurisdiction in interstate not intrastate, you should brush up your history on the East West story as an example.
The Commonwealth "Two Airlines Agreement" was exactly a "control" on capacity and scheduling originally to protect the huge foreign exchange investment required to bring Australia into the jet age when Qantas, thankfully :ok:, dug their heels in and insisted on the Boeing (who wanted cash on the barrelhead) product against the Motherlands Heath Robinson contraptions with no cash down and interest free for the first 200years. :rolleyes:
The worlds largest aviation user the US had similar controls for quite different reasons but it all came down to safety which is inextricably and fundamentally linked with the economics.
One can only guess where we would now be if they had not done so. I only am certain that we would not be as far up the road as we are today.
The original concept got sorta out of focus before they finally repealed it with deregulation.:{

QF has competition on international routes and does okay I was not in this instance referring to International which in any event is capapcity controlled by the Contracting (international) States for that very reason.

I believe you have been in the Real Estate industry for some years? Supply and demand operates freely in this industry with plenty of builders going broke and owing contractors. Government control is limited to land release and interest rates isn't it. Life goes on. close but no cigar.

I have been in that industry my entire life.
I have also been in the aviation business for the better part of my working life.
Some would observe that the similarities between the two are scary, it is not, they are both service industries with the same problems and the same proportion of dumbasses on both sides of their check in counters.
"plenty of builders going broke and owing contractors." exactly like the 'dodgy brothers' in the aviation industry.
Except the building industry sought and gained from Government more economic regulation of 'dodgy bros' builders not less.
The Government don't "control" land release on a capacity basis, they are tasked in fact to encourage and reduce the "red tape" for more developments to meet whatever demand is generated. The capacity is currently something like 18 months to 2 years behind the demand, not Government control just the market demand exceeds the developers capacity, here at least.
Interest rates, are a global factor and do not have any more or less effect buiding industry than any other.

Yes I agree but QF and Ansett were not entitled to $1500 Perth - Sydney either? well, in the context of the schedule requirements and obligations to service all of the long thin and uneconomic routes that came with the "protection" they were. So now we have cherry picking and the loss of many routes to areas that are now significantly socially disadvantaged.

Australia is a hard taskmaster in geographical and demographic terms in any industry it is absolutely brutal on aviation.

We learned all these lessons nearly 50 years ago why do we continue to have to relearn them:sad:

[Sunfish]

Icarus, I can't answer your posts because I don't have access to the load factors.

I've looked at the U.S. and British websites. From New York, Sydney is often 12 hours closer and $200 cheaper to get to than Melbourne.

From London there is QF9 and 10, but unless you book well in advance my understanding is that these aircraft are always full!

I have lost count of the number of U.S., European and British friends and business associates who have commented on how hard it was for them to get here compared to Sydney.

[Eastwest Loco]

Sunny

The web sites are limited in their ability to read multi sector availabilites, or check by sectors as we can and build the same beastie for a far lower price. Apart from busy periods such as Chinese New Year, school hols when all the foreign students are going back and forth and other abberations, the QF 9 and 10 birds are generally saleable. It they are not, there are numerous combinations that you can use within Oneworld including the BA side of codeshares, or a straight transfer to BA or BA all the way. Many ways to skin honourable cat. The web based engines are very literal and cannot handle this. A lot of people spend a lot of money they do not need to thinking tha "is web? is good."

They eventually learn.

Interestingly I got a call from a friend locally who had 2 rels travelling J from London to Auckland with a stop in Australia and some side trips while they were here. I was confident I would get smashed by local fares available in the UK market, but - bugger me - my quote on EK came in thousands under their local quotes. What in hell is going on here? Am i missing something? I pulled a full 9% on published EK fares and won. Something is seriously wrong in that marketplace.

As for FRA bikkie - I feel you will see a code share agreement with the Luftwaffe being touted shortly. The fact they are Star Alliance carries little creed as the code share with Air France which is up and running is a combo of One World and Skyteam.

It is pretty clear that QF do not want staff - farm off your accounting to Fiji, sales checking to the UK - move staff to London, drop routes to low cost alternatives. it is bloody clear felling at the moment.

Our debit memos (Notice of a deduction from our weekly IATA statement due to disputed coding or taxes or recall of commission on a refunded credit card sale) are arriving in envelopes postmarked Surrey in the UK.

Thank you for calling Qantas reservation - Rajih speaking.

Best all

EWL

[Sunfish]

EWL will call you next time I need to travel.BTW, have you commented on Flight Centre and their little "announcement" the ACCC makes them run?

[Mr. Boeing]

I believe they are about to announce two more destinations so perhaps they need the aircraft for that.

[QFinsider]

Well Mr.Boeing I hope you are right, however I think in the current environment they are rationing everything including milk in the fridges..

Makes perfect sense to announce new ports, soend money developing them and leave a port that makes money...
It is the cost apportionment that makes all the ports "unsustainable" they won't reveal what the other entities pay to borrow infrastructure, people etc.

New flights will be additonal slots to LA to milk the route before SIA get on it.
Oh and to be creative they may have an extra flight to london.

Ain't much of a strategy is it?:mad:

[mach2male]

......more like Delhi and Calcutta

[Animalclub]

Somebody has to carry the interport mail to India... don't they???

I'm on my way....

[QFinsider]

mach 2 male,
Delhi and Calcutta wooopy do..been done before and pulled out of too..

Returning to the original post, why are they pulling out of Frankfurt, a profitable stable return for the last x years?

The answer is cost apportionment. Mainline is loaded with cost that belongs elsewhere in the group. A jumbo full of passengers so full of costs belonging elsewhere it hardly can fly.

The constant sh$t might get some down, not me.. Their insistence on return on assets not occuring is lame when they dont publish the figures...

:mad:

[IORRA]

So are we absolutely sure that QF is pulling out of FRA? Or at this stage is it all hearsay/Fatties gossip (nothing wrong with that either, but somewhat different from being a 'done deal')?

[Eastwest Loco]

Sunny

I have not started a topic regarding Fright Centre, as that would have been blatant bad management practise.

One does or should not start a witchhunt against a direct competitor. Very bad form.

I did reply to a forum that made specific reference to the ACCC action and where I was invited to comment.

Not for one second do I state that I held back what I really think, but that is just the bloke I am.

If you call me for a booking Suny, I will give it my best shot as always. Thanks for thinking of me.

QFinie and others - the sub continent routes are incredibly high yield, and SQ will be copping the brunt of load losses with any operator going in direct. It is very hard to get a seat at any time of the year into India.

Oh - and as an aside which has probably been mentioned elsewhere anyway, AO anounced today they are hauling out of Kota Kinabalu Sabah - that lastd well..... not!!

Shames as the passengers we sent there on AO enjoyed the inflight experience.

Best all

EWL

[Sunfish]

and Geoffrey has said they will do anything to protect the lil paper profit AO makes ?????????

If this is true than I think the ACCC will get interested RSN.

[QFinsider]

Here's what we know....

Airport staff not after June

New routes and no available capacity

Hotel staff sad to see us go


After all it is a rumour network, the rest is up to each to judge. My continued assertion is that unless we have fuller reporting on the apportionment of costs between the entities then GD can call mainline a legacy carrier and noone can disprove it. He has made reference to the profit of AO, and protecting it, I wonder what he means. By inference cost apportionment is the key to just how low cost is AO or j*. Without transparent apportionment, then routes like FRA can be called unsustainable

Oh and by the way I was getting worked up and removed the inference alluded to by sunfish.

[EPIRB]

I wonder if it will mean less double shuttles??

[jetjockey7]

So the capacity from FRA will go to.......Tada, the States.