Jetstar Pacific can't pay the bills....

[DirectAnywhere]

I think this deserves a thread of its own. If the article is correct which, given that it includes direct quotes from the 'Director General' I have no reason to doubt, it appears that Qantas is going to be forced to make another capital injection (through a share issue and buyback) into Jetstar Pacific to keep it solvent.

Thanks Angryrat for the article. If this doesn't make qf shareholders and staff cranky nothing will.

VietNamNet - Jetstar Pacific now thirsty for capital: General Director | Jetstar Pacific now thirsty for capital: General Director (http://english.vietnamnet.vn/en/travel/9216/jetstar-pacific-now-thirsty-for-capital--general-director.html)

I've included my response to what I think are the most telling points in the article.

Quote:
While the input costs increased significantly, airlines cannot raise the airfares. Though the airfare ceiling has been raised since April 2010, the current airfares are still much lower than the actual expenses. I know that all domestic airlines incurred losses on domestic air routes in 2010.

Thread drift I know but nice pickup Angryrat. Expect to see a "clarifying statement" from Jetstar Pacific management tomorrow after Australian management read that article. We couldn't possibly have someone revealing the true state of this operation to the market now could we?

Quote:
Shareholders have approved the plan to issue new shares to existing shareholders and outside shareholders to raise the chartered capital.

So a further capital injection will be required through a share issue with those shares being bought by Qantas?

Quote:
In the immediate time, JPA has accepted the request by Vinapco to make payment one day in advance for the flights of the next days.

So Jetstar Pacific has to buy its fuel on a daily basis now as its payments have become so unreliable its creditors don't trust it. What a debacle. But they're cheap so it must be ok.

The general director of Jetstar Pacific is about to get a rap over the knuckles for daring to speak the truth. Loose lips sinks ships old fellow.

[Sunfish]

Qantas was warned. Asia is littered with the bones of Western "Joint Ventures".

It always goes the same way. The Westerner invests $$$$$ and perhaps some expertise. Then for some strange reason the enterprise doesn't make money. The Westerner is again asked to put in more $$$$$ to cover the temporary shortfall. Then the business starts making losses again and the Westerner is asked to put in more $$$$$.

This cycle can be repeated Four or more times until the Western company finally wakes up to the fact that the business will never, ever, make profits for the Western partner. The business is sold for a song to an Asian investor and the Asians go looking for the next naive Western sucker.

My Dad saw this happen numerous times from 1935 onwards. I had a friend who moved production of his wheelchairs and mobility aids to Asia Fifteen years ago. He has a good business and he set up an ultra modern factory. His Asian partner stitched him up, he lost everything and committed suicide.

R.I.P Rick Morris.

[SkyScanner]

JPA woes weren't helped by the fact that they had 2 engines that suffered multi- overtemping resulting in a multi-million dollar repair bill recently...

[Jack Ranga]

How did the over temping occur?

['holic]

Just found this article. Admittedly it's a little old, but it still brings up some interesting points.

Little to smile about at Jetstar Asia -- Intellasia.Net (http://www.intellasia.net/news/articles/regional/111256083.shtml)

Little to smile about at Jetstar Asia 20-JAN-2009 Intellasia |


The Qantas-backed Singaporean budget airline Jetstar Asia has belatedly posted a modest full-year profit, the first since it began services in late 2004.

But far from crowing about its US$S4.5 million (US$4.5 million) full-year profit, the airline's holding company, Orangestar Investments, was even tardier in releasing its full-year accounts than its Singapore Airlines-backed rival, Tiger Airways, which filed its accounts three months late.

(AFP) The 45% Qantas-owned holding company sneaked out its accounts to the Singaporean corporate regulator shortly after the new year -more than one-month later than Tiger.

Despite the profit for the 12 months to March 31, 2008, Jetstar Asia seems to have little to celebrate.

Jetstar Asia failed to respond to the Herald over the weekend on speculation that several of its senior managers, including its chief financial officer, had resigned. Nor would the airline's Singapore management comment on suspicions its maiden profit had been propped up through its relationship with its Australian sister airline, Jetstar, to which it subleases three of its 10 Airbus A320s.

The accounts show Jetstar Asia earned US$S21.8 million in "sublease" revenue in the 12 months, against US$S12.5 million the previous year. It has four jets leased out altogether.

Jetstar Asia did not explain why its subleasing revenue rose the same year it transferred the three jets it had leased to the Turkish airline AtlasJet to the Australian Jetstar. Jetstar took delivery of the aircraft in December 2007.

A spokesman for Jetstar Australia, Simon Westaway, said the jets were leased at a "commercial" rate.

The figures suggest the Singaporean airline is possibly being subsidised by the subleasing of its three A320s to the Australian franchise at a higher rate. Jetstar Asia paid US$S45 million for the lease of all of its aircraft during the year. This includes the aircraft operated by Jetstar Asia under the Valuair name. Qantas also acknowledges in its annual report that it "has seconded employees and provided various support services" to the airline.

It is also likely Jetstar Asia's meagre profit could have been wiped out by the surge in oil prices last year and now the slump in demand fuelled by the economic slowdown in Singapore.

The figures also show that four-years on, the low-cost airline boom in Asia has failed to live up to its hype. When the Jetstar Asia name was unveiled in Singapore in September 2004, the former Qantas chief, Geoff Dixon, argued: "This is going to be a very, very substantial airline."

Jetstar merged with the loss-making Valuair in 2005, mainly in an attempt to gain landing rights in Indonesia. Valuair has racked up US$S87 million in losses since its founding and Jetstar Asia US$S81 million. Qantas's other shareholders in the venture include the Singaporean government's investment arm, Temasek, which aside from being a shareholder in Singapore Airlines has a stake in Tiger Airways.

Tiger, too, has failed to live up to its hype, with its Australian operations incurring heavy losses and its overall operations making only a modest profit last year. The former darling of the Asian low-cost segment, Malaysia's AirAsia, recently reported its first loss since its listing in 2004.

And that, my friends, is one of the ways costs are transferred between parts of the group. Oh well, throwing some 787s at it should fix the problem :rolleyes:

[assasin8]

"Alan Joyce, says he is not going to spend any more money on “the premium international operation until they (start) to return their cost of capital” ... But it's obviously ok to throw good money after bad with this lot!:rolleyes:

"Help us, Obi Wan Kenobi, you're our only hope...":{

[ampclamp]

What cheeses me off the the 'THEY' (QF international) in that statement. HE is running ALL of Qantas, not just the bits he likes.

[QFinsider]

Joyce and Dixon survived on consultants...At least count there were how many "advisers". Those two featherweights can't change their shoes without a consultant...

[gobbledock]

They will blame the former CFO and COO for the current woes...
The current COO is an ex 'bag chucker'.

[gobbledock]

Joyce and Dixon survived on consultants...At least count there were how many "advisers". Those two featherweights can't change their shoes without a consultant...
There IS a good reason they rely heavily on Consultancies..........Keep digging and ye shall all find out why.