Qantas Announcement: 28 AUG 14

[Wedcue]

Welcome folks, to the unofficial announcement page.

Predictions, facts and rumours are all welcome.

[spelling_nazi]

Submit your best guess for the dollar figure Alan has
blown this time! Closest guess wins a night with Livvy.

2nd prize, two nights

[blueloo]

anyone know of live feed via internet?

[SenZubEanS]

My guess for the amount of jelly beans not in the coffers anymore...

$915 Mil


My prayer...

resignation announcement.

[VicVector]

$1.2 b

It's a sure thing.

[crewmeal]

1. Code sharing across the Pacific using EK 380's
2. QF hosties working on EK flights on the kangaroo route (If it hasn't been chopped.
3. EK pilots flying QF 380's (Showing them how it's done in DXB)
4. Mr Joyce walking away with a 'gold watch' as a thank you for all the cut backs in staffing levels.

I will come back and see how off the mark I was :ok:

[Cactusjack]

From Nicks SMH article,
Its excuses over the years have included an unlevel playing field, higher fuel costs, difficult unions, a high or low Australian dollar (Qantas has blamed both in recent years) to name but a few. Qantas' excuses for abysmal performance and grand plans for a turnaround just don't stack up.

Full article below. It's brief but it is succinct and to the point. Well done Nick, nice to see at least one politician who appears to give a **** about the real issue here - human beings, as in Qantas workers and their families and the Australian traveller.

Qantas chief Alan Joyce has many questions to answer (http://m.smh.com.au/comment/qantas-chief-alan-joyce-has-many-questions-to-answer-20140827-108wov.html)

Surely it is time that the 5 foot human wrecking ball (and other associated parties to the QF destruction) be frog marched out of Mascot (and preferably Australia) immediately?

[SOPS]

I want a job that pays me 22 million to destroy something. Where can I apply?

[ALAEA Fed Sec]

My tip is $780M and much congrats for the Board for keeping below $1B in these troubled times.

[bazza stub]

"Closest guess wins a night with Livvy."

Errrr, um, it's a profit? :p

[bazza stub]

$897 million

[Iron Bar]

$747 million plus write downs and redundancy costs forced into the 13-14 FY.

[Qantas 787]

It is going to be a huge number regardless and we know the reasons for it.

What we want to know is how they are going to fix it - we won't get those answers today, it will just be the normal spin. Announcements that should happen (like the board and CEO will end their tenure by the end of the year) won't happen and there will be no strategy going forward to give anyone confidence.

It is about time these big shareholders make some noise..........

[Autobrakes4]

$852 million.

[Keg]

Operating loss circa $350 million. Other one offs, write downs, redundancies, etc to take it Ito $890-1.1 billion. Retired debt in their circa $100 million or so.

[Australopithecus]

I think Keg is about right on the QF mainline operating loss. What is not ever apparent is the JQ Intl and Asian misadventure losses. Given the various snippets of information from those quarters. I would guess another 130-200 million there. Add in the one-off costs and we get a nice headline custom made to instill confidence in travellers buying a ticket for future travel. :ugh::ugh:

When manure starts to snowball it gets ugly fast.

The only way forward is to replace all of the board and executive and blazon ads and billboards with the old "under new management" ray of hope.

[Soteria]

$1.25 billion loss - all the fault of overpaid pilots, surplus Engineers and company destroying unions.

Now, where's my bonus and ????

[Stationair8]

$1billion.

The Irishman will tell us about the tough times in the industry blah blah.

The board will pat themselves on the back and blame the overpaid pilots, overpaid trolley dollies, the non level playing field, the unions etc!

The fund managers will just sit there unable to explain why they have such faith in in the board and management of the rat!

Just confirm the first prize is a night with lovely Livvy!

[Pastor of Muppets]

Holy sh$tballs. 2.84b

[Romulus]

$2.84 billion

$2,840,000,000

Holy crap.

[badboiblu]

$&@$ 2.84.

[eshlon]

It was always going to be a dramatic figure so as to give impetus to the grand plan. Not looking good for any of us!

[gordonfvckingramsay]

Oh dear.......2.84 billion, that's what happens when you cut back so much you have to pay for the mistakes.

[Pearly White]

About 40 A320s then... Good one. You chaps on the board must be jolly proud. How do you sleep?

[Des Dimona]

It looks bad, I know, but I wonder how much is asset write down?......


What is the actual operating loss ?

[badboiblu]

About 2.4 B write down on the international fleet.

[caneworm]

From the ABC,

BREAKING: Qantas posts a loss of $2.84 billion
by Daniel Franklin 8:41 AM

[Angle of Attack]

Some explanation from the report

[QUOTE][While there are significant surpluses in Qantas Loyalty, Qantas Domestic and Qantas Freight CGUs, an impairment of $2,560 million arose in the stand- alone Qantas International CGU. The size of the impairment loss recognised is largely the result of wide body aircraft being purchased through a period where the Australian dollar was significantly weaker against the US dollar compared to recent years.
This impairment is a non-cash charge, with no impact on the economics of the business or change to cash flow forecasts. The impairment has arisen because Qantas International CGU has been tested as a standalone CGU for the first time. Accordingly the Qantas International fleet assets are not assessed in combination with the collective cash flows of the whole of Qantas’ operations. Following the impairment, the carrying value of Qantas International aircraft is more reflective of current market value./QUOTE]

[KrispyKreme]

If Alan Joyce survives this i will be very surprised! Hope he does not, time for new blood

[busdriver007]

The Australian dollar is relatively strong(0.93)...What the?

[Ollie Onion]

So, Qantas domestic profitable, Jetstar domestic profitable, Qantas International loss making with old fuel guzzling aircraft and Jetstar International loss making with beautiful fuel efficient aircraft but a loss making model. If only there was a way to somehow give the new aircraft to Qantas International and let Jetstar focus on what it is good at, low cost domestic travel NOT in Asia. Obviously not this simple :ugh:

[73to91]

The airline has decided to hold on to its frequent flyer program, as expected, but will form a new holding company that will allow its international business to participate in future consolidation opportunities.

Read more: Qantas posts $2.8b loss after hefty writedowns (http://www.smh.com.au/business/aviation/qantas-posts-28b-loss-after-hefty-writedowns-20140828-109ba6.html#ixzz3BdVrF1Md)

No doubt the new 'holding company' will be managed by the same management that got QF into this mess.

[73to91]

Today I want to outline the Full Year result, update you on the Qantas Transformation program, and set out the results of the Structural Review announced in December last year.

This morning Qantas announced an Underlying Loss Before Tax of $646 million.

This underlying result reflects:

The cumulative effect of two years of market capacity growth outstripping demand,

A record high fuel cost of $4.5 billion, up $253 million on the prior year, and

Weaker demand due to an environment of lower consumer confidence, with reduced activity by business, particularly the mining and government sectors.


The statutory loss after tax of $2.8 billion reflects the underlying loss, and:

The costs associated with our $2 billion Qantas Transformation program, including redundancies and early aircraft retirement, and

A non-cash write-down of $2.6 billion to the value of the Qantas International fleet, following our Structural Review, and as required by accounting standards.


I foreshadowed today’s result at our half-year announcement in February, declaring it was unacceptable.
There’s no doubt that today’s numbers are confronting.

But they represent the year that is past, and we have now come through the worst.

With our accelerated Qantas Transformation program, we are already emerging as a leaner, more focused, and sustainable Qantas Group.

Our work is on track and we will see accelerating benefits in the coming year.

The changes arising from the Structural Review will deliver significant short and long-term benefits.

Importantly, there is a clear and significant easing of both international and domestic capacity growth, which will stabilise the operating environment.

We therefore anticipate a rapid improvement in the Group’s financial performance in financial year 2015.

The Qantas Group expects to deliver an underlying profit before tax in the first half of the year, subject to factors outside our control.

Full Year

Turning to key points in the full year result.

Both our Qantas Domestic and Jetstar Domestic businesses were profitable over the year - in all likelihood, the only profitable airlines in the domestic market - in a year of unprecedented competitive pressure.


Group Domestic earnings were just below $50 million.


Revenue declined relative to the prior year, due to a second consecutive year of market capacity growth well ahead of demand.


Both airlines delivered unit cost improvements, offsetting some of the revenue decline and higher fuel costs.


Qantas International is transforming at speed, with


$400 million of costs removed over the past two years.


However, these achievements were offset over the same period by revenue decline, again due to competitor capacity growth running well ahead of demand, and fuel cost increases.


Earnings recovery in Qantas International will continue to be driven by removing costs from the business, and the easing back of capacity oversupply.


The Jetstar Group delivered a two per cent unit cost improvement and business fundamentals remained strong.


However, due to competitive intensity and capacity oversupply in Australia and South East Asia, yields were adversely affected.


Qantas Loyalty recorded its fifth straight year of double-digit earnings growth - another record result in a great business.

The Group finished the year with a strong cash position of $3 billion, a decrease in debt, and total liquidity of $3.6 billion.

With two recent landmark bond issuances totalling $700 million, the Group’s debt maturity profile has been significantly extended, with no major unsecured re-financing required before April 2016.

The Group also reported an operating cash flow of $1.1 billion, leading to a neutral free cash flow result, despite the significant costs associated with Qantas Transformation over the period.


Accelerated transformation program
Now to our progress with our accelerated Qantas Transformation program.

The reality is that we are undergoing the biggest and fastest transition since the privatisation of Qantas in 1995.

Our Transformation is about working our assets harder, making our business smarter, giving even more to our customers, and reshaping our operations for long-term sustainable success.

We are only six months into the program but we front-loaded many of the more difficult employment and restructuring measures, so we are well ahead in terms of the execution of our major plans.

The measures announced in February led to significant redundancies, of which 2500 have taken place.


By the end of full year 2015, 4000 of the total 5000 redundancies will have occurred.


The 5000 redundancies will conclude the period of major job reductions.


Over the course of the year, Group unit costs were cut by three per cent, two percent in the first half of full year 2014, and four percent in the second half, demonstrating the growing momentum in the Transformation program.

A total of $440 million in benefits was delivered in 2014, including $204 million from the accelerated Transformation program.


A further $900 million in initiatives is underway, with more than $600 million in benefits to be delivered in full year 2015.


Net debt was cut by almost $100 million, with an expectation of more than $1 billion of debt reduction in total by the end of the current financial year.



Importantly for our balance sheet, our debt-to-EBITDA peaked in financial year 2014, with earnings improving and debt being reduced from this point forward.


Customer Focus
While we are aggressively cutting our costs, we are creating even better experiences for our customers, because customers are at the heart of everything we do at Qantas.

Our targeted investment programs support the Qantas brand promise and yield premium every day, and for the long-term.

We are investing in new international lounges, and even better in-flight entertainment.



We are updating the cabins of our A330 and B738 fleets.



We continue to innovate with great Qantas Loyalty options like Qantas Cash and the Aquire scheme.



We keep investing in our people to deliver outstanding customer service.



As a result, Qantas leads on key indicators including customer advocacy and on time performance.


We have recently achieved a string of global and national awards and recognition.
For Jetstar Group we are investing in the Boeing 787 Dreamliner, hitting record customer satisfaction levels across the portfolio, and continuing to improve the customer experience from booking to destination.

Structural review

In December last year I announced a comprehensive structural review of the Qantas Group.

That review is complete.

Non-Core Asset Sales

The review identified opportunities to divest some non-core assets such as airport terminals, property and land holdings.

Valuations were undertaken.

Some assets have now been sold, including the Brisbane Airport terminal lease, and we continue to assess opportunities where these will lead to enhanced shareholder value.

The proceeds from any sales will be used to pay down debt.

Qantas Loyalty

We also considered the partial sale of Qantas Loyalty.

Due to the strong support of our customers and partners, Qantas Loyalty is a standout business, achieving a new record result for the year with double-digit growth.

After careful consideration, our judgement was that Qantas Loyalty continued to offer major profitable growth opportunities, and there was insufficient justification for a partial sale.

To continue to realise the value in Qantas Loyalty, we will be innovating, investing, working closely with our partners, and rewarding the loyalty of our customers with even more ways to earn and redeem Qantas points.

Jetstar in Asia

And we looked at our Jetstar ventures in Asia.

In the world’s fastest growing aviation market, this is a major long-term opportunity that we continue to believe in.

No new Jetstar ventures will be established while the Group is focused on Transformation, but we know that substantial value exists across the Jetstar airlines and we will realise that value over time.

Structural separation

Since 2012, in order to strengthen accountability and performance, we have reported the Qantas International and Qantas Domestic businesses as separate segments.

The Australian Parliament recently decided to soften the foreign ownership restrictions in the Qantas Sale Act.

As a consequence of this decision, we have decided to create a new holding structure and corporate entity for Qantas International.

This will have no impact on the day-to-day operations, network or staffing at Qantas International.

However, this structure increases the potential for future investment.

It will create the long-term option for Qantas International to participate in partnership opportunities in the international aviation market, with a view to achieving further efficiencies and improved returns to shareholders.

Fleet Write-down

The decision to create a separate holding structure and entity for Qantas International has triggered an accounting requirement to test the value of Qantas International assets on a stand-alone basis.

The international fleet was purchased when the value of the Australian dollar averaged 68 cents against the US dollar, and in the case of the B747s, 57 cents.

Today the Australian dollar is trading at 93 cents.

The value of these aircraft on our books has therefore been written down by $2.6 billion to their current market value.

As a result future Qantas International depreciation expenses will be lower by around $200 million per year.

Importantly, this is a non-cash charge – a book write-down to the carrying value of aircraft that Qantas has no intention to sell, and will retain in its fleet.

It will have no impact on the economics of the business or change cash flow forecasts.

Outlook and Conclusion

Let me conclude.

Everything we are doing is about building a sustainable premium airline model for the 21st century.

Over the coming year we anticipate continuing high competitive intensity, but capacity growth is clearly and significantly easing in both the domestic and international markets.

International competitor capacity growth in Australia is expected to be below three per cent for the first half of 2015, compared to average growth of eight per cent over the past four years.



Overall domestic capacity growth in the first half of 2015 is likely to be around one per cent.


As you know, we froze Qantas Group domestic capacity growth for the first quarter and we have decided to extend that freeze for the second quarter, meaning no capacity growth for the first half of 2015.
We believe this to be appropriate given the underlying market conditions.

However, we maintain significant flexibility within our fleet and operational envelopes to respond swiftly should market conditions and our customer proposition require it.

By the end of this Transformation:

We will have dramatically reduced our cost-base disadvantages in Qantas Domestic, compared with our competitor, to under five per cent, and significantly reduced the Qantas International cost base.



Our organisational structure will be clearly aligned to our strategy, with Qantas International in a separate entity to provide future options.



And our capital structure will be stronger, through the generation of positive free cash flow, and further asset sales to repay debt.


Finally, I want to thank the employees of the Qantas Group.
The transformation of our business is a difficult process.

They have responded with great courage and good spirit to the challenges that we face, while maintaining the highest standards of performance.

Due to their efforts, the national carrier will be far better placed to deliver for our customers, reward our frequent flyers, serve Australia, and build long-term shareholder value.

We still have more to do, but we have come through the worst and we have clear evidence of a brighter future.

As I said, we anticipate a rapid improvement in the Group’s financial performance in financial year 2015 and, subject to factors outside our control, we expect to deliver an underlying profit before tax in the first half of the year.

Any questions. When are you leaving?

[V-Jet]

$800m before write downs/restructuring costs??? Think I heard that..

Bonuses all around!!!

[500N]

If Alan Joyce survives this i will be very surprised! Hope he does not,
time for new blood


He got a lashing in The Age yesterday and a stark reminder of Qantas versus NZ Airlines.

[Australopithecus]

Only a the most craven of liars would use "consolidate" and "opportunities" in the same sentence. This result, this arbitrary and sudden write-down of its fleet assets looks like opportunism riding on the back of an unrealistic book valuation.

The next question I have is how did the auditors account for the fleet valuation last year? Nothing significant has been revealed in the past year to revise the fleet's worth: they were obsolete fuel hogs then;they are obsolete fuel hogs now. With no replacement strategy.

Are these criminals exposing their auditors to a dose of scrutiny? I hope so, because then thieves will fall out and the whole truth may have a chance at some daylight.

[Angle of Attack]

If you remove the write down and redundancy costs it actually isn't too bad, those international write downs are from years ago, purchasing the 747's etc. It's basically clearing the decks for foreign investment into the international division...

[Ertimus]

Not surprising after privatization first on the corporate list give the CEO buckets of cash then close down most of your routes, try and sell the Airline, don't buy any new aircraft and when you do, buy the biggest and keep your face on news bulletin's, set up another airline to compete with, give your remaining routes away to your competitor it's easier for them to do the hard work.
Restructure, restructure, restructure the Australian corporate answer to everything. When Australia took on the American theory of only concentrating on your core business and getting smaller and more efficient the writing was on the wall for all Australian companies.
The only thing left for QANTAS is to sell all the aircraft and become a ticketing company, sadly this is the future for all Australian companies with university educated management following failed American doctrines.

[Pundit]

The Board and Chairman will survive

AJ will survive

It was not his fault. He inherited a hospital pass from Geoff.

Funny about that, most guys I have seen receive a hospital pass were wiped out almost immediately. He has survived for 6 years without paying a dividend so the financial institutions must like him. They never complain.

AJ has promised a profit next year, give him a bit more time.

[Australopithecus]

...and it is idiocy to announce a massive book loss on fleet valuations and expect the average punter to parse that out from the headline loss. As Joyce stated, that exercise was discretionary, the result of deciding to form a holding company.

The average Joe will only hear " 2.8 Billion lost" and think "blood in the water". Then go book his next trip on anybody else lest he lose his dough in the ensuing bankruptcy.

A triumph of airline management and perception management. :ugh::ugh::ugh::mad::{:mad::{:mad::ugh:

[500N]

Austral

Except in exceptional circumstances, auditors never seem to face scrutiny !

Funny about that, most guys I have seen receive a hospital pass were wiped out almost immediately. He has survived for 6 years without paying a dividend so the financial institutions must like him. They never complain.

In most other industries, 6 years is long enough so as you say,
someone must like him !

[dr dre]

The average Joe will only hear " 2.8 Billion lost" and think "blood in the water".

Just shows the average joe knows nothing about accounting

The 2.4B comes from the split of QFI into a separate CGU, some of those costs come from the 90's when the dollar was high compared to the US.

The $646m loss is the important number

As far as fleet changes go, -2 A332, -2 738 (1 QFD and 1 JC). I take it this is after the additional -738's and 332's are delivered

[Australopithecus]

But that is hardly a revelation? The average joe being ignorant of accounting nuances? I guess that a charm offensive should begin any minute reassuring the hoi poloi that their reservations and advance purchases are safe.

I know I shall be issuing hollow promises to my family this evening, so I had better catch up on the QF talking points today...

[Archer2002]

Apparently everything is on track and as per the grand plan. So carry on regardless chaps.

[dr dre]

I guess it's similar to the media reporting a go around as "Passenger aircraft seconds from disaster as it avoids deadly runway collision by mere metres"
And that doesn't deter the public from flying

The cash position went from +2.4B at the half year to +3B now

[framer]

The cash position went from +2.4B at the half year to +3B now
If you have the time can you please explain how that has happened and what exactly it means? I have no accounting experience whatsoever and struggle a bit with this sort of announcement. That said, I think I understand the write down that has occurred.
To me it does look like they are separating International out and positioning it for sale.

[Marvin Martian]

As Murray Walker once said when Nigel blew a tyre in ADL when attempting to get back to the pits.... "Spin Spin Spin!!"

I mean really, kiddies selling home made lemonade from a roadside stall can do better...

An absolute disgrace....

Clearly the plan is to make it a 'virtual' airline...
No aircraft, fuel, staff, terminals, unions etc etc...
Just buy code share tix as and when you need them on a seasonally adjusted basis and add a margin...

In the meantime, ruin the lives and careers of dedicated folk who give 110% to try and keep it in the air...

Grrr

[lamem]

Boy Steve were you off the mark.

[Keg]

Decks are clear. Transformation on track and returning to profitability next FY- ie already. QSA is being revised and may yet be revised further. My money's on China Southern being the cash coming in and then that means fleet investment and so on.

Overall I reckon its a genius strategy given they still have a narrative to belt the various unions over the head with in upcoming EA negotiations.

I'd rate Qantas now as a 'buy'- at least for the medium to long term. It'll be pretty volatile over the next day or so.

[ALAEA Fed Sec]

Underlying loss is less than I or the market predicted. This 2.8B is just a fantasy figure to make them look good next year. This is a clear signal that Alan Joyce is here to stay.

[ACT Crusader]

Boy Steve were you off the mark.


Yeah it was actually better than he predicted - 780 mill prediction as opposed to 646 mill underlying loss.

With cash in the bank and the new Int'l entity, it definitely has the "come and look at me overseas players" song sheet about it

[MarkZ]

Obviously a Medium/Long hold strategy would be the only option, but at what price would you look at QAN and say pull the trigger?...

I'm just watching it for my own intrigue, but what do the investors think? Im looking at this with the knowledge of basic Accounting and Investment subjects done at Uni before I changed courses.

And as ElZincho said, how can you go from $2.6b back to profit in 6 months from the following:

QANTAS OUTLOOK
The Group expects a return to an Underlying Profit Before Tax in the first half of FY15, subject to factors outside its control.

This is based on the following expectations:


A target of $300 million of Qantas Transformation benefits to be realised in the first half.
A stabilising operating environment, as market capacity growth subsides.
First half fuel costs in line with the first half of FY14.
The repeal of the carbon tax.
Reduced depreciation costs compared with the first half of FY14.

[badboiblu]

Share market up 6%

[Captain Biggles84]

When will these muppets get back to the basics..

How about just running the airline as it stands right now..
Clearly the biggest issue is fuel and wrong aircraft..

Enough of this accountant BS… Thats the problem so fix it.

They have the money there to go and purchase aircraft. Yes in their current state is not ideal as cost of servicing debt has now increased. But delaying fixing the basic elements of running the airline just festers the cancer within. Instead of spending money on f#wit accountants and lawyers on how to spilt international into two entity's so we can undermine our own current international to further the rot all for the sake of some airline overseas who thinks they will make a quick buck… (prob will cause their terms will stitch QF who will have no choice as we "need" the money… resonates EK deal)

You have the product, you have the right staff, you have the infrastructure. Spend the money on them. Spend other money lobbying those politicians and pressure them profusely to protect our skies (open skies rewards no one except the public and long term will be a constant cycle of death especially in Aus where certain costs are higher than other countries) and demand the pollies hold to account the other crims/corporations who run the airports of Aus..

Then we may see the playing field levelled back in everyones favour…

These accounting tactics just further my hatred for that irish smoker and his mates.. Run the airline. put the calculator and formulas away FFS

[extralite]

A write down of assets now is only possibly due to over-valuing of assets in the previous financials. Asset write downs should in theory reflect their true value at each reporting point. $A has been where it is or higher for a while.

The value of a company's assets is part of the value of a business. So an increase in cash position, while the value of your assets has declined by more than a $billion is still a big loss. No point having $1000 more in the bank if the value of your house declines by 25%. However it is spun as "clearing the decks", the value of QANTAS is now $2.8 less than it was.

Heard Geoffrey Thomas on ABC this morning saying that he believes it is brilliant management strategy, and in particular Alan Joyce is a brilliant manager. His selective answering of questions was incredible...he is paid by QANTAS? Certainly seems to be their spokesman.

[FYSTI]

Rural and Regional Affairs and Transport References Committee (http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees%2Fcommsen%2F292f5b43-e430-4edb-bcd4-2bad09b57a04%2F0005;query=Id%3A%22committees%2Fcommsen%2F292 f5b43-e430-4edb-bcd4-2bad09b57a04%2F0000%22) 14/03/2014 (http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=COMMITTEES;id=committees%2Fcommsen%2F292f5b43-e430-4edb-bcd4-2bad09b57a04%2F0005;query=Id%3A%22committees%2Fcommsen%2F292 f5b43-e430-4edb-bcd4-2bad09b57a04%2F0000%22)

Senator XENOPHON: (http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22handbook%2Fallmps%2F8IV%22;queryty pe=;rec=0) Can you just explain to me the contrast between the two. You are saying that there is a loss but you are now saying that Qantas international is cash flow positive.


Mr Joyce : There is a difference, as you know, between the P&L and the cash flow position. I will let Gareth talk about that.


Mr Evans : I think the difference that you are talking about is exactly that—the difference between the P&L and the cash flow. Our international business has about $800-$900 million worth of depreciation charge to it every year—the depreciation of the aircraft fleet primarily, and the other infrastructure that the international business uses. That is a non-cash charge because it relates to the depreciation of the assets. The businesses, the routes, do in the main generate cash. One route that has not been generating cash in the recent past is Perth-Singapore as an example. As a result of that, that is a route that we are terminating because we cannot afford to have routes where we actually do not even cover the cash costs of our business. The issue in the longer term for the international business is that it does need to spend some significant amounts of capital in the future to reinvest in its fleet. Today, we have a good fleet with great product, and in fact that fleet is moving into a simplification phase and part of the transformation is that it will need to reinvest at some points in the future.



Mr Joyce : That is an important issue. You can generate cash, but if the cash is not sufficient enough to generate the renewal and the replacement of the fleet, then the businesses in turn will decline. That is the definition of terminal decline. If you cannot replace the assets eventually, then that business is not going to be able to renew, it is not going to be ongoing. The requirement for us to turn the business around so it covers the cost of the replacement of its aircraft is critical. That is how the business can renew itself and continue to operate and to grow. At the moment, when the business is not covering the depreciation of those assets, it is in a business that cannot afford to replace those assets into the future.

QANTAS GROUP FINANCIAL RESULTS ALAN JOYCE OPENING REMARKS SYDNEY, 28 AUGUST 2014 (http://www.asx.com.au/asxpdf/20140828/pdf/42rt7z8bgd8ycj.pdf)
Fleet Write-down
The decision to create a separate holding structure and entity for Qantas International has triggered an accounting requirement to test the value of Qantas International assets on a stand-alone basis.

The international fleet was purchased when the value of the Australian dollar averaged 68 cents against the US dollar, and in the case of the B747s, 57 cents.

Today the Australian dollar is trading at 93 cents.
The value of these aircraft on our books has therefore been written down by $2.6 billion to their current market value.

As a result future Qantas International depreciation expenses will be lower by around $200 million per year.

Importantly, this is a non-cash charge – a book write-down to the carrying value of aircraft that Qantas has no intention to sell, and will retain in its fleet.

It will have no impact on the economics of the business or change cash flow forecasts.

[ohallen]

Yes but he is part of the Qantas Angel's and this morning I had the unfortunate experience of coming across his spin on both 7 and 2.


He is the go to man for media which says it all really. He did however struggle to justify his assertion it was in turn around mode, clearly the briefing he got was not complete or there is only so much you can absorb on a cross continent flight up the front.

[Capt Quentin McHale]

Well said Biggles84...... back to the basics and the KISS principle!!!


McHale.:D:D:D

[Blueskymine]

So is the aviation expert a Qantas angel?

[B772]

QF up 8% + on the ASX at 11am from yesterdays close.

[bmam7]

"To continue to realise the value in Qantas Loyalty, we will be innovating, investing, working closely with our partners, and rewarding the loyalty of our customers with even more ways to earn and redeem Qantas points."

I imagine "our partners" include those members of the OneWorld alliance; however, having just restructured the points and Status Credit value for flying with those partners (which you have to do if you want to go to various European cities (and not fly EK) or even SE Asia and the Americas), how is that "rewarding the loyalty of our customers"?

Australopithicus: I had the same idea as you - the average punter will see in glaring headlines $2.84M loss and choose another airline. Why would you buy a QF ticket if you think you might get to LAX or LHR then the airline folds before you get home?

It's all doublespeak. George Orwell would be envious.

[Dark Knight]

Joyce Qantas Announcement 2013

Alan Joyce - Qantas Group FY13 Results Announcement (http://www.qantasnewsroom.com.au/speeches/alan-joyce-qantas-group-fy13-results-announcement)

Then compare the full report to todays???

Summation:
`Looking Forward

Looking to the rest of FY14, we expect that trading conditions will remain challenging – despite a reduced level of capacity growth in the Australian domestic market.

We have seen the Australian dollar record its second largest quarterly fall since the float.

Over the long term, we view the lower dollar as a positive.

It encourages inbound tourism.

And it reduces the cost deficit between Qantas and our competitors.

But in the short term a lower dollar is a challenge, resulting in higher fuel costs –when jet fuel is already a major headwind.

At current market rates we expect underlying fuel costs to be $160 million higher in the first half than in the prior period.

The global outlook is mixed.

The US economy is improving and there are signs of recovery in Europe as well.

At the same time, there is uncertainty over how fast and how sustainable the recovery will be.

In this volatile market, we are focused on the elements we can control.

We are strengthening our domestic business and holding our market share.

The turnaround of Qantas International is on track as we grow its network and reduce its costs.

We continue to build the Jetstar brand in Asia, positioning it for success across the region.

And we are broadening Qantas Loyalty for our frequent flyers.

As we move forward, we will continue to secure the Group’s future through prudent management of costs, capex and debt.

And we will continue to deliver the Qantas Transformation program, making our business more productive and efficient.

There are many challenges ahead, but we have an outstanding aviation business – and we have a clear strategy to build an even stronger Qantas Group.

[MarkZ]

B772: QF up 8% on ASX at 11am for yesterdays close
Is this due to the Underlying loss of $646m before tax being lower than predicted by analysts, the promise in Joyce that QF will return to profit by FY15, or investors out there believing it cant get any worse and are just buying up for the long hold to profitability?

[itsnotthatbloodyhard]

Geoffrey Thomas mightn't get it, but Ian Verrender of the ABC does:

National: Qantas loss now nearly $3b: What will it take for Joyce to go?

"It is the question hovering on the lips of every Qantas shareholder and employee - what new atrocity would it take for Qantas chief executive Alan Joyce to be shown the door?

In his five disastrous years at the helm of the national carrier, almost every decision taken by Joyce could be preceded by the rider "ill-fated".

There is no denying the difficulties of running a global airline in a market flooded with capacity, much of it sponsored by foreign governments with bottomless pits of cash.

But this morning's $2.8 billion loss – almost three times worse than the most pessimistic forecasts – is the crowning glory of an ignominious career that has seen Joyce not once take responsibility for the airline's appalling financial performance and its steady decline in the eyes of the travelling public.

While most of the loss is the result of an accounting treatment due to restructuring costs, the underlying $646 million loss is a savage indictment on Joyce and the board led by chairman Leigh Clifford.

Once again, fuel prices have featured prominently as a culprit, even though they have barely budged for years. The dollar rates a mention yet again, despite it too being relatively steady for most of the past year.

But the overriding reason for the latest disaster is an incomprehensible decision last year to slug it out with rival Virgin Australia for domestic market share which has seen record numbers of seats thrown into Australian skies.

Rather than focus on running a profitable business, Joyce and the Qantas board set their sights on market domination.

Muscling up to a rejuvenated Virgin, Joyce vowed that for every extra seat his rival threw into the air, Qantas would put up two.

The result? Fantastic deals for travellers, but a Flying Kangaroo that was swallowing cash faster than a pokie on steroids.

From almost the day he assumed the top job in 2008, Joyce began an industrial relations war under the watchful and approving eye of his chairman.

He complained long and loud about the lousy financial performance of Qantas International, essentially trash talking his own company, an unprecedented step for any chief executive.

Presumably, it was a strategy designed to undermine the power of the pilots in upcoming industrial relations agreements. But the side-effects were toxic. Loyal customers went elsewhere. Long standing staff felt disillusioned.

It culminated in a debacle. On the weekend before the 2011 Melbourne Cup, Joyce and Clifford grounded the entire fleet, leaving stranded customers around the world bewildered and angry, in a move that undermined investor confidence and eliminated whatever allegiance staff had for their employer.

Further fiascos followed. Who could forget Joyce's plan, in the midst of all this, to establish a new "premium" airline in Asia?

It was a plan that left most experts scratching their heads. Wasn't Qantas supposed to be a premium airline? And where was this new airline to be based? Joyce blurted out the plan even before he had negotiated a deal. It could be Singapore. But maybe it would be Kuala Lumpur.

Unsurprisingly, the whole fanciful dream was canned before it went anywhere, although there were negotiations around a merger with Malaysian Airlines. Given recent events, the failure to pull that one off would have to count as perhaps Joyce's standout achievement.

While he was busy trashing Qantas International, Joyce's great international expansion plan centred on establishing Jetstar operations in Asia. It is a strategy that not only has bled the company of cash but has managed to infuriate rival and partner airlines alike.

The Singapore-based Jetstar Asia steeled the resolve of Singapore Airlines to cripple Qantas, partly explaining its decision to take a key stake in Virgin Australia. Joyce this morning confessed the airline lost $40 million last year.

Then there is Jetstar Japan. It too has been a disaster. But that hasn't stopped Joyce pouring ever more cash in. It lost $70 million last year.

Both of those pale into insignificance, however, when compared with Jetstar Hong Kong. A joint venture with China Eastern Airlines, the operation literally has never got off the ground. An enraged Cathay Pacific – Qantas's code-share partner – has effectively blocked the move.

Announced with huge fanfare in 2012, the joint venture has yet to receive approval from Hong Kong regulators, has required further capital injections and its nine aircraft have been idle with six now sold off.

Joyce's attempts to resuscitate the company have come too late. His alliance with Emirates was negotiated from a position of defeat after Qantas had abandoned many of its European destinations. It was a great deal for Emirates.

Meanwhile, the hugely remunerated Joyce continues to hack away at staff numbers, with more than half the 5,000 planned redundancies now out the door. So far, that's cost $428 million in termination payments.

The immediate reaction from financial markets to this morning's loss was positive. Qantas stock rose 5 per cent, mostly because it has decided to split its international and domestic arms as a prelude to attracting greater foreign investment.

Clifford and Joyce now seek salvation from a plan that aims to attract foreign investors into Qantas International, the very division they've been trash talking for years.

Foreign investors won't save Qantas because the company's woes are not the result of its capital structure, or the Qantas Sale Act.

The problems are down to poor performance, strategic errors and appalling execution in a hugely distorted global aviation market that requires sheer brilliance just to survive."

[Dark Knight]

The above article sums it all very succinctly.

Couple the disastrous decision to support the `R' campaign (Reconcillation) has seen Qantas again upset many, many of its customers.

BHP Billiton, CRA and Bank executives including Board members saw their positions terminated for losses such as this surely it is way past time Joyce and the Qantas Board were frog marched out the door.


ps>> who won the night(s) with Livvie?

[Ramjet77]

In The Australian this morning GREENS Senator Brandt blamed our Prime Minister for the current debacle at QANTAS. :ugh:

[500N]

The importance of him getting his name in the paper outweighs that what he says makes him look an idiot. Par for the course for the Greens,
especially "Two dads, I can't ell the difference between reality and fiction on TV" :rolleyes:

[Fragman88]

QF results finally released this AM: 2.8 Billion loss. Joyce is frantically re-arranging the deckchairs, proposing to separate QF International Mainline from both domestic and Jetstar.



Not hard to see where that one will head.



1. Load all the group corporate debt into Qantas International Mainline, render it unviable, and then collapse/sell it. (this is probably illegal, after the `Bottom of the Harbour schemes of the late 1970s, famous for being an exceptional case where legislation was made retrospective. An ex-Girlfriend’s father, who was a senior accountant involved, was quietly advised (by the Cops) that rapidly going on an extended overseas holiday was in order. Due to the ` Heavy Names’ involved [Senior Politicians, Lawyers, Govt. Bureaucrats etc,] and the likelihood of jail time, should he survive as far as testifying and naming the names . He spent the next 15 years in Mexico before being given the wink that interest in him had waned sufficiently for him to return). However the best accountants can normally find a way around the best of laws.



2. Joyce’s baby, Jetstar International, takes over the routes and aircraft. Say goodbye to Skippy Internationally, with a stripped down Jetstar `Low Cost’ model competing against Emirates, Etihad, Singapore Airlines and Cathay Pacific.



His battle cry seems to be `Government Subsidies’, however, though there may be some truth in this regarding the first three, I was with Cathay Pacific for 15 years and as far as I know it is still privately owned with no Government support, and competes directly with China backed China Southern, China Eastern and Air China, not to mention the Taiwanese Flag Carrier, China Airlines.



I am very concerned with Joyce’s machinations, and particularly his repeated use of the term `Optionality’ (sic) with regards to mergers available for Qantas International. He barely mentioned Customer Satisfaction or the fine reputation of QF, built up over decades, except in a dispassionate cost-benefit manner. As has been said so many times in these posts, it's all about cost-cutting, nothing about money making, route development and recovering the hitherto loyal passengers gifted to the competition (Perth heading North anybody?).



If I hadn't just heard it I would not have believed it.



When I joined CX in the 1980s the fight for the top spot in the World Airline Awards was hotly contested every year by the big 3; Qantas, Singapore Airlines and Cathay Pacific Airways, with BA lurking. In 2014, Cathay are at #1, followed by Qatar, Singapore and Emirates. Qantas came in at 11, down from 10 last year, behind Turkish, Garuda, Asiana and Etihad. According to friends in QF, they are doing their best, but morale is at an epic low, and the cuts have largely been in low profile, but operationally essential areas, whilst the legions of PR spin doctors and consultants continue to bloom.



After 15 years of fierce competition with QF, I am surprised to be supporting them, but they are a Fine Airline, indeed Iconic worldwide, and their hard won reputation, built up over decades, should not be squandered by an Irish barrow boy with a `Low-Cost’ dream.



The sooner his head is on a spike on Sydney Harbour Bridge the better!

Rant over.
:ugh:

[The Professor]

A lot of people here misunderstand how QF's strategy will play out. In the medium term QF will be fine, todays write downs were merely "throwing out the trash", lumping all sorts of losses into one big event. Now its time to get down to business.

Yes QF is in for massive change and its needed but soon there will be dozens of QF painted 787's returning to the destinations of yester year. And profitably too.

Watch this space, the share price reflected the markets approval of the startegy.

[dragon man]

What ever the board and Joyce are smoking I wouldn't mind some of it. I feel guilty as I posted here some weeks ago $1.5 to $2.0 billion and I was wrong. The board have nailed their collective backsides to the Captain of the Titanic believing that he can get them thru the ice field without hitting an iceberg and sinking. The only problem of course is if he doesn't we will all drown. Monday will be interesting as the July traffic figures will be posted and we can compare them to July 2013. If there isn't a big improvement in yields and load factors then it will be interesting to here his spin.

[Bagus]

Next financial year we will make profit.i m not sure profit or sacking.which come first

[Ngineer]

Quote:
The cash position went from +2.4B at the half year to +3B now
If you have the time can you please explain how that has happened and what exactly it means? I have no accounting experience whatsoever and struggle a bit with this sort of announcement. That said, I think I understand the write down that has occurred.

Correct me if I am wrong, as I am merely an ngineer, but this "cash position" is a carefully worded term to describe their cash at hand. This is not necessarily cash they have in the bank, but a total of their own cash plus readily available credit ( for example - undrawn loans).

[moa999]

Cash does not include undrawn loans - that would be undrawn debt (which is a liability not an asset)....

But the Qantas cash does include a lot of airfare prepayments (ie. customer pays for fare, Qantas still owes them a flight, which will become revenue when the fly) and unredeemed points (eg. Amex pays Qantas $xxx so customer can get yyy points) -- so there is a future liability attached to a bunch of that cash

--==--

One thing that stood out as a positive in the result.
Operating cash flow was above $1bn -- i.e. net cash in the door was positive
And basically this was spent on aircraft $1bn,
so no change in the net cash position, and no dividend.
Given all the doom and gloom - that was a massive plus.


Secondly they have really set International up to be in much better shape going forward. The right down of $2.5bn asset value will have two effects.
Very likely to paint Hickey as the saviour of QFi and put him in prime position
- Even if next year is identical to this year the reported result will be $200m better-off (as less depreciation)
- If the Aussie dollar drops again - these planes become more valuable in $A and I assume (though not certain) that as they retire/sell these aircraft (and obviously QFi will be retiring a bunch of 747s and 767s over the next few years) they will be able to recognise a profit on sale.

[The The]

What are the writedown specifics? $2.5b is a lot and it seems to be all the international fleet!

How much of this is the B744? B767? I would have thought they would be fully depreciated by now anyway?

A380? Are they writing them down for potential sale? Perhaps a few A330's?

What about the B737? Appears the shorthaul fleet unaffected, but some of these aircraft are approaching 15yrs old.

I hope this is clearing the books for future investment in the business, but I also think it could be to avoid future big write downs if International was wound up!

[Black belt]

A very big congrats to the QF management for such a fine job well done. ONLY a cool $2.8 Billion dollars down the tube. Can anyone tell me another company in the world who pays it's big Honsho a cool $5.1 million dollars a year for such a fine job.? I'm really looking forward to Air Bangladesh taking over the joint and flying our friendly skies.!!! :D

[Ngineer]

Cash does not include undrawn loans - that would be undrawn debt (which is a liability not an asset)....


No, not "cash", but "cash position". As I said a carefully worded term and I am not confident (or have I read the full asx report) to believe that they actually do have $3 billion of their own money in the bank coffers.

See following link.....


Qantas records $235m loss on falling revenue | Australian Aviation (http://australianaviation.com.au/2014/02/qantas-records-235m-loss-on-falling-revenue/)

The overall financial position of the airline remains strong, with liquidity of $3 billion comprising $2.4 billion in cash and $630 million in undrawn debt facilities as at December 31, and no major unsecured debt due to mature before April 2015.

So what defines cash position, how much cash they have of their own in the bank or how much cash they have access to? I fail to see how undrawn debt is a liabilty (until it is drawn upon).

[porch monkey]

Tomorrow's news will take QF off the front page for a bit.....

[The Bullwinkle]

Tomorrow's news will take QF off the front page for a bit.....

Why? What's Jacqui Lambie said now? :)

[bandit2]

Quote:
Tomorrow's news will take QF off the front page for a bit.....


Lara Bingle on holidays again?

[framer]

A croc on Mitchell Street?

[pilotchute]

Another ground breaking reality show featuring "tech savvy" twenty year olds doing normal everyday stuff whilst being made out to be dealing with major dramas every four hours?

[boocs]

Keg,

From Fragrant Harbour Cx & Ka are hoping China Southern make a heavy investment in Qf. I dont mean that in a good way either. CSA have some very heavy investments re fleet expansion, routes etc. If they invest in Qf, that is a good thing as seen from up here. (Takes the heat off them).

b.

[Keg]

Hey boocs, thanks for the info. Interesting times.

[Fliegenmong]

In The Australian this morning GREENS Senator Brandt blamed our Prime Minister for the current debacle at QANTAS

Always worth a giggle the greens crazy world view eh!?!? :rolleyes: One day the Aust voting public will wake up to them...then again maybe not....

That said....it is worth remembering that the current senior QF management and board members are significant donors to the Abbott government (Or 'Gummint' in Tony Abbott speak).....and clearly the 'Gummint' (TA speak again) is well and happy to endorse the actions of AJ & LC, as long as they contribute handsomely to Liberal party coffers..... :rolleyes::{

Or as Sunfish would say..."to put that another way"........Clearly Joyce's and the QF Board actions are entirely supported by the Abbott 'gummint'....happy to take the cash and the lifelong chairman's club memberships on offer!!!!

You cannot tell me that behind closed doors, Abbott, hockey, Clifford and Joyce are not having a right giggle at the predicament they are setting you up for!!!

[73to91]

From the Virgin announcement thread.

AAs a non airline person apart from that of consumer, I have to note the difference in the way JB presents and his positive manner and the appearances of AJ at the Qantas presentation.


I liked JB when he said, "we are not a slash and burn airline"

[Goddamnslacker]

Seriously, how can anyone, shareholder, Institution, Employees or the General Public believe a word Alan Joyce says....like Jetstar is loosing money hand over fist, why would you put a fuel efficient long range 787 in a low cost model, when you can get a far great return on the produce in a premium sector...Hello look across the water, Air New Zealand!!!
Now they have a management team and a strategy...
I am afraid unless they remove Joyce and the Board Qantas with the blood sucking leech Jetstar will continue to loose money!
It time to go Joyce, we have continuously heard the same crap over and over...you have had 6 years and produced an Airline that has continuously strunk!

[Stalins ugly Brother]

Qantas has never been the same (in the eyes of the public and staff) since AJ famously shut down the Airline back in 2011.

Absolutely speechless, How much more of this incompetence do we have to tolerate? :ugh:

[Square Bear]

In The Australian this morning GREENS Senator Brandt blamed our Prime Minister for the current debacle at QANTAS

Always worth a giggle the greens crazy world view eh!?!?

Seems to me that you a proponant of the same idea that you are bagging the Greens for suggesting.

Personally I't say AJ and the Board managed to do a perfectly good job of destroying the brand all by themselves without the need for any outside help.

[p.j.m]

Next financial year we will make profit.i m not sure profit or sacking.which come first

Qantas won't be making any profit from me, they are the last airline I'd fly, due to their atrocious service, snarly attendants, hitler attitude checkin chicks, constant delays, and stranding me on the other side of the world.

[ohallen]

The arrogance and rat cunning of these people are best shown by the complete lack of acknowledgement of anything they did was wrong or contributed to the absolutely disastrous results that anyone but them would have hung their heads in shame. Forget the asset right downs what about the underlying results.


Puts a whole new meaning on confronting doesn't it.

[Kharon]

Thoughtful Opinion piece by Sandilands today on the - Plane Talking (http://blogs.crikey.com.au/planetalking/2014/08/30/malaysia-airlines-restructure-plan-hits-raw-nerves-in-australia/) - blog. Worth a read if you get the chance.

[Arnold E]

I am afraid unless they remove Joyce and the Board Qantas with the blood sucking leech Jetstar will continue to loose money!

Lets face it, Joyce is not going to go, why would he? in the last 6 years he has taken $22.2m out of QANTAS. Will the board sack him? well,no, the reason being that they would then have to admit that they were wrong not to get rid of him years ago. So I think you will see all the current players there while there is still money to be bled out of the organization into there pockets.
Oh and the investors, well why should they care? the majority of them are institutional investors who are playing with "your" money, not their own.

[Acute Instinct]

Would it be fair to say the government and taxpayers of Australia are already subsidising this privatisation?
How much company tax has been avoided by this latest round of creative accounting?
Mr Hockey, hundreds of millions of dollars that could have gone to infrastructure, roads, or anything else we so desperately need. No enquiry, no forensic peek-a-boo at the books, and the infrastructure minister Mr Truss is out there singing praise of the driver of this $2.8B simulated train wreck.
Is the government in on this? You tell me.......

[Ngineer]

Lets face it, Joyce is not going to go, why would he?

Of course not. He will leave after the arline returns to profitability otherwise his reputation will be tarnished.

This is all part of an orchestrated plan. Make the airline look like a financial disaster by filling the books with expenditures, slash-rstructure and try get some government relief, then reposition the books back to profitability. The grand plan is past halfway to completion (minus the hoped government wishlists).

But at the end of the day what has been achieved through all of this? An airline temporarily shutdown, loss of some loyal customers, an Aussie brand tarnished, valued and experienced staff & procedures lost forever, millions of dollars wasted, loss of routes, and a share price the fracton of what it used to be (just to name a few things).

[Nassensteins Monster]

Forget the asset right downs what about the underlying results.
And what of the future of the fleet? AJ said that once QFI returned a profit on the capital (which has been massively written down in value therefore depreciation is much less an issue for the bottom line) he would invest in new aircraft. He is predicting QFI will return to profitibility by end-H1 FY2015, ie December. Here was his chance for renewal: replace some of the aircraft he's consigned to the Boneyard with a few of the 787-9 options expiring Nov 2014 - Feb 2015: they would roll off the production line from 2016 allowing accelerated retirement of the now much-devalued B744s. Instead, in the cacophony surrounding one of corporate Australia's largest ever losses, many have missed the real news that the options have been pushed back even further to 2017. Another year of excessive fuel burn, network disruption costs and maintenance costs on obsolete, unreliable and thirsty B744s.

Lets face it, Joyce is not going to go, why would he?
Because the Board have probably already been quietly canvassing potential future CEOs, and they probably know that no sane self-respecting potential CEO is willing to take a hospital pass to fix the mess that AJ and friends have created. I know if I was approached my response would be "If the airline is still alive and turning a profit in 12 - 24 months, call me. Till then AJ can eat his own **** sandwich."

This is all part of an orchestrated plan. Make the airline look like a financial disaster by filling the books with expenditures, slash-rstructure and try get some government relief, then reposition the books back to profitability.
A $2.8B loss, and frankly I think they're patting themselves on the back that it wasn't larger. Remember the many predictions of a $750M-$1B underlying loss? Now $2.8B is pretty close to $3B, and that book loss would have been even closer to $3B had the underlying loss been closer to the predictions... Now recall AJ sticking his hand out to the Gummint for $3B a few months ago. Coincidence?

[ohallen]

Yes and where do those predictions of sub $1bn loss come from....no chance it was the managing of analyst expectations by the Rat and their angels do you think with some well placed strategic leaks or some quiet briefings to a select few as revealed in the Senate Committee hearings???


This write down of the fleet is an interesting accounting exercise that is designed for one major purpose, hit the current shareholders and set up a windfall for anyone coming in down the track if there is anything left by the time this lot finish with the carcass.


Shameful more than confronting except to our intelligence.

[Goddamnslacker]

Quote "Another year of excessive fuel burn, network disruption costs and maintenance costs on obsolete, unreliable and thirsty B744s."

The most labour intensive unreliable fuel burning aircraft are the A380 lemons...The B744 are constantly having to pickup due to some A380 breaking down....
The wrong aircraft, fly too slow, over weight and use way too much fuel....thats why smart airlines like Cathay, Air Newzealand and many other could see the A380 just isnt the right aircraft....too big, too heavy and too inefficent...constant manpower black hole...QF should get rid of them...

[Global Aviator]

Now Malaysian to slash 6000 jobs.

Malaysia Airlines to slash 6,000 jobs and cut routes as part of major revamp (http://www.straitstimes.com/news/business/companies/story/malaysia-airlines-cut-6000-jobs-part-major-revamp-20140829)

[Keg]

Even Joyce will admit from time to time that we've got the wrong long haul fleet and that hindsight would show the A380 call to be the wrong one. That said, the decision was made in 2000 under very different circumstances. Qantas though supposedly lauds its ability to respond quickly to changes. Doesn't appear so in this case. :sad:

[the_company_spy]

Goddamnslacker, absolute bull****. You are talking out of your arse.

[Ollie Onion]

Although a massive loss I would say things are looking up for Qantas. Definite change in tone coming from head office which would suggest all the 'crap' has been lumped into this loss and we will see a remarkable return to profit next year. The capacity war seems to be over with both Virgin and Qantas stowing the handbags for later. For all of Joyce's faults it seems now that Qantas is going to get some sort of legislative change that will enable some more foriegn cash through the door. We even have Qantas confidently stating they are looking forward to exercising options on the 787-9.

“Those 50 options and purchase rights still exist,” says chief financial officer Gareth Evans. “We’ve pushed back the first couple of those from 2016 into 2017 and we’re very much looking forward to exercising those options and bringing those aircraft into the Qantas fleet.”

“We’ve got to get through the transformation of the business first and drive the international business into profitability, and we’re well on track to do that. Then we will be making the future investment decisions and what we’ve got is a lot of flexibility and some great opportunities to bring some new generation very efficient aircraft into the Qantas fleet,” he adds.

So, in 18 months the business will be profitable with the new aircraft about to arrive and Qantas may even be in an expansion mode. Joyce will leave which will make many happy, what won't make people happy though is that he will be leaving with.a massive bonus for overseeing such a remarkable business transformation, but hey we can't have everything.

[Boe787]

Goddamnslacker,

Re 380s what a load of crap, must be such a bad aircraft, thats why Emirates, Singapore etc bought them!!
In a recent passenger survey, 75% of passengers rated the 380 as their favourite Aircraft to fly on!
And it is passengers that pay everyones wages!
I dont think it is any coincidence that Qantas are doing well across the Pacific, and growing capacity on these routes, as they are the only airline flying the 380 to from USA!

380 maybe a bit to big at present, but its only 5 years into its program,and with world passenger traffic predicted to double every 15 years, it will prove to be the only way to grow capacity into slot restricted airports.

It is however dissapointing that Qantas, have delayed acquiring the much needed 787/9s!

[Going Boeing]

Company Spy & Boe787, what Goddamslacker said has some credibility. The A380 was bought by Qantas to efficiently operate 14 hour sectors - since it has been in service, it's been found to be most efficient over 9-11 hour sectors and on sectors above 12 hours, its fuel burn is excessive and thus it is not cost effective. No one disputes that the aircraft is popular with passengers but airlines have to make a profit out of it and on the sectors that QF operates it, it's not as good an option as the B777-300ER. No one with operational experience can understand why Joyce is putting it on the DFW route, it seems to be another way to burn excessive amounts of fuel.

SQ recently ordered 5 more A380's but these are not additional aircraft. They are planned to replace the first five aircraft that they took delivery of, as they are significantly heavier than subsequent aircraft that came off a mature production line. It looks like SQ will not be expanding their A380 fleet any time in the future.

“Those 50 options and purchase rights still exist,” says chief financial officer Gareth Evans. “We’ve pushed back the first couple of those from 2016 into 2017 and we’re very much looking forward to exercising those options and bringing those aircraft into the Qantas fleet.”
In that statement, Evans appears to be taking a measure of poetic licence as the B787 order book stands at 50 Purchase Rights (zero options).

[breakfastburrito]

Make these clips go viral on social media.

nNQ9Me-I3iA


w6kSangn9x8 (http://youtu.be/w6kSangn9x8)

More to come...

[Capt Quentin McHale]

Company spy,


Can you confirm or deny the rumour that the 380 Dugong service DFW-SYD will depart everyday with 100 empty seats to enable it to make SYD? I fail to see the economics in it if said rumour is indeed true.


McHale.:)

[Capt Fathom]

380 Dugong service DFW-SYD will depart everyday with 100 empty seats to enable it to make SYD?

So it will only carry 400 passengers then?

[neville_nobody]

The theory the board tried to spin was that the B777 was to small for their operation. In that they were operating into capacity limited airports where they couldn't increase frequency. So their thinking was that they go in there with the biggest machine possible.

Problem was the economics of the A380 didn't really work out and that the 777 was a better both way bet.

[C441]

The scheduled is through BNE on the return at present

At the end of the month, when the A380 takes over the service, it will be scheduled to operate DFW-SYD direct; a scheduled time of 16:55.

As mentioned some months ago, the aircraft can carry roughly 280 tonnes of payload and fuel. The reasonable estimate is that 240-odd tonnes of fuel will be required so about 40 tonnes will be left to uplift punters....400 pax is a reasonable estimate.

By the way Gds; the A380 cruises at the same Mach no. (.84-.85) as the 747 for the equivalent Cost index and in the Qantas case, 400 pax will leave 88 seats empty (not 150 -200....see following post)

[Goddamnslacker]

I rest my case the A380 is a lemon and yes it isnt 100 empty seats 150-200 empty seats...very cost effective compared to a full 777-300ER..
The A380 is destine to the scrap yard, zero resale value!

[donpizmeov]

You won't get a "full" 777er on a 16hr sector. This is why EK are replacing 777s with 380s on ultra long haul flights. Full seats and some cargo on the 16hr trip to/from lax where the 777 is seat limited.
Just sayin.

The don

[SOPS]

Don, I have flown plenty of LAX and SFO trips on the 777 when we are full, as in every seat taken. I can't see that as being seat limited, but perhaps I miss understand you.

[breakfastburrito]

Complete results presentation Aug 28 2014

7Te6TSAWvQk

[donpizmeov]

SOPS,
Just repeating Tcas's answer to why SFO, IAH and DFW are all going maxi bus when it burns more fuel etc when asked by 777 driver at wash up.

The don

[haughtney1]

SOPS,
Just repeating Tcas's answer to why SFO, IAH and DFW are all going maxi bus when it burns more fuel etc when asked by 777 driver at wash up.

The don

Ahh that voice of complete honesty, Tcas :E

FWIW Don, we launched out of home base at MTOW the other week 44C T/O bump, APU-packs (atomic batteries to power :E) and we were full of punters, 14 tonnes of freight, and 130T of gas, chocked on at IAH 16hrs and 22 minutes later with 7.2 tonnes in the tanks. Not a bad effort for the John Deere. I personally don't see the 380 being a game changer in terms of revenue on those longer sectors, that being said, in EK's case it has just as much to do with "prestige" and……one-upmanship as it does in revenue creation. Anything that breaks even or a bit better will have a 380 on it before long as it is the flagship.
In QF's case they should bury the lot of them and get 350-1000's or 777-9's IMHO.

[PoppaJo]

Qantas should let Virgin report their results before them next year.

On Friday, in Melbourne's Herald Sun, Qantas got the front page, the first six pages full, half the editorial/opinion, half the business. Basically half the newspaper!

On Saturday I see Virgin got 10 lines a few pages in! And half those ten lines were reminding us of Qantas' result!!!

[Mango]

haughtney1 wrote
FWIW Don, we launched out of home base at MTOW the other week 44C T/O bump, APU-packs (atomic batteries to power ) and we were full of punters, 14 tonnes of freight, and 130T of gas, chocked on at IAH 16hrs and 22 minutes later with 7.2 tonnes in the tanks. Not a bad effort for the John Deere. I personally don't see the 380 being a game changer in terms of revenue on those longer sectors, that being said, in EK's case it has just as much to do with "prestige" and……one-upmanship as it does in revenue creation. Anything that breaks even or a bit better will have a 380 on it before long as it is the flagship.

But the 380 will carry 488pax for 16hrs and the 777 will cary 354pax for 16hrs in present EK config. I don't think its about "one-upmanship". Its just that one airplane carries more people than the other and EK can fill them up.

In the case of QF doing 16hrs in their 380 I don't think they have the higher gross weight version and must admit, depending on their config, it's tight and seats might be blocked. IMHO QF should use 777 but EK can get away with using 380s.

[donpizmeov]

Sorry for the thread drift fellas.

Haughtney,

No you didn't. They are only lifting under 40t on the way to IAH at the moment. I will PM you instructions on how to read a load sheet :)

It doesn't matter what fleet QF had with the present management. You can't shrink to profit. Fingers crossed it has turned a corner and the future is brighter.

The don

[peuce]

I can't help but be reminded of Einstein's definition of Insanity:

"...doing the same thing over and over again and expecting different results.."

[breakfastburrito]

More commentary by Evan Lucas

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[breakfastburrito]

Commentary by Greg Bamber starting at 1:50 on industrial relations for the service sector is vastly different from mining.

w6kSangn9x8?t=1m50s

[Capt Quentin McHale]

Company spy,


You out there somewhere?


McHale.:E

[the_company_spy]

McHale, I cannot comment on any potential limitations DFW-SYD, however the inference that Qf A380's are constantly going AOG and the network is being recovered by the good ole 744 is what I reacted to. It is bollox.

[Capt Quentin McHale]

Company spy,


Are you a LAME by any chance? Do you work at the coalface, getting all slimy and greasy, repairing those AOG 380's or are you in an Ivory tower somewhere?


Am wondering why the engineers at the coalface say the opposite? Just curious...


McHale.

[Big M]

Quentin,

Ask 10 LAMES get 10 answers. The 380's are probably less/same AOG than any other fleet. They are just often further away. Those who say the Jumbo is always rescuing the 380 are merely looking through rose-coloured glasses at the venerable 747. There are a lot of LAMEs with the 744 'ticket' and a lot who also have the 747 classic compared to the chosen few who have the 380 training and they tend to talk up the 747 as opposed to the plastic whale (myself included).

Early in the 380 life when there was only a few in the fleet, when they went AOG and when they all were grounded after the engine explosion out of Sing, the mighty 747 stepped in to complete all the services by 'extending' 'pushing-back' maintenance on the 744's. However, remember this was before the complete destruction of the fleet by the current fools at the helm. When the 380 was introduced, Q had 30, yes thirty 744's and still had 5 747 classics. There was certainly enough to cover 1 broken 380 out of a fleet of say 4-6 aircraft during fleet buildup.

The sad reality now though is there are only 12 747's left and that will soon be 9. The 747's barely operate any routes at all, let alone help out 380 routes and it has been like this for years. Would love a nice big fat order of 747-8 intercontinentals! (Tell him he's dreaming)

:(

[the_company_spy]

McHale, I am the coal face.
What BigM said (although Boeing are close to closing the 748 line, unless they get some more orders.)

[Capt Quentin McHale]

Big M and the spy,


Thanks for the explanation. Puts a better perspective on things. As I said... just curious


McHale.;)