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View Full Version : Where is the revenue Alan? (EK alliance)


Tuck Mach
15th Apr 2017, 10:11
Has the EK 'alliance' generated a tangible revenue gain for QF?

An astute observer may posit that Joyce fails to mention the revenue generated by the 'alliance' sticking to safe words like 'the customers love it' as financial gains for Qantas shareholders are hard to find.....

A quick look at Qantas' consolidated accounts is revealing.
If we look from FY2010 onward and see just what has been achieved, it is not what is Joyce proudly claims; the total revenue, allowing for a CPI adjustment is completely static. In other words since FY2010 nothing has changed, excluding of course (the management chosen) impairment of the Long haul fleet and a large drop in the jet fuel price.



FY2010 to FY2016 in real terms, adjusted for inflation the Qantas group has gone nowhere. Revenue is static.
Operating expenses largely unchanged.
JQ added 80 odd aircraft, Joyce got rid of 80 odd QF aircraft.

Qantas carries around 30% less passengers to the UK than they did before Joyce and Clifford got their hands on it.




The EK Alliance commenced on April fool's day in 2013 and since then the numbers have continued to slide (for carriage to the UK), of course that does not include the abandonment of Frankfurt....

Was the Alliance of any financial benefit to customers and shareholders or simply another exercise in 'spreadsheet management theory' that Alan is so fond of? Will the alliance continue until the little fellow and Dorothy the dinosaur (Clifford) have left? :E

Snakecharma
15th Apr 2017, 11:00
At least they arent going broke like some other airlines

Got to be a plus surely?

Bula
15th Apr 2017, 11:30
What, because the code sharing arrangements have allowed people to traxnsfer direct DXB to the place of their choosing, rather than the UK.

QANTAS group has refocused to Asia. And now, shortly to offer direct services back to the motherland. Sounds like a good play book to me,

From an pilots perspective, you guys can keep the ULH. Sounds like a receipe for ultra extreme out of this world boredom.

AerialPerspective
15th Apr 2017, 12:32
In terms of business economics including airlines, revenue is irrelevant except for determining the percentage of revenue that profit constitutes. If an organization is generating anything approaching 10% of revenue in profit it is doing well and doesn't need to keep increasing every year as 10% equals sustainability in the long term.

People need to realise that revenue is just the money that's coming in the door, it is too often used to talk about how profitable a company is but revenue is simply one component in determining the success of a company - e.g. revenue minus cost = profit.

In terms of that, Qantas is consistently one of the most profitable airlines in the world and I don't include the 2.6bn loss as it wasn't a loss at all but a write down and I'm not convinced it wasn't a case of creative accounting to use as rhetoric to get a better deal out of the government and/or to leverage other benefits such as tax minimization for a number of years afterward.

What The
15th Apr 2017, 13:03
Aerial Perspective,
Possibly the most uneducated and dumbest post ever to grace this board.
Without Revenue, you have no Profit and no Cash Flow.

AerialPerspective
15th Apr 2017, 13:17
Aerial Perspective,
Possibly the most uneducated and dumbest post ever to grace this board.
Without Revenue, you have no Profit and no Cash Flow.
And ditto, your post is the most arrogantly uninformed post on here. It is irrelevant whether a company makes 2 billion dollars or 20 billion in revenue, as long as sufficient profit (as a percentage of revenue) is earned. My point was that it doesn't matter what the revenue is from the EK deal, it matters what the profit margin is. A company will not survive if it earns 20 billion in revenue every year but spends 25 billion. Revenue comes from activity and the level of activity generates the costs involved as people pay to fly then the airline flies and pays out money for fuel etc so cashlfow is not necessary unless there is activity, generated by revenue received which results in the business activity being carried out. It does not matter a jot whether the flight is on EK metal or not, as long as QF make a profit on the segment.

Bula
15th Apr 2017, 13:30
AerialPerspective you are correct, if however, a little myopic. Of course it's creative accounting to bring forward asset depreciation, however it's not negative in saying that. Its a financial management tool.

I'm sure can you can agree it is never that simple.

What The, Have a look at VAH. Year on year increasing revenue yet profits are few and far between due to being heavily leveraged (like all airlines), and decreasing shareholder equity (massive share and cash deal with Hinan Group).

It's not that simple either.

aerostatic
15th Apr 2017, 21:10
I would suggest the EK alliance was more about protecting the down side. With the proliferation of ME and asian carriers offering one stop services to Europe something had to be done. From that point of view I'd say it's been pretty successful. The direct flights from Perth should be a bit of a game changer for the airline.

AerialPerspective
15th Apr 2017, 21:13
AerialPerspective you are correct, if however, a little myopic. Of course it's creative accounting to bring forward asset depreciation, however it's not negative in saying that. Its a financial management tool.

I'm sure can you can agree it is never that simple.

What The, Have a look at VAH. Year on year increasing revenue yet profits are few and far between due to being heavily leveraged (like all airlines), and decreasing shareholder equity (massive share and cash deal with Hinan Group).

It's not that simple either.
I agree Bula, none of it is that simple. In VA's case, cashflow seems to come from endless injections of billions of dollars from the owners (or most of them).

AerialPerspective
15th Apr 2017, 21:22
I would suggest the EK alliance was more about protecting the down side. With the proliferation of ME and asian carriers offering one stop services to Europe something had to be done. From that point of view I'd say it's been pretty successful. The direct flights from Perth should be a bit of a game changer for the airline.
I would agree with that. It was an attempt in some ways to counter the increasing dominance of the ME carriers by leveraging off them - the old saying... "better to have them in the tent p-ssing out, rather than outside the tent p-ssing in".

The plan has always been to use the 787 to do things like PER-LHR and to use them in Europe as well, flying possibly between DXB and CDG, FRA, IST or other centres. To me, with a one-stop to LHR it opens up the possibility of flying to DXB but not on to LHR, but other European centres. People need to remember that while Qantas has pulled out of FCO, CDG, FRA, etc. so have all the older Euro carriers pulled out of Australia. It works for EK and SQ and EY, etc. because they can hub and spoke over a city closer to Europe. Qantas can't fly smaller aircraft around Europe fed from 747s or A380s at a hub because they don't have the traffic rights. It is why I think any 'shuttle' into Europe with a 787 will start its journey as a lower density flight to DXB from somewhere else (MEL or SYD) which will then link with QF1 or QF9 passing through.

Qantas may not fly to all those European cities but it didn't fly to DFW and JFK 20 years ago either. It doesn't fly to a lot of places in the Pacific anymore either because it used to have to stop on the way to get to the US West Coast.

p.j.m
15th Apr 2017, 22:33
The direct flights from Perth should be a bit of a game changer for the airline.

Can't see it, sure some people from Perth may prefer a direct and longer flight to the UK, but no one from the eastern states in their right mind would prefer Perth over Singapore or Dubai as a stopover.

Tuck Mach
16th Apr 2017, 00:51
I would agree with that. It was an attempt in some ways to counter the increasing dominance of the ME carriers by leveraging off them - the old saying... "better to have them in the tent p-ssing out, rather than outside the tent p-ssing in".
I appreciate the quote, but can you show me what tangible benefit 'leverage' accrues to Qantas from the alliance? If not revenue then what?

Herb Kelleher Founding CEO of Southwest said and I paraphrase 'Revenue alone is not important, neither is cost, the gap between the two is.'..

QANTAS group has refocused to Asia.Yes that is correct, Joyce did., with board approval 'pivot' to Asia.With the JQ Asia 'franchise' in its 13th year and no tangible profit, with JQ having more aircraft than QF does Where is the tangible financial upside? Ever wonder why JQ is not De aggregated into two operating (domestic and international) segments like Qantas is?


Presumably the statutory accounts show exactly the leverage (financial) obtained through the EK alliance. Can someone tell me which revenue line it is in the accounts? :E

TBM-Legend
16th Apr 2017, 04:43
...or as it was said in the Machiavelli's The Prince

"The new Prince must strive to hold close his allies, but it is of more importance to hold close his enemies..."

AerialPerspective
16th Apr 2017, 05:59
I appreciate the quote, but can you show me what tangible benefit 'leverage' accrues to Qantas from the alliance? If not revenue then what?

Herb Kelleher Founding CEO of Southwest said and I paraphrase 'Revenue alone is not important, neither is cost, the gap between the two is.'..

Yes that is correct, Joyce did., with board approval 'pivot' to Asia.With the JQ Asia 'franchise' in its 13th year and no tangible profit, with JQ having more aircraft than QF does Where is the tangible financial upside? Ever wonder why JQ is not De aggregated into two operating (domestic and international) segments like Qantas is?


Presumably the statutory accounts show exactly the leverage (financial) obtained through the EK alliance. Can someone tell me which revenue line it is in the accounts? :E

Well for a start, EK pax bookings on QF domestically went through the roof compared with the BA arrangement, something like a whole year worth of BA bookings in one month from EK pax. I don't have the info at hand but could probably find the quotes and the stats. It definitely had an impact and almost straight away. In the 70s, Qantas pulled out of New York and used it's arrangement with AA to fill the gap. No one complained or said it was the beginning of the end. It actually allowed QF to maintain a presence in NY and not incur the cost of flying their own metal there again until it reached a point of critical mass where it became financially viable to return.

Bula
16th Apr 2017, 06:46
[/I]Yes that is correct, Joyce did., with board approval 'pivot' to Asia.With the JQ Asia 'franchise' in its 13th year and no tangible profit, with JQ having more aircraft than QF does Where is the tangible financial upside?

Ever wonder why JQ is not De aggregated into two operating (domestic and international) segments like Qantas is?

[/I]

JQ Asia is only minority owned by the QANTAS group, as is all the other JQ "franchises". At the end of the day, they are all representing the JQ brand. Competition is tuff in Asia, yet the QF group is still making $200 million from such investments. What they are yielding is another matter entirely. Perhaps the long term game will see where it ends up, though it would be silly as, guess what, JQ Asia revenue is also climbing, albeit a lot slower rate than forecast, with manageable leveraging.

As for the whole QF Domestic and International being aggregated as opposed to JQ, one will find this is a hold over from the Australian Airlines almalgamation. And while they can use this segregation to leverage industrial and political opportunities, can you actually blame them for not combining these two parts of the business?

Interestingly though, if memory serves me correctly, JQ used to report international and domestic financials separately. Now they only report yields and RSK's as a percentage of change.

lc_461
16th Apr 2017, 11:47
I think you will find as well there has never been a separate financial report for JQ long haul...
Given all the new toys but their traffic stats have never been as good as mainline in places such as Japan ~ and they are frequently known to have 2 for 1 deals etc.

As for EK, I imagine one of the ideas was - if you can't beat them, at least neutralise and ?profit out of one of your biggest and most aggressive competitors! This then allowed a refocus on high growth areas (Asia) and high cost competitors (USA) where QF can actually make money. Domestic oncarriage from EK also would have been major compared to BA as mentioned (~100 flights/week compared to ?7).

Keg
16th Apr 2017, 13:56
As for the whole QF Domestic and International being aggregated as opposed to JQ, one will find this is a hold over from the Australian Airlines almalgamation.

I distinctly remember QF making a big song and dance about splitting the reporting of QF DOM nad QF INT a bunch of years back. Increased accountability of some spin like that. Of course the immediate question of why that doesn't apply a,so to JQ was never answered.



And while they can use this segregation to leverage industrial and political opportunities, can you actually blame them for not combining these two parts of the business?

I suspect this was the reason for the spilt back when they did it a bunch of years ago.



Interestingly though, if memory serves me correctly, JQ used to report international and domestic financials separately. Now they only report yields and RSK's as a percentage of change.

I don't know about this but I recall a bunch of years ago The Cutest of Borg demonstrating that the pax numbers for 'JQ international' included their NZ domestic airline so the numbers have always been open to manipulation.

AerialPerspective
16th Apr 2017, 21:55
I think you will find as well there has never been a separate financial report for JQ long haul...
Given all the new toys but their traffic stats have never been as good as mainline in places such as Japan ~ and they are frequently known to have 2 for 1 deals etc.

As for EK, I imagine one of the ideas was - if you can't beat them, at least neutralise and ?profit out of one of your biggest and most aggressive competitors! This then allowed a refocus on high growth areas (Asia) and high cost competitors (USA) where QF can actually make money. Domestic oncarriage from EK also would have been major compared to BA as mentioned (~100 flights/week compared to ?7).
My point above. The oncarriage from EK to domestic benefits QF substantially more than still flying to FRA or CDG. It was in fact a smart move by QF and look at the rules that surround the bookings which ensure that QF makes a profit out of every seat it sells to EK on QF domestic and regional in that way, it provides sufficient incentive that it is not worth an EK customer flying on VA or anyone else in terms of their status and points.

tail wheel
16th Apr 2017, 22:27
"...except for determining the percentage of revenue that profit constitutes..."

"...as long as sufficient profit (as a percentage of revenue) is earned..."

A little simplistic or myopic perhaps? The relevance of profit is as a return on capital equity (ROE), one of the first owners/shareholder consideration.

Devaluing assets by $2.6 billion erodes shareholder's market equity whilst inflating return on investment in the longer term. ROE can also be high if a company is heavily leveraged.

QAN ROI is 30.68%, a result of being heavily leveraged. Qantas debt to equity in December 2016 was 1.387, versus 0.1027 twenty years previously in December 1996.

AerialPerspective
16th Apr 2017, 23:04
A little simplistic or myopic perhaps? The relevance of profit is as a return on capital equity (ROE), one of the first owners/shareholder consideration.

Devaluing assets by $2.6 billion erodes shareholder's market equity whilst inflating return on investment in the longer term. ROE can also be high if a company is heavily leveraged.

QAN ROI is 30.68%, a result of being heavily leveraged. Qantas debt to equity in December 2016 was 1.387, versus 0.1027 twenty years previously in December 1996.
Qantas received a total of $147m in capital from the government during 45 years of government ownership. The company managed to put away $967m in profits over the years. $80m of what the government injected was when the 747-300s and 767s were purchased.

When it was floated, the Keating Government gave $1.1bn of the proceeds back to Qantas as a capital injection, wiping out just about all of the debt. Strong then claimed the next year he'd turned the company around and that's how reputations are made, didn't explain how his stewardship of TN led to a 5/95 debt/eq ratio though.

Bottom line, it's easy to improve performance when most of your debt is paid off. To be fair, Qantas did not always have that d/e ratio in 1996 in prior years, it was fairly highly geared because of the need to fund aircraft and after the injection post float, it had by then a lot of aircraft that were owned. Aircraft get sold, loans are raised for new aircraft and to be fair, since 1996 Qantas has added something like 10-12 747-400/400ERs, 75 737-800s, 30 odd A330s (albeit many at a discount for not cancelling the A380), 12 A380s and is now adding 787s, not to mention $80m to start up JQ in 2003/4 and the purchase of all the A320, 21s, etc.

Airline leverage goes in cycles and it's not good allegedly to have zero debt, about the middle 50/50 is about right as it has tax benefits with interest payments, etc. My last check, QF had about $4-5bn cash which not many airlines can boast of, certainly not their main competitor which is a sheltered workshop.

Lezzeno
17th Apr 2017, 00:23
Some interesting replies to the original thread. Most are based on hearsay and opinion only, some could be a cut and paste from the QF social media department's recruitment brochure but can anyone answer the question from TM's post #12?

Presumably the statutory accounts show exactly the leverage (financial) obtained through the EK alliance. Can someone tell me which revenue line it is in the accounts?

Tuck Mach
17th Apr 2017, 00:34
Bula-

JQ Asia is only minority owned by the QANTAS group, as is all the other JQ "franchises".Bula, an associate entity is a 'minority' one, and one that is controlled is not a minority entity under AASB128? JQ Asia may be a 'minority' entity but strangely QF choose to report it in JQ Group, therefore they consider it effectively under the control of the group. The only 'minority' (thus associate entities) reported under AASB 128 are JQ Vietnam and JQ Japan. I suspect you know this already...

Tuck Mach
17th Apr 2017, 00:38
Domestic oncarriage from EK also would have been major compared to BA as mentioned (~100 flights/week compared to ?7).

EK pax bookings on QF domestically went through the roof compared with the BA arrangement, something like a whole year worth of BA bookings in one month from EK pax.

I don't have the info at hand but could probably find the quotes and the stats.

Thanks for offering, so how about some facts to back up opinions.
I cannot see any financial upside in the P&L...How much was it?

AerialPerspective
17th Apr 2017, 01:42
Thanks for offering, so how about some facts to back up opinions.
I cannot see any financial upside in the P&L...How much was it?
What about continuing to operate via SIN and to FRA was losing money and dropping it would have saved money but not increased profit but doing it by doing a deal with another operator secured the additional traffic on the domestic network which meant it turned a loss making venture into a sustainable situation. Are you suggesting that with yields dropping on FRA, etc. that they should have just let it keep sliding rather than be proactive so that you would be able to see the effect in the P&L???

It was a declining operation financially (evidenced by the fact that NONE of the major Euro carriers that used to operate here do so any more) and was not going to be able to sustain itself in the long term, so recognising the change and a competitor with links to many more EU cities, they dropped their own service and got the benefit of oncarriage which steadied the ship before reducing profit to a point that it put the whole group into loss. I thought is was quite proactive and you can't use the line that they are giving away stuff to a competitor because they were giving AA all their US mid and east traffic until they started operating to DFW and JFK in their own right so the 'steady decline' argument doesn't work either.

Bottom line it was a business decision to ensure continued return before the previous situation declined too far. The result being that yes, the P&L don't appear to have changed but they would have had this move not been made.

Tim Clark has made it clear on multiple occasions that he expects QF to operate more aircraft through DXB such as the 787 and to take up some of the DXB-EUR flying and he doesn't tend to be someone who says something and doesn't mean it.

Lezzeno
17th Apr 2017, 02:34
AerialPerspective I hope Olivia is paying you overtime for working Easter or are you really Geoffrey Thomas?

TBM-Legend
17th Apr 2017, 02:36
Don't mention the Virgin share price of .19c either...

AerialPerspective
17th Apr 2017, 05:09
Don't mention the Virgin share price of .19c either...
Yes, I've often wondered if I ever have a lazy $2K lying around it might be worth buying 10,000 shares in VAH (and for discolsure sake, I don't work for them nor am I associated with them in any way just in case ASIC is monitoring LOL) because if the 'inference' that has been drawn from that SMH article today about JT, they could go up if/when JB eventually departs and someone with a track record takes over.

Bula
17th Apr 2017, 07:27
AP, I've been doing the same. Looked into their books and from my humble perspective let's just say if we are approaching Australia's financial shakeup, VA can cover 1x their interest repayments. I can't see the major stake holders throwing good money after bad, especially with change in Etihad CEO and CFO causing them to look long at hard at their overseas investments.

Keg, fair enough. From my poor recollection I stand corrected. Though I have an itching sensation that the merging of the books occurred under GD when Airline Partners Australia were on the hunt.

TM, I get what you're saying. My point is they divested ownership to manage risk in the grand JQ Asia pivot by having other stake holders to help carry the burden.

busdriver007
17th Apr 2017, 08:21
Aerial Perspective: Under Australian Accounting Rules (AASB 8) there is NO requirement to report Route Profitability hence nothing Qantas reports is believable except for total profit and loss, nothing else makes sense and/or is provable! The Singapore alternative has been well and truly taken over by other carriers(BA for one) and 57% of premium QF passengers prefer to go through Asia and guess what they go through the ME. And Keg not once has Qantas reported Jetstar segments separately! No-one has broken the law here, the problem is the regulators (AISC) have never been diligent enough to protect Shareholder's Interests and the words "Misleading and deceptive" have been words to describe behaviour that lead to the Global Financial Crisis but never has it been taken seriously in Australia. Remember only one person went the jail after that debacle and what was worse the banks were asked to "help the US Government" in the recovery, talk about letting the wolves into the henhouse! Facts are QF's total revenue has stagnated around $15 billion for the last 9 years. Shareholder funds are 48% of what they were in 2008. Nothing has been transformed because the business needs a huge amount of capital to be spent on replacing aging fuel-hungry aircraft like the B744 and ultimately the A380. Remember QF ordered the B787, originally the board approved 8 B788s to replace the B767 and 6 for Jetstar and a total of 115 including 65 options in 2005 and mainline will finally get them in 2017. The A330s were "given" back to Qantas to be reconfigured at Qantas' expense and are getting long in the tooth as well. The final share buyback has been completed this month so it will be interesting to see the share price now. Remember QF has spent over $1.5 billion buying back their own shares when they desperately need new aircraft! As for the EK agreement in December 2014 EK decided to give QF 10c in every dollar for QF to carry their passengers with the words "Sue us" if you are not happy. IATA agreements typically allow 27c in the dollar for airlines that carry fellow IATA airline passengers. The original agreement between QF and EK was 18%. No wonder whenever questioned the reply is alway that this is "commercially sensitive".

Tuck Mach
17th Apr 2017, 09:32
My point is they divested ownership to manage risk in the grand JQ Asia pivot by having other stake holders to help carry the burden. There is not a shred of return (other than leased aircraft back and forth to JQ) and Dennis didn't pay a cracker,he had the right passport. They found out with the ill conceived venture in cheque book diplomacy in HK, not even Stanley and Patsie could make a totally non-compliant with (principal place of business legislation) a going concern.

Mr. Perspective,

they dropped their own service and got the benefit of oncarriage which steadied the ship So could you please quantify the benefit of on carriage in a tangible dollar amount? I am challenging the statements of opinion, just show me where it is quantified? There is not a mention of it, nor is there one statement to the ASX, the shareholders or even weekly Pravda stating a dollar amount benefit for the Qantas shareholder.

As Kerrie Packer said, you only get one Alan (Bond) or was it Joyce :D

As for share buy backs, they rarely if ever benefit the shareholder, but insiders with huge options written when Qantas was 'terminal' may have a substantial upside!

reubee
27th Apr 2017, 09:03
Presumably the agreement is up for renewal at some point (or perhaps has some break clauses), so the decision makers at QF/EK must have some spreadsheets giving them numbers to justify wether to carry on. It would be interesting to see those numbers and how they are calculated.

From an Australian or European passengers point of view, many places in Australia/NZ connected to many places in Europe via one-stop is great.

I think where the arrangement sucks is the perceived inequity in that QF is only flying MEL-DXB, SYD-DXB once a day whilst EK has multiple frequencies and BNE, ADL, PER as well. If the flying DXB-Oz was split 50/50 then I suspect any negativity around the arrangement would be lessened.

blow.n.gasket
28th Apr 2017, 01:41
Interesting rumour doing the rounds amongst QF cabin crew.
Allegedly sourced from a HR insider , Glorious Leader is considering an early retirement sometime this year , allegedly coinciding with the next tranche of executive bonuses maturing. Figures of $100 million were expressed.
Rats leaving the ship?
Getting out before the big worldwide correction ?
No more money left to artificially prop up the share price through buy backs?
Interesting !

Logohu
28th Apr 2017, 03:20
I think where the arrangement sucks is the perceived inequity in that QF is only flying MEL-DXB, SYD-DXB once a day whilst EK has multiple frequencies and BNE, ADL, PER as well. If the flying DXB-Oz was split 50/50 then I suspect any negativity around the arrangement would be lessened.

Agreed, and the capacity inequity becomes even greater when the QF787 MEL-PER-LHR starts as it simply replaces the existing QF A380 MEL-DXB-LHR.
From the same date EK has announced it will upgrade all its 3x daily MEL-DXB services to A380s instead of a mix of B777/A380 !!

Tuck Mach
28th Apr 2017, 05:10
Presumably the agreement is up for renewal at some point (or perhaps has some break clauses), so the decision makers at QF/EK must have some spreadsheets giving them numbers to justify wether to carry on. It would be interesting to see those numbers and how they are calculated.

Very specific questions have been asked by analysts regarding the so called 'alliance'. As a shareholder one must ask the question whether there ever was a tangible commercial benefit for Qantas? Despite repeatedly being asked senior management never provide any data regarding the revenue and other benefits...According to the little fella, 'the passengers love it'..It is likely EK do too..

busdriver007
30th Apr 2017, 23:01
Remember in 2018 the Accounting rules change so that all the Leases come onto the balance sheet. Maybe Alan will leave before this adds another $3-4 billion to the Debt/Equity of the airline!

Tuck Mach
30th Apr 2017, 23:48
busdriver007

Absolutely agree.
The treatment of lease exposure and the discretionary subjective inclusions has been an issue for an extended period providing substantial cover to actual gearing.

Have pondered for a considerable period whether lease transparency would finish the little fella.If you consider the composition of the QF board and many other airlines, the flying business is simply a shopfront for the back end of re-hypothecation of aircraft ownership. Many boards have little aviation experience, but substantial lease exposure, think Ward and Allco, Clifford and Barclays, Meaney and TPG...Other than that, Tshirt Todd and Freehills IR fleas that is it..

Remember the JQ Asia lease shell game?

One may find short interest in QAN and other airlines grows comes the new standard...:E

CurtainTwitcher
1st May 2017, 00:48
How much was spent on share buy backs to support the share price, which in turn supported the Long Term Incentive Plan (LTIP) bonus (http://www.qantas.com.au/infodetail/about/corporateGovernance/2016DirectorsReport.pdf) (page 33) for the CEO?

I'm sure that could have been better used to bolster the balance sheet for the lease accounting changes. Here is a nice summary: New leases standard requires virtually all leases to be capitalised on the balance sheet (https://www.bdo.com.au/en-au/accounting-news/accounting-news-february-2016/new-leases-standard).

I'm sure the upcoming disclosures will make interesting reading & give a little more visibility into the internal accounting machinations.

Tuck Mach
1st May 2017, 01:25
Intellectually if one supposes share buy backs are a result of 'good times' for the shareholder, the EXPECTATION is better times ahead...

Qantas have given no forward earnings guidance, and the AUD$1.7 ish billion could be a fleet of 787

Encumbering a business with cheap debt to pop a share price target isn't long term strategic thinking but it sure makes a lot of money for those on the inside.

Have a read of what Forbes thinks of enriching insiders

https://www.forbes.com/sites/stevedenning/2015/06/09/how-share-buybacks-hurt-shareholders-and-society/#553be5e3496c

coaldemon
1st May 2017, 01:46
That accounting standard will make it interesting for VA's accounts.

Tuck Mach
1st May 2017, 02:00
Yes coaldemon, the entire industry uses the same veil..

The problem is that Qantas went from 'terminal' to transformed in three years...With Joyce stating categorically when the business was going to be profitable...With any more than empty suits at ASIC that statement would have been probed..

busdriver007
1st May 2017, 08:49
Bula-

Bula, an associate entity is a 'minority' one, and one that is controlled is not a minority entity under AASB128? JQ Asia may be a 'minority' entity but strangely QF choose to report it in JQ Group, therefore they consider it effectively under the control of the group. The only 'minority' (thus associate entities) reported under AASB 128 are JQ Vietnam and JQ Japan. I suspect you know this already...

That may be what is publicly stated but Qantas owns 99% of Jetstar Asia. 51% of Jetstar Asia was bought for SIN$1 by Dennis Choo. Well known Singapore underworld figure!
Qantas has a 33% ownership of Jetstar Japan(by law) but seems to be the only one propping it up! What was that quote about Alan Bond?

Tuck Mach
1st May 2017, 11:43
Dennis didn't pay a cracker,he had the right passport. Dennis may have paid a dollar!:rolleyes:

The whole Pan Asian pivot or whatever the whiz kids called it does not hold water. It never did.None of the entities make a real profit, there has never been a dividend, and in the case of JQ Asia a business having been rebuilt with QF shareholders money for over a decade.

The source of JQ Asia 'profit' has been leasing aircraft, owned and sourced by Qantas to JQ Australia.

One suspects that the EK 'Alliance' is a similar loss leader for the 'group'. Corporate sources suggest that the little general is viscous in his prosecution of dissenters, voicing one's concerns leads to the street, curbside and unemployment. It is highly probable that there is not a shred of return for Qantas shareholders, unless of course they were managers in on the big fix...

CEO QF international and domestic
Two company secretaries on the same day..

Rated De
25th Sep 2017, 09:32
The more things change the more they stay the same....So a five year random walk into bizarro land sees QF return to a well established route having lost half their passengers.

FY19 will see QF bank $80 million a year...
Never did a release detail any such revenue flow from Dubai..

Someone knew what was up :ok:

QuarterInchSocket
25th Sep 2017, 15:30
He knew. He did it anyway. Legalised book-cooking. The turnaround fallacy will be paraded forevermore. The Emirates partnership serving as one of many mechanisms that went into achieving his warped outlook. The kicker? No one in a control position cares! He is $25mil better off because "the shareholders" thought him worthy. Made a companion to the OA in addition - Must've satisfied Clifford in more ways than one such that his nomination for Joyce yielded a higher rank in that order than himself.

Groaner
4th Oct 2017, 02:09
Interesting, no-one has got it yet.

The real reason for the QF/EK alliance (from the QF point of view) is... the FF program. A fabulously profitable business almost invisible to the outside world, and which now has seen off any threat of EK establishing a significant FF program in Oz.

AerialPerspective
4th Oct 2017, 06:40
AerialPerspective I hope Olivia is paying you overtime for working Easter or are you really Geoffrey Thomas?
Oh please... sarcastic much... so we're only allowed to have an opinion if it conforms with yours??? No, I am not GT, have no time for that pretender but I do see one airline making billions and another spending billions but making nothing. Can't be THAT much wrong with the way QF is operating if it's making wads of money.
By the way, I don't work for any of the airlines any more.

Rated De
5th Oct 2017, 19:07
The real reason for the QF/EK alliance (from the QF point of view) is... the FF program. A fabulously profitable business almost invisible to the outside world, and which now has seen off any threat of EK establishing a significant FF program in Oz.

In part this is correct. Frequent Flyer businesses are entirely dependent on the airline itself. Revenue can be generated from point sales to corporate entities, but ultimately the 'business' of the repeat customer is entirely contingent upon the airlines itself having 'seats' to redeem.

In accounting for the frequent flyer business airlines basically sell a seat at marginal cost, that would probably fly empty.

In October 2011 (two odd weeks before the grounding) Alan and Qantas signaled their surrender of Qantas International, as they had already established a 'decline narrative' to suit their industrial campaign.


The problem for Qantas with little international network remaining after the changes requested of the International Air Services Commission, was that a rush of point redemptions by frequent flyers would not only place a huge squeeze on revenue and remaining asset valuations but further destabilise the already precarious position Qantas put itself in.

The amount of points held by Qantas members is ever growing, accumulated largely through domestic flights, to be usually redeemed in exchange for a seat(s) on international flights.

Put simply it is stupid to expect people join frequent flyer program to get cheap groceries. Ever wonder why Woolworths and QAN had a frequent flyer redemption? Qantas needed, in light of its shrinking network to have alternatives to get rid of points.

You will see it increasingly difficult to redeem points for a seat, there will be further dilutions of redemption value as the points liability continues to grow and the 'game changing' 787 (already 600 operating-not sure what is going to not have already changed?) will remove additional capacity from the market as 787 replace 744 one for one.

Perhaps as such, skywards is the only way to burn off a points balance and actually go somewhere. The key to whether it actually benefits the Qantas 'group' accounts and with the changes announced in Australia with respect to credit cards it is likely that the EK alternative may be a way to get a seat.

The issue remains as the title of the thread implies is that Qantas never made a dollar from the hastily cobbled together EK 'partnership'. They know it and I can certainly attest their competitors knew it all along.

blow.n.gasket
9th Oct 2017, 22:32
An interesting thread , to say the least.
Overheard a theory recently , trying to explain why Alan would sign up to what appears to be from the outside , a dud deal for Qantas , reference the Qantas Emirates code share alliance.
Circa early 2013 , the Dixon ,Singleton , Carnegie ,
( along with Harvey and Gregg ) consortium dumped their speculative takeover bid for Qantas.
Apparently , the rumour intimates that the takeover putch was relying on a foreign capital injection from Dubai.
Now , looking at timelines the famous Alan Joyce , Tim Clark , Wolgan valley " love in " was in May 2012.
The time that the " consortium " was pushing hard for a takeover.
The theory suggests that if the consortium money was to come from Dubai , that could only mean one person, one entity .
So the theory suggests Clark saw an opportunity , once notified by his boss and summoned Alan to Wolgan.
One can only speculate what was layed out on the table at the "love in " .
The suggestion of "sign this alliance deal or the takeover consortium will get their money and you're out of a job " , was one of the theories I heard suggested.
So once Clark had Alan over the barrel and got his agreement to the " deal " it took until April 2013 to sort the fine print and approvals out.
It was around January 2013 that Dixon et al , realise their quick pump and dump operation was a dead duck.

Rated De
11th Oct 2017, 09:35
Overheard a theory recently , trying to explain why Alan would sign up to what appears to be from the outside , a dud deal for Qantas , reference the Qantas Emirates code share alliance.
Circa early 2013 , the Dixon ,Singleton , Carnegie ,The deal was contingent on financing. It needed the acquiescence of key work groups.


Your theory is very close to the truth as I understand it.

Mr. Joyce had been in Singapore scouting for an alliance with Tamasek in the period immediately prior. I'm told literally weeks.

Did Tim Clark see Mr Joyce coming? I think it highly likely.
Having suffered an own goal with the 'terminal decline' Qantas was desperate to stem the losses in FY12-13. Code share revenue would presumably fill the gap and with street talk suggesting a bid and the sole remaining shareholder of note very close to stopping out, time probably was of the essence. Had that block provided the liquidity, Messrs Dixon et al were odds on. Competitor airline management were astounded Qantas would abandon solid routes through Asia. They promptly added capacity.

As the thread title indicated, public accounts show no revenue or margin improvement for Qantas. The 'transformation' of Qantas largely a result of falling fuel prices and depreciation changes.

Where exactly Qantas gained anything remains to this day a pertinent relevant and interesting question.

Correlation is not necessarily causation, but the absence of any public actualised revenue gain and a rush back to Singapore suggests that the thread is very relevant, if one cares to look.

Subsequently, it appears others are counting too...

http://www.abc.net.au/news/2017-10-12/why-investing-in-airlines-is-a-dumb-idea/9040916

blow.n.gasket
11th Oct 2017, 20:27
Having suffered an own goal with the 'terminal decline' Qantas was desperate to stem the losses in FY12-13.

The rumours as to what was behind the "terminal decline " era are also "entertaining" to say the least.
Do a bit of research behind Dixon , GAAM , which entity controlled the leases of all those 747's & 767's that got Victorvilled after GAAM got sold .
How the hell do they get away with portraying the " wee fella " as a paridigm of business acumen????