QANTAS to ground 8 A380

[sheepless]

According to ..stuff NZ (https://www.stuff.co.nz/national/health/coronavirus/120146738/coronavirus-qantas-grounds-a380s-and-cuts-international-capacity-by-nearly-a-quarter)

[PoppaJo]

I wonder where they will park them. Avalon?

[SilverSleuth]

WOW that's a lot of pilots. What happens to them? I Cant see Joyce happy to pay them to sit around doing nothing for 6 months? Tough times for all.
Bring on this bloody vaccine!

[ruprecht]

WOW that's a lot of pilots. What happens to them? I Cant see Joyce happy to pay them to sit around doing nothing for 6 months? Tough times for all.
Bring on this bloody vaccine!

Lots of annual and long service leave to exhaust over the next 6 months.

[Wunwing]

The problem with pilots and everyone else who become temporary unemployed in burning up their accrued leave is that when things improve no one will be able to take holidays because they will have no leave. So the whole airline and travel industry will still have an ongoing long term problem.

Wunwing

[Atlas Shrugged]

If true, that would leave only 4 380's in service would it not.....? Interesting to see which routes are dropped.

[Beer Baron]

2 are in for maintenance/refit so it leaves just 2 flying! :eek:

[patty50]

A lot of pain for people as overtime and allowances evaporate. Redundancies seem like overkill at least for a company that is already structurally understaffed and plenty of cash.

The problem with pilots and everyone else who become temporary unemployed in burning up their accrued leave is that when things improve no one will be able to take holidays because they will have no leave.



They won’t burn *all* of it unless they choose to. Plenty of employees within Qantas have over a year of banked annual leave and long service with no intention of taking it. It’s a second super fund that goes up 3% and gets cashed out when they retire.

[Foxxster]

If true, that would leave only 4 380's in service would it not.....? Interesting to see which routes are dropped.

definitely true. Joyce had a press conference to confirm it. Now around 32 aircraft grounded. I heard also the Sydney London via Singapore flight will be re routed via Perth until end of April. At least I think that is what was said. Seems mostly Asian services affected.

Australia's largest airline has been heavily affected by the drop in demand for global and domestic travel and the latest capacity cut represents a 23 per cent drop in international seats compared to this time last year. The cuts leave all but two of its A380 aircraft grounded and will remain in place until mid-SeptemberThe airline also announced it would delay an order for Airbus A350 planes and it was cancelling plans for a $150 million off-market share buyback to preserve cash.

Instead of cutting entire routes, Qantas is using smaller aircraft where possible and also reducing the number of flights across its network. The reductions are equivalent to grounding 38 planes.



Domestic flights across Qantas and Jetstar will also be cut further until at least mid-September.

Qantas retains the ability to "go a lot deeper" with flight cuts, Mr Joyce said, as he sounded an ominous warning for the aviation sector in the face of the ongoing health crisis.

"We know we can ride this out. Not all airlines in the world will," he said



I think this will be survival of the fittest, and I think Qantas is one of the fittest and [most] dynamic airlines in the world."

The changes mean just two of the airline's fleet of 12 Airbus A380 jumbo planes will remain flying. The Sydney-London route will not stopover in Singapore after April 20, with the flight instead re-routed through Perth.

The launch of the Brisbane-Chicago route has been shelved until September, while Jetstar will suspend flights to Bangkok and cut flights to Japan and Vietnam by almost half.

Compared to the same time last year, the reductions represent a 31 per cent cut to Asian services, while the US (19 per cent) and the UK (17 per cent) are also affected as travel demand collapses amid the uncontained spread of the virus into Europe and the US.

[ScepticalOptomist]

For the first time in a while it seems “right aircraft, right route” will work out.

Swapping out an expensive to run A380 with a relatively cheap to run B787 with the forward loads as they are makes sense and will ease some of the burden of this temporary crisis.

[Blueskymine]

Problem is they will make more money running the 787s full while the A380s are parked up.

I’d be surprised if they do reactivate them to be honest. It’d almost be better to run a second 787 and up-gauge when the 350s come, than bring back the big bird.

As much as I love paxing on it and all.

[crewmeal]

LH have parked up the whole of the 380 fleet for now. Korean the same. Seems these birds have 'cooked their goose' for now. As for the future who knows.

[TBM-Legend]

LH has asked German Govt for a bail-out unlike QF...

[SOPS]

I wonder what EK will end up doing?

[mmmbop]

Exactly what I was thinking SOPS. I'd be feeling very nervous if I was there. That really is the biggest house of cards simply due to the number of 380s combined with the travelling public's growing aversion to Asia/Middle East.

[Joker89]

But also government owned and backed. Tough times everywhere

[halas]

EK will be QF’s go to aircraft.
Cheaper

halas

[PPRuNeUser0198]

Korean the same

Korean are on the verge of bankruptcy.

[SOPS]

Korean are on the verge of bankruptcy.

Are Korean not government owned as well?

[Jeps]

EK will be perfectly fine. State owned as has already been said. Wouldn’t surprise me given their propensity to largesse that they announce something like “we are the only airline in the world that made profits during COVID-19”

[Angle of Attack]

Big financial hit for A380 pilots for the next 6 months, with no overtime they will struggle to make more than Shorthaul crew.

[davidclarke]

Big financial hit for A380 pilots for the next 6 months, with no overtime they will struggle to make more than Shorthaul crew.

wow what an arrogant comment....or did I just get baited

[B772]

Jeps: It is obvious you are not a reader of eturbonews.com. A recent headline says Emirates Airlines about to shut down due to Coronavirus?.

[Black Pudding]

Jeps: It is obvious you are not a reader of eturbonews.com. A recent headline says Emirates Airlines about to shut down due to Coronavirus?.

Tried to search for this story. Was you joking ?

[crewmeal]

Things seem to be going from bad to worse for QF

QF close Singapore lounge (https://www.executivetraveller.com/news/qantas-will-close-its-singapore-first-class-lounge-from-april-20)

[atakacs]

Problem is they will make more money running the 787s full while the A380s are parked up.
I’d be surprised if they do reactivate them to be honest. It’d almost be better to run a second 787 and up-gauge when the 350s come, than bring back the big bird.

Seriously ? If true Emirates is toast...

[Chiefttp]

Thank You China

[Karunch]

Thank You China

You'll have more to thank them for once they ramp up their 'foreign aquisition' program- cheap foreign assets bought during a worldwide recession. Maybe even a national carrier or two.

[PPRuNeUser0198]

Qantas now has 2,000 surplus crew (crew that it does not need) as a result of the capacity changes. This could be bad news for some over the horizon. Suspect VR's will start, before forced, if they decide not to hold out...

EK will just down size their routes to the B777

Except EK has 142 A380's. Not so easy compared to 12. That is a lot of crew, and a lot of metal. They will feel a lot of pain - but they'll be fine. No ME government will ever allow their national carrier to collapse. Never going to happen.

[dctPub]

Qantas now has 2,000 surplus crew (crew that it does not need) as a result of the capacity changes. This could be bad news for some over the horizon. Suspect VR's will start, before forced, if they decide not to hold out...



Except EK has 142 A380's. Not so easy compared to 12. That is a lot of crew, and a lot of metal. They will feel a lot of pain - but they'll be fine. No ME government will ever allow their national carrier to collapse. Never going to happen.

Ha! So you think Virgin will be alright yet qantas is about to start VRs? Interesting.

[Transition Layer]

Qantas now has 2,000 surplus crew (crew that it does not need) as a result of the capacity changes. This could be bad news for some over the horizon. Suspect VR's will start, before forced, if they decide not to hold out...

I think you mean 2000 staff across the entire company, not crew. In fact, according to another thread, SO recruitment is continuing UFN.

[PPRuNeUser0198]

Ha! So you think Virgin will be alright yet qantas is about to start VRs? Interesting.

Yes. I believe VA will make it through. But that has nothing to do with QF and VR's. Why do you link them? VA is still shedding their labour force with the ~700 to be exited by EOFY. VA's capacity reductions are not on the same scale as QF since the business is primarily domestic. QF is dramatically adjusting capacity. They won't hold labour indefinitely. It's not what Qantas does. And yes - thanks TL - I meant to say 2,000 FTE (not specifically cabin/tech crew). QF always offers up VR's first during downturns. We're in one now.

[Cdash]

QF won’t be offering VR as they need to retain as much cash as possible in an environment like this. VR is a long term investment.

Worst case scenario and we don’t see things improve and redundancy becomes necessary then I imagine we would see last in, first out as they would be the cheapest.

[rmcdonal]

Except EK has 142 A380's. Not so easy compared to 12
115 A380s.

[PPRuNeUser0198]

I hope not for the employee's sake - but I will hedge redundancies. They have always done it during every downturn (GFC/SARS/MERS etc.). Not replacing roles, no approvals for recruitment and VR's occurred last time.

[PoppaJo]

VA are holding firm on their guidance given recently. PS was out today with media, and his right, his airline is predominantly domestic. His not seeing such large scale reductions yet on the domestic front. The $75m maximum impact still stands. This is predominantly Chinese domestic related, and what small international network they have related.

Alan has briefed the asx on his reductions. BUT He has not given an update on any financial figure yet. 100m? 200m? 300m?

[parabellum]

So who is going to get precedence, Airshows Downunder and their two-yearly show in Feb/Mar 2021 at Avalon or Qantas and their grounded A380s?
Can't see how there would be room for both, unless the A380s are parked on the grass!:)

[Arthur D]

VA are holding firm on their guidance given recently. PS was out today with media, and his right, his airline is predominantly domestic. His not seeing such large scale reductions yet on the domestic front. The $75m maximum impact still stands. This is predominantly Chinese domestic related, and what small international network they have related.

Alan has briefed the asx on his reductions. BUT He has not given an update on any financial figure yet. 100m? 200m? 300m?

True, but standby for the domestic contagion. ANZ bans on domestic travel announced today, expect the other banks to follow.

This will be survival of the fittest, and with $5B plus debt to only $650m equity, VA ain’t looking like Michelle Bridges.

[regional_flyer]

So who is going to get precedence, Airshows Downunder and their two-yearly show in Feb/Mar 2021 at Avalon or Qantas and their grounded A380s?

All reports suggest the A380 grounding is only through to September 2020 at this stage.

[topend3]

With the government advice announced today expect whole lot more international
cuts coming

[Angle of Attack]

Hot rumour is massive reductions to international. Further 30% cut.

[C441]

If they institute 14 day bans everywhere, crewing and aircraft selection will be based on…...
"Anyone gotta crew that have done their 14 days?"
"I've got a 330 crew in Sydney."
"Right grab a 330 and stick it on LA"
:D

[A little birdie]

Hot rumour is massive reductions to international. Further 30% cut.

Based on the restrictions enacted by the government I suspect it will be closer to 100%!

[normanton]

It's about to turn into a royal cluster ****!

[Foxxster]

With the government advice announced today expect whole lot more international
cuts coming

this is only just starting. If we in Australia don’t take draconian action then it won’t be long before flights FROM Australia are banned by other countries like the US. Our rates are increasing at around 20% a day which is in line with other countries . 250 today, 64,000 in 40 days. Look at Italy to see where we are heading.

so expect domestic air travel to all but stop altogether. Schools will be closed, shops will be closed and areas will be put under mandatory quarantine.
and as other countries see increases in numbers, they too will be subject to international travel bans.

so we ain’t seen nothing yet.

[dragon man]

I believe there is an emergency board meeting happening now. This is going to get very ugly.

[dr dre]

It's about to turn into a royal cluster ****!

At the moment the goal is to stop the influx of new cases. All cases of COVID-19 either have an international origin or close contact with someone overseas. There are few or no cases of "community transmission", probably due to the warmer weather here compared to the northern hemisphere.

So the goal is to limit the number of cases arriving into Australia over the next month or two whilst the virus season ends in the north and before our own winter season starts. This is to ensure that hopefully all cases are contained and monitored prior to winter, and underlying virus holders aren't widespread before the seasons start. So as harsh as it sounds limiting international travel for the next 2-8 weeks or should isolate most inbound cases and as the numbers start to die off in the north the bans are lifted and inbound travel recommences.

But of course what to do with the excess crew? One, they all sit and burn leave for the next few months. Sounds great but cash flow is going to be shot with a lack of international travel. RIN? Where to? The fleet least needed is the most senior (A380) and the training cost will be immense. And once it's all over you need to train back up to their original positions. Redundancy? I think cash preservation is the key so I can't see a VR being offered. I think it's going to be a combination of things but it will probably come to a mandated LWOP rolled out amongst all crew. It will probably need, and get, union approval because I can't see even AIPA doing anything against the companies interests anytime soon.

My advice, make sure you've got some spare cash saved up over the next few months as you'll probably need it.


so expect domestic air travel to all but stop altogether.


I wouldn't say that much. There's no evidence of this being spread anywhere via air travel. China, South Korea haven't stopped domestic air travel and they are starting to get the virus under control. You'd probably be better off banning public buses and train transport.

[Beer Baron]

I think it's going to be a combination of things but it will probably come to a mandated LWOP rolled out amongst all crew. It will probably need, and get, union approval because I can't see even AIPA doing anything against the companies interests anytime soon.
Errrr... I don’t think AIPA are going to be making much effort to help Qantas out just now. In the past, definitely but Qantas just burnt all their goodwill with the A350 threat. I’d expect AIPA to hold Qantas to every letter of the EA.

[Foxxster]

At the moment the goal is to stop the influx of new cases. All cases of COVID-19 either have an international origin or close contact with someone overseas. There are few or no cases of "community transmission", probably due to the warmer weather here compared to the northern hemisphere.

I wouldn't say that much. There's no evidence of this being spread anywhere via air travel. China, South Korea haven't stopped domestic air travel and they are starting to get the virus under control. You'd probably be better off banning public buses and train transport.

Well I will ask you this. Given both Italy and now France have closed all shops and theatres etc, how many Italians or French do you think are now taking internal flights? And the Italians are locked down so not many of them... Look at their numbers three or four weeks ago. They are where we are now. Now Italy has over 21,000 cases and 1,450 deaths. We ARE headed there. Because we have started with low numbers nobody has noticed. 20% increase of 10 is only 2 in one day. 20% of 50 is only 10. We went from 200 yesterday to 250 today. And tomorrow will be around 300. So these measures will come here . And when not if they do, nobody will be flying. Why would you even if you are allowed to which is not the case in Italy. . No shops open, museums closed, no sport. And businesses won’t be taking the risk .. they are already stopping travel.

[dr dre]

Errrr... I don’t think AIPA are going to be making much effort to help Qantas out just now. In the past, definitely but Qantas just burnt all their goodwill with the A350 threat. I’d expect AIPA to hold Qantas to every letter of the EA.


This this threat may be more significant than anything that's come out of management offices. The airline's international operations are being shut down for a few months. The domestic ones curtailed. How are you going to pay all those crew at full divisor if you don't have any cash flow coming in? How long will the cash reserves last? Will AIPA want to be the union that didn't come to the party? Will the government come up with a bailout?

If the domestic market isn't too greatly affected then it is possible VA may be in the stronger position as they don't have a significant international operation and the required labour costs to service it.

[dr dre]

Well I will ask you this. Given both Italy and now France have closed all shops and theatres etc, how many Italians or French do you think are now taking internal flights? And the Italians are locked down so not many of them...

Well with cases in the tens of thousands there are still some domestic aircraft aloft in Italy. But Germany, France had similar numbers to Italy then (more now) but a glance at FR24 shows quite an active airspace over those two countries. China from what I've observed hasn't really slowed down their aviation market at all. Now they're looking to be past the peak, South Korea too. Unlike all those countries we have no real interstate rail and driving takes too long. I think air travel between cities is quite essential for the Australian economy

Look at their numbers three or four weeks ago. They are where we are now. Now Italy has over 21,000 cases and 1,450 deaths. We ARE headed there.

With these travel restrictions and a lack of community transmission I doubt we'd be at Italy's position in three weeks. Three weeks ago they had 20 cases and it's now 21,000. But we had about 20 cases 3 weeks ago too, and now we only have 250. Warmer weather, more controllable borders, and a very good testing and monitoring regime implemented by our health services (hats off to those heroes). I think it may be more due to Italian incompetence and an elderly population. Again, South Korea has a similar population and greater initial numbers but has gotten the outbreak under control much quicker. Singapore too.

[SOPS]

Small thread drift. American Airlines is grounding it’s entire wide body fleet and cutting 75 percent of International flights. This is going to be very ugly.

[CurtainTwitcher]

With these travel restrictions and a lack of community transmission I doubt we'd be at Italy's position in three weeks. Three weeks ago they had 20 cases and it's now 21,000. But we had about 20 cases 3 weeks ago too, and now we only have 250. Warmer weather, more controllable borders, and a very good testing and monitoring regime implemented by our health services (hats off to those heroes). I think it may be more due to Italian incompetence and an elderly population. Again, South Korea has a similar population and greater initial numbers but has gotten the outbreak under control much quicker. Singapore too.

Sorry to burst your bubble Dr, our testing and monitoring has been limited by reagent shortages (USA as well). We are observing positive test results rate limited by available resources. At least one State (WA) tests for only imported cases, not community spread.

There is no evidence that warmer weather alters the rate of transmission. Qatar had a large number of cases.State health ministers have reported (https://www.watoday.com.au/national/western-australia/chief-health-officer-confirms-five-new-coronavirus-cases-in-wa-20200313-p549s3.html) shortages of reagents and kits used to conduct coronavirus tests in laboratories, as unprecedented demand for testing combines with limits on exports from other nations struggling to contain Covid-19.

Speaking at the council of Australian governments meeting on Friday (https://www.theguardian.com/world/2020/mar/13/coronavirus-mass-events-and-foreign-travel-should-be-cancelled-says-australian-government), Australia’s chief medical officer, professor Brendan Murphy, said supply problems with coronavirus testing kits was a “temporary issue” but one that was hampering the scale of testing in Australia and across the globe.


----


The West Australian health minister, Roger Cook, said a global shortage of personal protective equipment for health workers and reagents for Covid-19 tests had health department procurement staff scrambling around the clock to secure them. “That’s something of acute concern to us,” he said. There is currently a 72-hour testing backlog in the state.

The state’s deputy chief health officer, Robyn Lawrence, said new measures were being adopted to ensure only the highest-risk patients would be tested. Those wanting testing would need to bring evidence of overseas travel within the past 14 days, such as boarding passes, she said.




The Guardian Global shortage of Covid-19 test kits hits Australia as other nations limit exports (https://www.theguardian.com/australia-news/2020/mar/13/global-shortage-of-covid-19-test-kits-hits-australia-as-other-nations-limit-exports) Fri 13 Mar 2020 17.48 AEDT

[dr dre]

Sorry to burst your bubble Dr, our testing and monitoring has been limited by reagent shortages (USA as well). We are observing positive test results rate limited by available resources. At least one State (WA) tests for only imported cases, not community spread.

There is no evidence that warmer weather alters the rate of transmission. Qatar had a large number of cases.

The Guardian Global shortage of Covid-19 test kits hits Australia as other nations limit exports (https://www.theguardian.com/australia-news/2020/mar/13/global-shortage-of-covid-19-test-kits-hits-australia-as-other-nations-limit-exports) Fri 13 Mar 2020 17.48 AEDT

There's still a lot of testing being conducted in Australia. 16,000 from NSW Health (https://www.health.nsw.gov.au/news/Pages/20200315_00.aspx).
Almost all cases are from overseas or close contact with overseas cases. Have there been some community transmission? Yes, but not a great number yet.

As for Qatar they get a flu season too, which correlates to their northern hemisphere winter. Although it may not be warm temperatures that kill the bug, it may be things like increased travel from nearby countries that have a flu season, a high transitory migrant population, more time spent indoors? Scientists aren't exactly sure but the rates to seem to correlate with them having their flu season concurrent with the northern hemispheres.

[B772]

The US has done a blackflip on flight approval to the US from the UK and Ireland. Flights from the UK and Ireland to the US will be banned from Mon 16 March.

EK has suspended service on 37 routes.

[Foxxster]

Small thread drift. American Airlines is grounding it’s entire wide body fleet and cutting 75 percent of International flights. This is going to be very ugly.

in around 6 to 8 weeks, this will be almost every airline. And it won’t just be international flights. Domestic will be cut by as much. That includes Qantas and Virgin. Remember only about 8 weeks ago nobody had heard of this virus. And also remember that the virus and it’s affects are exponential. So you cannot simply double the impact of the last 8 weeks to see the impact for the next 8.

the PM was on tv at a press conference on the news tonight. If I heard correctly, they are predicting under a best case scenario, new cases will peak at 30,000 a day.

I suggest people organise their finances around that scenario. If you had planned a new car or an upgrade to the bathroom or kitchen, forget it. The effects on not only the airline industry but retail, hospitality, entertainment etc etc are going to be devastating.

[CurtainTwitcher]

no, he did say 30k ad day, opposed to 300k per day without the measures take. Difficult to post a facebook link, I have split it up. About 1:35 in. Remove the space after the http and paste it in your browser.

https: //www.facebook.com/7NEWSsydney/videos/848652082300235/

[dragon man]

A lot more than the 380s will be grounded very shortly. Terrible for all concerned, take care everyone.

[Angle of Attack]

I can’t see it being any different to the US airlines and Air NZ, pretty much all of the Long Haul fleet will be grounded and not for a month, probably 6 months. They will keep a few token flights to keep trade route open to UK and US but hardly any probably only equivalent to 3 or 4 787 aircraft. Domestic will be cut probably around 30% next month increasing each month as required to possibly 80% reduction and keeping token routes open at dramatically reduced frequency. Leave will be burnt first but it won’t be anywhere near enough, expect thousands of lay offs in office areas, probably a massive cull on Cabin Crew and other front line staff commensurate with the reduction in flying, especially the Casuals, and I’m guessing the are going to go to AIPA to agree on forced stints of LWOP for pilots, all over the board. Who knows whether there will be agreement but even with that there has to be layoffs in pilot ranks too. All training will cease with immediate effect.

Probably looking at halving staff costs while weathering the storm. The might have 2 billion in cash or so but this lumbering giant will be burning huge amounts of cash daily just to survive. There will be some assistance from the government, Airlines were even mentioned in the media today, but it will be token and not a lot in the scheme of things. No I don’t have inside info but I really can’t see it being anything different just looking at revenue and cashflow numbers, they need to take drastic action, in fact it could even be worse than my prediction.

[Flava Saver]

...yes am hearing entire wide body fleets at QF/JQ about to be grounded in a matter of days.. take care of your friends and colleagues, and importantly, yourself.

[morno]

I know I’m not known for my love of QF pilots, but we’re all in very similar boats at the moment, or about to be. It’s a very stressful time with a lot of uncertainty for all. Keeping an eye out for your mates is pretty important right now.

Hope it all works out for you guys, you’ll be the ones hopefully taking me back to my job overseas whenever I get some work back :sad:

[ruprecht]

Thanks morno, same to you.

[Angle of Attack]

No I’m hearing it’s worse....much worse 80% reduction in all QF group airlines flying....just coming through Bloomberg and other sources, that’s 20-23000 job losses if true.

[WhoFlungDung]

No I’m hearing it’s worse....much worse 80% reduction in all QF group airlines flying....just coming through Bloomberg and other sources, that’s 20-23000 (tel:20-23000) job losses if true.

Yeah/nah. Nothing on Bloomberg or any other news wire.

WFD

[Angle of Attack]

No problem get back to me tomorrow afternoon WhoFlungDung.

[Angle of Attack]

https://cimg1.ibsrv.net/gimg/pprune.org-vbulletin/1419x1349/8cfa9cce_23a1_433c_beb9_fad26dbc82f8_9529a5955f9b80f9e6037af 1fb184e361415d93d.jpeg
https://cimg2.ibsrv.net/gimg/pprune.org-vbulletin/1414x1361/f651f85e_cdd0_4837_9dc7_757f882da967_1b16a3fe8f7949f4a1cbe7d 6654df66bf55474a1.jpeg
https://cimg5.ibsrv.net/gimg/pprune.org-vbulletin/1407x1034/f9318c76_684f_4fa8_bce8_c0f744b41902_c732b7d308ae51d228f3d96 ed7581ae4a878da4f.jpeg

[WhoFlungDung]

No problem get back to me tomorrow afternoon WhoFlungDung.

Yeah/nah. No mention of job losses.

[Angle of Attack]

I don’t want to be a devils advocate but job losses are inevitable with these financial statistics. They can’t survive unless they cull, it’s a known fact.

[Foxxster]

No I’m hearing it’s worse....much worse 80% reduction in all QF group airlines flying....just coming through Bloomberg and other sources, that’s 20-23000 (tel:20-23000) job losses if true.

well that came sooner than I expected. Virgin will do the same. And this will be the picture for all airlines worldwide. And if or more correctly when the next phases come in, closing all shops, schools and restaurants and cafes, then next, locking people in like Spain and Italy, expect basically a complete shutdown. Not 20% left flying, maybe 2%.

job losses will of course occur. The airlines and many many other affected industries will need to go into hibernation for a period of about 6 months. I imagine a lot of admin staff will be fired but pilots put on extended leave without pay .

this is out of management’s control. All they and we can do is watch the case numbers and hope they level off sooner rather than later. Currently Australia’s are still growing exponentially. Same for many other countries.

wash your hands, keep away from other people as much as possible and look after any elderly relatives who are likely going to be told to self isolate for many months. Somebody has to make sure they have food , medical supplies etc.

good luck. We are in for about 6 months of hell then fingers crossed a better Xmas..and new year.

[Sunfish]

Well the A380’s might make good water bombers. I can’t see them being profitable in a post pandemic world.

[transition_alt]

90% international capacity cut across the QF group with 60% domestic flights cut just announced.

Doesn’t sound good in the short term!

[Angle of Attack]

Pretty much all wide bodies grounded until end of May, 60% reduction in domestic till end of May, just confirmed

[junior.VH-LFA]

Best of luck everyone, my thoughts are with all of you waking up to this news today.

[LostWanderer]

Wow, this is terrible.

Any news on what they will do with the 717 fleet at Cobham or the Dash flying?

[Gin Jockey]

Wow, this is terrible.

Any news on what they will do with the 717 fleet at Cobham or the Dash flying?

predictions are difficult, especially about the future!

[VH DSJ]

Wow, this is terrible.

Any news on what they will do with the 717 fleet at Cobham or the Dash flying?

The Dash belong to Regional Services business unit (blue tail) servicing the resources sector on closed charter ops so it shouldn't be affected.

[RENURPP]

The Dash belong to Regional Services business unit (blue tail) servicing the resources sector on closed charter ops so it shouldn't be affected.
I suspect he was asking regarding the Qlink Dash's

[parabellum]

The only up side, if it can be called that, is that the QF/VA fuel bill will be drastically reduced as will crew allowances and as most aircraft are going to be Ground Risks Only for a while the insurance bill should drop too. Otherwise it is all pretty black out there.

[SilverSleuth]

So has the company said what they are
gping to do with the pilots? Must be some very stressed guys out there. Good luck all...

[Chris2303]

Well the A380’s might make good water bombers. I can’t see them being profitable in a post pandemic world.

Now that would a sight worth seeing!

[V-Jet]

I keep going back to the fact Qf borrowed billions in share buy backs basically to ensure remuneration. As soon as anything goes wrong (yes this is unprecedented) the Govt has to step in and bail them out.

Heads I win, tails you lose.... The people pay regardless.

[Sunfish]

Too important to be allowed to fail.:yuk:

[Australopithecus]

If the taxpayer is going to be the lender of last resort it’s time for the government to behave that way and demand equity in return for saving the enterprises. I am all for a bailout, but enough with the private profits/social loss model of modern capitalism.

[CurtainTwitcher]

Harvard Business Review
Why Stock Buybacks Are Dangerous for the Economy

by
William Lazonick (https://hbr.org/search?term=william%20lazonick)
Mustafa Erdem Sakinç (https://hbr.org/search?term=mustafa%20erdem%20sakin%E7)
and
Matt Hopkins (https://hbr.org/search?term=matt%20hopkins)


January 07, 2020
Loading...https://hbr.org/resources/images/article_assets/2020/01/Jan20_07_690423314-700x394.jpgHBR Staff/Daniel Sambraus/Getty ImagesEven as the United States continues to experience its longest economic expansion since World War II, concern is growing (https://www.federalreserve.gov/publications/2018-november-financial-stability-report-borrowing.htm) that soaring corporate debt (https://www.forbes.com/sites/mayrarodriguezvalladares/2019/07/25/u-s-corporate-debt-continues-to-rise-as-do-problem-leveraged-loans/#2796aad53596) will make the economy susceptible to a contraction that could get out of control. The root cause of this concern is the trillions of dollars that major U.S. corporations have spent on open-market repurchases (https://www.nytimes.com/2018/08/23/opinion/ban-stock-buybacks.html) — aka “stock buybacks” — since the financial crisis a decade ago. In 2018 alone, with corporate profits bolstered by the Tax Cuts and Jobs Act of 2017, companies in the S&P 500 Index did a combined $806 billion in buybacks, about $200 billion more than the previous record set in 2007. The $370 billion (https://www.yardeni.com/pub/buybackdiv.pdf) in repurchases which these companies did in the first half of 2019 is on pace for total annual buybacks that are second only to 2018. When companies do these buybacks, they deprive themselves of the liquidity that might help them cope when sales and profits decline in an economic downturn.

Making matters worse, the proportion of buybacks funded by corporate bonds reached as high as 30% in both 2016 and 2017, according to JPMorgan Chase (https://www.bloomberg.com/news/articles/2019-01-27/debt-financed-share-buybacks-dwindle-to-lowest-level-since-2009). The International Monetary Fund’s Global Financial Stability Report (https://www.imf.org/en/Publications/GFSR/Issues/2019/10/01/global-financial-stability-report-october-2019), issued in October, highlights “debt-funded payouts” as a form of financial risk-taking by U.S. companies that “can considerably weaken a firm’s credit quality.”

It can make sense for a company to leverage retained earnings with debt to finance investment in productive capabilities that may eventually yield product revenues and corporate profits. Taking on debt to finance buybacks, however, is bad management, given that no revenue-generating investments are made that can allow the company to pay off the debt. In addition to plant and equipment, a company needs to invest in expanding the knowledge and skills of its employees, and it needs to reward them for their contributions to the company’s productivity. These investments in the company’s knowledge base fuel innovations in products and processes that enable it to gain and sustain an advantage over other firms in its industry.

The investment in the knowledge base that makes a company competitive goes far beyond R&D expenditures. In fact, in 2018, only 43% of companies in the S&P 500 Index recorded any R&D expenses, with just 38 companies accounting for 75% (https://www.ineteconomics.org/perspectives/blog/financialization-us-pharma-industry)of the R&D spending of all 500 companies. Whether or not a firm spends on R&D, all companies have to invest broadly and deeply in the productive capabilities of their employees in order to remain competitive (https://www.cnbc.com/2019/12/05/oracle-shows-buybacks-can-go-too-far.html) in global markets.

Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm. Indeed, these distributions to shareholders, which generally come on top of dividends, disrupt the growth dynamic that links the productivity and pay of the labor force. The results (https://global.oup.com/academic/product/predatory-value-extraction-9780198846772?view=Grid&lang=en&cc=gb) are increased income inequity, employment instability, and anemic productivity.

Buybacks’ drain on corporate treasuries has been massive. The 465 companies in the S&P 500 Index in January 2019 that were publicly listed between 2009 and 2018 spent, over that decade, $4.3 trillion on buybacks (https://www.ineteconomics.org/perspectives/blog/financialization-us-pharma-industry), equal to 52% of net income, and another $3.3 trillion on dividends, an additional 39% of net income. In 2018 alone, even with after-tax profits at record levels because of the Republican tax cuts, buybacks by S&P 500 companies reached an astounding 68% of net income, with dividends absorbing another 41%.

Why have U.S. companies done these massive buybacks? With the majority of their compensation coming from stock options and stock awards (https://www.ineteconomics.org/research/research-papers/the-value-extracting-ceo-how-executive-stock-based-pay-undermines-investment-in-productive-capabilities), senior corporate executives (https://rooseveltinstitute.org/wp-content/uploads/2019/07/RI_Corporate-Insiders-use-Stock-Buybacks-for-Personal-Gain_Working-Paper-201910.pdf) have used open-market repurchases to manipulate their companies’ stock prices to their own benefit (https://www.marketwatch.com/story/secs-jackson-says-research-hes-conducted-shows-corporate-insiders-are-using-buybacks-to-cash-out-2019-03-06) and that of others who are in the business of timing (https://www.ineteconomics.org/perspectives/blog/what-we-learn-about-inequality-from-carl-icahns-2-billion-apple-no-brainer) the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers (https://global.oup.com/academic/product/predatory-value-extraction-9780198846772?view=Grid&lang=en&cc=gb) — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.

In contrast to buybacks, dividends provide a yield to all shareholders for, as the name says, holding shares. Excessive dividend payouts (http://www.isigrowth.eu/2017/06/15/share-repurchases-in-europe-a-value-extraction-analysis/), however, can undercut investment in productive capabilities in the same way that buybacks can. Those intent on holding a company’s shares should therefore want it to restrict dividend payments to amounts that do not impair reinvestment in the capabilities necessary to sustain the corporation as a going concern. With the company plowing back profits into well-managed productive investments, its shareholders should be able to reap capital gains if and when they decide to sell their shares.

Stock buybacks done as open-market repurchases emerged as a major use of corporate funds in the mid-1980s after the Securities and Exchange Commission adopted Rule 10b-18 (https://www.yalejreg.com/bulletin/the-1-trillion-question-new-approaches-to-regulating-stock-buybacks-2/), which gives corporate executives a safe harbor (https://www.brookings.edu/research/stock-buybacks-from-retain-and-reinvest-to-downsize-and-distribute/) against stock-price manipulation charges that otherwise might have applied. As a mode of distributing corporate cash to shareholders, buybacks surpassed dividends in 1997, helping to elevate stock prices in the internet boom. Since then, buybacks, which are much more volatile than dividends, have dominated distributions to shareholders when the stock market is booming, as companies have repurchased stock at high prices in a competition to boost their share prices even more. As shown in the exhibit “Buying When Prices Are High,” major companies have continued to do buybacks in boom periods when stock prices have been high, rendering these businesses more financially fragile in subsequent downturns when abundant profits disappear.


https://hbr.org/resources/images/article_assets/2019/12/W191216_LAZONICK_STOCKBUYBACKS-383x754.png

JPMorgan Chase has constructed a time series (https://www.bloomberg.com/news/articles/2019-01-27/debt-financed-share-buybacks-dwindle-to-lowest-level-since-2009) for 1997 through 2018 that estimates the percentage of buybacks by S&P 500 companies that have been debt-financed, increasing the financial fragility (https://thedalesreport.com/business/till-corporate-debt-do-us-apart/) of companies. In general, the percentage of buybacks that have been funded by borrowed money has been far higher in stock-market booms than in busts, as companies have competed with one another to boost their stock prices.

In 2018, however, as stock buybacks by companies in the S&P 500 Index spiked to more than $800 billion for the year, the proportion that were financed by debt plunged to about 14% in the last quarter. Why was there a sharp decline in 2018, when the dollar volume of buybacks far surpassed the previous peak years of 2007, 2014, and 2015?

The answer is clear: Corporate tax breaks contained in the Tax Cuts and Jobs Act (https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-business-taxes) of 2017 provided the corporate cash for the vastly increased level of buybacks (https://www.washingtonpost.com/business/economy/a-year-after-their-tax-cuts-how-have-corporations-spent-the-windfall/2018/12/14/e966d98e-fd73-11e8-ad40-cdfd0e0dd65a_story.html) in 2018. First, there was a permanent cut from 35% to 21% in the tax rate on corporate profits earned in the United States. Second, going forward, the 2017 law permanently freed foreign profits of U.S.-based corporations from U.S. taxation (Under the Act, the U.S. Treasury has been reclaiming some tax revenue (https://www.federalreserve.gov/econres/notes/feds-notes/us-corporations-repatriation-of-offshore-profits-20190806.htm) lost because of a tax concession dating back to 1960 (https://www.salon.com/2011/08/18/global_tax_dodgers/) that had enabled U.S.-based corporations to defer payment of U.S. taxes on their foreign profits until repatriating them).

In 2018 compared with 2017 (https://www.cbo.gov/about/products/budget-economic-data#2), corporate tax revenues declined to $205 billion from $297 billion, hypothetically increasing the financial capacity of U.S.-based corporations to do as much as $92 billion more in buybacks in 2018 without taking on debt. Given that from 2017 to 2018 stock buybacks by S&P 500 companies increased by $287 billion (https://www.yardeni.com/pub/buybackdiv.pdf) (from $519 billion to $806 billion), the reality is that, through the corporate tax cuts, the federal government essentially funded $92 billion in buybacks by issuing debt and printing money to replace the lost corporate tax revenues.

Since the total federal government deficit increased by $114 billion (from $665 billion in 2017 to $779 billion in 2018), we can (again hypothetically) think of $92 billion of this additional government debt as taxpaying households’ gift to business corporations to enable them to do even more buybacks debt-free, shifting the debt burden of stock buybacks from corporations to taxpayers. If, as a “transfer payment,” we add $92 billion to the $150 billion in debt that, according to the JPMorgan data, S&P 500 companies used to fund buybacks in 2018, the percentage of their 2018 buybacks that were debt-financed rises to 30%, greater than the proportion of 29% for 2017. But because of corporate tax cuts, in 2018 taxpaying households were burdened with about 38% of the combined government and business debt that enabled corporations to do buybacks.

Whether it is corporate debt or government debt that funds additional buybacks, it is the underlying problem of the corporate obsession with stock-price performance that makes U.S. households more vulnerable to the boom-and-bust economy. Debt-financed buybacks reinforce financial fragility. But it is stock buybacks (https://hbr.org/2014/09/profits-without-prosperity), however funded, that undermine the quest for equitable and stable economic growth. Buybacks done as open-market repurchases should be banned (https://www.nytimes.com/2018/08/23/opinion/ban-stock-buybacks.html).https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

[Rodney Rotorslap]

90% international capacity cut across the QF group
One media source stated that this is unprecedented. Not so. It wasn't so long ago that 100% was achieved and that was based on an imaginary threat.

[PPRuNeUser0184]

One media source stated that this is unprecedented. Not so. It wasn't so long ago that 100% was achieved and that was based on an imaginary threat.

what a dumb post