Is QANTAS (Geoff Dixon) fighting a losing battle?

[Kaptin M]

Is QANTAS fighting a war that it can never win?

As CEO, Geoff Dixon, takes a razor to as many parts (except his own) of QANTAS that he can reach, will all of the slashing eventually be in vain, unless the Australian Government intervenes, and once again takes (a majority) ownership of Australia's flag carrier?

The competiton that is mounting against QANTAS, consists predominantly of airlines that are State owned, Emirates, Singapore Airlines, JAL, and Air New Zealand - airlines with far deeper pockets than those of privatised QANTAS.
Deeper, because although superficially these airlines are competing on market price, the reality is, NONE of them are going to be ALLOWED to fall over.

This is NOT the case with QANTAS, as a public company - the private sector sharemarket runs on dividends and perceived returns, and not a "fly at any cost" rationale.

With those airlines ( Emirates, Singapore Airlines, JAL, and Air New Zealand ) as primary competitors with QANTAS, is Dixon merely forestalling the inevitable?

Imo, unless the Australian Federal Government, once again assumes the position of primary shareholder, QANTAS is destined to become just a name on a non-Australian carrier's aircraft!

RIP QANTAS??

Edit: With thanks to Chronic Snoozer.

[Chronic Snoozer]

will all of the slashing eventually be in vein,

If thats intentional its quite funny, otherwise its in vain.

[bonvol]

Sooner or later the number of MEL's we carry will exceed the number you can count.

My highest lately is 27. For the poor punters, the IFE is out a lot and the reading lights..well not uncommon for dozens of them to be u/s. Its embarrassing to keep apologising on nearly every flight.

Dixon is right to be worried about the competition. He's doing a good enough job stuffing the brand and upsetting the pax to make them jump as soon as an alternative pops up.

The maintenance is getting worse and worse and worse and now he's picked a fight with the lames

Maybe his gloom and doom will be a self fulfilling prophecy.

[schnauzer]

QF certainly does have some "issues" to address. Whether it will ultimately see the demise of the airline, well I would doubt it but time will tell.

The ironic thing about this post is that Kapt M would love to see QF "crash and burn". Ever since his beloved Ansett went "tits up", and indeed since 1989, Kapt M has been furiously rubbing his hands together waiting for his ultimate triumph.

I don't have any problems with the topic being discussed. But lets be a little transparent here. Kapt M is an 89er. He has a chip on his shoulder with regards to QF due to their inaction in the war. He generally manages to hide it, but sometimes it bubbles to the surface. Like now.

[Kaptin M]

What a load of old cobblers, schnauzer.
I have never criticised QF pilots and their decision to not be involved in 1989.
As I have stated here on several occasions though, QANTAS has been MY choice of airline, when I have bought (full fare) tickets for me and my family, on the numerous occasions since leaving Australia's shores many years ago.

Some of you QANTAS employees need to distance yourselves a little, and take a look at REALITY.

I, for one, would LOVE to see the international arm of QANTAS taken over again by the Australian Government to protect this nation's flag carrier from the onslaught of other State owned airlines, as I see that is probably the ONLY way it can survive in its own right.

Don't shoot the messenger, schnauzer!

[rtforu]

Government intervention has always, and will always, be the crutch used by flag carriers. If we really wanted a free market driven, deregulated enviroment, governments would have to stay out of it and simply let the airlines compete. MMM... All sounds good in theory, problem is, one has to always keep in mind the airline exec's that control these companies are driven by the dollar, in fact, they become obsessed by it, hence the 27 MEL's refered to in a previous post.

[schnauzer]

I'll be watching you, Kapt.

[schnauzer]

Don't misunderstand me here, biccy, because I'm first in line when it come to cynicism in regards to the ol' Kapt's motives.

In fairness to him (jeez, did I really say that? ) you've gotta wonder how much of that profit is derived from slashing our pay and conditions? How much is earned by ripping the guts out of the operation? And most importantly, how long do you make record profits after doing something like that?

[Z Force]

For that schnauser, you'll have to ask Mr. Eddington.

[Eastwest Loco]

schnauzer - just for the record, Australian was in the same condition of intrernal haemmorage when Qantas was instructed, rather than asked to assimilate it.

They were well and truly on the point of collapse due not to the greed that brought Ansett undone, but to the annual stripping of profits by the Federal Government.

I will admit that in my dreams, an F27-200QC swings off base onto finals and settles gently onto 24 - but those days are unfortunately long gone. New world order mate.

Best regards

EWL

[mr hanky]

you've gotta wonder how much of that profit is derived from slashing our pay and conditions? How much is earned by ripping the guts out of the operation? And most importantly, how long do you make record profits after doing something like that?

Well, from the last annual report, revenue was actually down from the previous year. The record profit was only achieved through costcutting. As for how long you make record profits doing that - not really Geoff's problem, is it? He'll be gone by then.

[Agent Mulder]

Just like current statements that it is important to contain costs due to the significant investment required to reduce the average fleet age of Qantas aeroplanes.

Start by going to James Strong's house (and all of his cronies during his tenure) and getting back the bonuses they made by not investing in the business. Strong's tenure was one of sell everything, buy nothing, bank the bonus. Now the company seem to think that current employees should pay for the "management oversights" at the time.

Unfortunately for Qantas Management, most employees have seen all this before, so to say to them that they have to show restraint whilst "management" give themselves massive increases in remuneration (even lower level execs got between 4%-7% payrises), and the board 66%, takes a better sell than they are currently/(capable of) doing.

[P47]

If GD had a conscience, he would take "SPIRIT OF AUSTRALIA" off the side of the aircraft !
No Australian company should attempt to do to its workers what the big "Q" is doing. That logo quite clearly does not mean a thing to Qantas Management.
I feel sick to my stomach when I see that logo diplayed on your aircraft as they taxi past, knowing it means - NOTHING!
Where is the pride of keeping jobs in Australia for Australians?
What about a bit of cost cutting in other places GD?
You are not behaving like an Australian patriot.
Stop sending Australians and Australian positions offshore.
Cheap Asian work is surely not what Qantas is about, or is it?

Shame, Shame , Shame Geoffrey; Shame, Shame, Shame!

[Kaptin M]

It would seem that Dixon can see that eventually - unless the Australian Government becomes the majority shareholder/sole owner - QANTAS, the name, is all that will be marketable.
He's very quickly selling off the farm, and all the animals on it, to keep his position for as long as possible.

A quick tally of the main Asian airline operators, shows that the vast majority of QF's competitors are government backed.
SQ, MAS, ANZ, Thai, JAL, Garuda.
Is Australian Government financial intervention going to be the ONLY way QF International can survive against its other State owned competitors?

[Hippolite]

Mr Hankey has it right.

Unless a company has that "ever growing" revenue stream, record profits can only be made buy cutting the costs, labor, debt repayment, maintenance, cabin service etc.

In fact, this industry cycle is very common, especially in the oil industry. A massive cost cutting drive takes place reducing pay and conditions for staff, maintenace is cut back to the bone, and the company operates in "harvest" mode for a few years. Often, it is sold or "merged"

Along comes the new owner and surprise surprise, look at all tyhe money that has to be spent to get things to a level where they can produce to capacity again.

The evidence is that QF does not have an ever increasing revenue stream, and in the mean time if the "brand" or customer perception of the brand suffers then it is hard to restore.

The company is currently operating in "harvest" mode. Sometime, new seeds will have to be sown for the next harvest and those seeds cost.

HH

[Sunfish]

Here comes the conspiracy theory again. The largest shareholder in Qantas is a nominee company with about 18%. From memory, the takeover offer threshold is 20%.

Qantas is still a VERY attractive brand to own if it can be acquired for the right price, and I can think of at least five Australians who could buy it.

I suspect that one of these gentlemen is holding 18% and doesn't want it known. He is watching Geoff Dixon driving the company into the ground, knowing that eventually the share price must implode when all the hollow logs have been stripped, costs cut to the bone, staff exhausted, and aircraft facing major maintenance bills. Shades of Ansett.

However once the market realises this, (the ghostly wreck of Ansett will be trottted out by the media) he will pounce, make a full takeover offer, and take the company private. It will then be "restructured" by real managers, not clowns like Dixon, and it will be done using the new industrial laws that the coallition will pass later this year.

For any off you who remember, PBL was a major shareholder in Crown Casinos. They watched its CEO overcapitalise the business and build up a huge and unsustainable cost structure, saying nothing at all. Then, as the glitter wore off and profits collapsed, they took the company off the grateful public's hands for a song.

Where are you going to get the dosh to pay for your A380's? Is J* Asia going to suck cash out of Qantas?

Then of course there are the usual business risks. What happens if there is an accident due to overworked staff? What happens if Singapore does negotiate an open skies deal? What happens if staff do strike?

My guss is that Dixon is taking you into uncharted waters and they are full of sharks.

[Kaptin M]

There's no disagreement, Sunny, that there is a very real perception by many, that

Geoff Dixon (is) driving the company into the ground

So why would ANYONE be interested in buying QANTAS, if, as you state

all the hollow logs have been stripped, costs cut to the bone, staff exhausted, and aircraft facing major maintenance bills.

By that time, it will be only the name that is worth anything at all, and it does seem apparent that that is where Dixon is taking it now.

If QANTAS were to be"be "restructured" by real managers, not clowns like Dixon", will they still not be faced with the same deep-pocketed competition of the State-owned airlines I have previously mentioned, and thus end up throwing good money after bad? (It's the old joke personified by QANTAS, "How do you make a small fortune out of an airline? Start with a large one.")

I can think of only ONE Australian entity that has pockets deep enough to keep QANTAS intact as Australia's international flag carrier, and that entity -a previous owner - has its HQ in Canberra!

[Sunfish]

Kaptin, provided there has not been an accident the brand is still very valuable.

As for competition from State owned airlines, I do not see that as a long term issue.

The trick is to get the airline cheap from its existing shareholders. If you can get it cheap enough, you can compete with state owned airlines because your required return on investment can be smaller.

Another thing you could do is restructure it and then flog it back to the punters via a public float.

I can imagine a Kerry Packer, or Toll, or Patricks going through Qantas management like a knife through butter.

[Kaptin M]

"As for competition from State owned airlines, I do not see that as a long term issue.

You mean SQ, MAS, ANZ, Thai, JAL, Garuda. are just going to fade away?
I see them as an ONGOING threat (to QF).

(BTW, Sunny, QF has already had an accident.....I guess you mean one where lives are lost, though.)

The trick is to get the airline cheap from its existing shareholders. If you can get it cheap enough, you can compete with state owned airlines

But State owned/funded airlines will ALWAYS be able to undercut privately owned and funded ones, regardless of how far the latter can reduce its operating costs.

Another thing you could do is restructure it and then flog it back to the punters via a public float.

Isn't that what's happening right now at QF?
Dixon is "re-structuring" QANTAS, while shares in it are traded on a daily basis.

OTOH, a company such as SQ and Air New Zealand that trade shares publically, but are government backed must be seen as far more secure than wholly publically owned ones....aren't they?

[Lodown]

By way of an aside, Boeing's complaints with Airbus revolve around a government investor which will always have deeper pockets than a private company.