Are QF's cost cutting targets unrealistic?
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Join Date: Apr 2002
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Are QF's cost cutting targets unrealistic?
I ask this question as I have heard from a number of people in different departments of the amount that they want each to cut. Some of the numbers I have heard seem to be in fantasyland and I am pretty sure are unachieveable.
There have been rumours that BD's demise in Engineering was to do with the amount they told him he needed to cut and he was honest in saying that it may not be possible. I have heard this from people in different engineering sections so I am thinking there may be some truth in the rumour. I support the LAME's in there stand as most other non-skilled areas signed their EBA's to hopefully outlive the Howard govt. The LAME's have skills which can not be replaced overnight so good luck to them.
Also on cost cutting I have a large dollar figure quoted for the amount they want cut from MEL airport. Have the accountants not figured out that if you have more flights in peak times that you need more staff to handle said flights. The only way I could see saving money at an airport would be to operate M-F between the hours of 0800-1600 so you do not need as many staff and you don't pay penalties.
Finally I can see the airline being so micromanaged that it will lose money and contracts because one area of the company may not make much money if any from a contract (eg ground handling)and they will not renew that contract. This in turn may or will hurt another area in the company who makes a tidy profit with the contract (eg engineering) and the company that the contract is with will walk away from everything.
All of this is because no one seems interested in the overall picture, just their own bonus level. These are just my observations please feel free to correct me if you think I am completely off track.
Sorry for the rant but I am just getting more and more pi$$ed off with this place as the time goes on.
Rammel
There have been rumours that BD's demise in Engineering was to do with the amount they told him he needed to cut and he was honest in saying that it may not be possible. I have heard this from people in different engineering sections so I am thinking there may be some truth in the rumour. I support the LAME's in there stand as most other non-skilled areas signed their EBA's to hopefully outlive the Howard govt. The LAME's have skills which can not be replaced overnight so good luck to them.
Also on cost cutting I have a large dollar figure quoted for the amount they want cut from MEL airport. Have the accountants not figured out that if you have more flights in peak times that you need more staff to handle said flights. The only way I could see saving money at an airport would be to operate M-F between the hours of 0800-1600 so you do not need as many staff and you don't pay penalties.
Finally I can see the airline being so micromanaged that it will lose money and contracts because one area of the company may not make much money if any from a contract (eg ground handling)and they will not renew that contract. This in turn may or will hurt another area in the company who makes a tidy profit with the contract (eg engineering) and the company that the contract is with will walk away from everything.
All of this is because no one seems interested in the overall picture, just their own bonus level. These are just my observations please feel free to correct me if you think I am completely off track.
Sorry for the rant but I am just getting more and more pi$$ed off with this place as the time goes on.
Rammel
Join Date: Dec 2002
Location: Sydney
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From my observations, perhaps the cost cutting is starting to eat into the bottom line. Having been doing a lot of LAX flights in recent times, several flight attendants on different flights, have been told by premium class passengers that they can't wait for Singapore to start operating to LAX as they will jump ship due to the poor performance of QF. It seems to be coming very prevalent now as you never heard this consistently. Coincidentally, these comments have come out with the advent of cost cutting.
I understand what you are saying Rammel, and if you are correct I have to agree. The root core of the problem is that cost accounting is an approximate science and attempts to model something like an airline in detail will ultimately come down to the question of the assumptions you make to allocate fixed and indirect costs, because the 'profit" of business units within the entity is illusory.
What usually happens in large businesses that decide to go down this road, unless they are very well managed, is that there is a wild scramble by middle managers to shift costs onto some other part of the business.
The net result, as I know to my cost
, is a giant management s**t fight, nobody looking after the business, and the most bizarre middle management decisions being taken in an effort to make their divisions look good. This normally results in INCREASED costs. Its like holding a rubber tube underwater, you push it down in one place, it pops up somewhere else.
For example, Supply decides to cut inventory of part XYZ, so now the old XYZ has to be refurbished and reused, supply has reduced its costs, but the workshops costs have just increased.
Sorry for the rant, I had a few years of dealing with this sort of thing, I still remember F28 APU starters at AN, I think we went through about 60 of them before somebody kicked Garrett in the nuts hard enough to fix the clutch problem.
What usually happens in large businesses that decide to go down this road, unless they are very well managed, is that there is a wild scramble by middle managers to shift costs onto some other part of the business.
The net result, as I know to my cost
, is a giant management s**t fight, nobody looking after the business, and the most bizarre middle management decisions being taken in an effort to make their divisions look good. This normally results in INCREASED costs. Its like holding a rubber tube underwater, you push it down in one place, it pops up somewhere else.For example, Supply decides to cut inventory of part XYZ, so now the old XYZ has to be refurbished and reused, supply has reduced its costs, but the workshops costs have just increased.
Sorry for the rant, I had a few years of dealing with this sort of thing, I still remember F28 APU starters at AN, I think we went through about 60 of them before somebody kicked Garrett in the nuts hard enough to fix the clutch problem.
