APA Qantas Bid Strategy
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Lets just suppose that for the last five years or so, you have been making money like mad....
You hide as much of it as you can, and you still announce a billion dollar profit while claiming that you are a 'legacy" carrier and retrenching staff as fast as you can,,,,because you are a poor and simple legacy carrier.....
So poor you.... competing against Government supported carriers, state run airlines, down on your luck, being thumped by competitors....and you have to retrench staff and hire foriegners to do their work...because nothing less is sustainable.....And you still stuff money into the hollow logs and make a billion profit, while crying poor to your staff.
So eventually the hollow logs are full to bursting. You are still crying poor to your staff and replacing them with foriegn labour because "business is so bad". The situation is so 'bad" that you cannot hide any more profits, so your story about needing to retrench staff and replace them with foriegn labor is going to sound a little thin. So what do you do?
Well, you can't go to the market and explain that instead of making 1 billion profit, the figure is closer to two billion, so you need to retrench more staff can you?
The obvious thing is to go private isn't it? Then you can empty the hollow logs without anybody watching can't you? You can still claim to be a poor little legacy airline while retrenching staff can't you? Nobody can see your accounts if you are private can they? The hollow logs can be emptied in secret.
The fact is that there are no auditors in Australia that can even understand what or where the "hollow logs" are. I used to regularly play with the Auditors sensibilities, ten minutes in the cockpit of a 767 would do nicely. I discussed the matter with a former seriously senior financial person from an competitor airlline today, and his view paralleled mine......... the deal is not in the interests of shareholders, but that is only my opinion, and everything about the bid is assuredly legal......
You hide as much of it as you can, and you still announce a billion dollar profit while claiming that you are a 'legacy" carrier and retrenching staff as fast as you can,,,,because you are a poor and simple legacy carrier.....
So poor you.... competing against Government supported carriers, state run airlines, down on your luck, being thumped by competitors....and you have to retrench staff and hire foriegners to do their work...because nothing less is sustainable.....And you still stuff money into the hollow logs and make a billion profit, while crying poor to your staff.
So eventually the hollow logs are full to bursting. You are still crying poor to your staff and replacing them with foriegn labour because "business is so bad". The situation is so 'bad" that you cannot hide any more profits, so your story about needing to retrench staff and replace them with foriegn labor is going to sound a little thin. So what do you do?
Well, you can't go to the market and explain that instead of making 1 billion profit, the figure is closer to two billion, so you need to retrench more staff can you?
The obvious thing is to go private isn't it? Then you can empty the hollow logs without anybody watching can't you? You can still claim to be a poor little legacy airline while retrenching staff can't you? Nobody can see your accounts if you are private can they? The hollow logs can be emptied in secret.
The fact is that there are no auditors in Australia that can even understand what or where the "hollow logs" are. I used to regularly play with the Auditors sensibilities, ten minutes in the cockpit of a 767 would do nicely. I discussed the matter with a former seriously senior financial person from an competitor airlline today, and his view paralleled mine......... the deal is not in the interests of shareholders, but that is only my opinion, and everything about the bid is assuredly legal......
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Well, it's starting to look as if this
may just achieve lasting notoriety as one of the most infamous and disgusting images in Australian aviation and business history.
Sure hope I'm wrong.
may just achieve lasting notoriety as one of the most infamous and disgusting images in Australian aviation and business history.
Sure hope I'm wrong.
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Why would you sell?
http://www.smh.com.au/news/business/...971263360.html
Even if the shares go down then you are covered for at least $2.23 per share.
I think APA have shot themselves in the foot, particularly with retail investors. I am thinking of buying more shares now!
Even if the shares go down then you are covered for at least $2.23 per share.
I think APA have shot themselves in the foot, particularly with retail investors. I am thinking of buying more shares now!
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Ohmigod, the financial press are actually smelling the same rat that I am !!!!! "Capital Management Review" indeed!
To me that translates to the "hollow logs" are bursting at the seams with cash!
To put it another way, its not a broken down Holden they are selling under all the mud and slime they have heaped on it - its actually a Rolls Royce!
"Legacy Airline" indeed! Its a cash generating powerhouse, but they cannot keep running the story about being a poor little legacy airline and getting rid of Australian staff and at the same time generate massive windfall profits can they?
The profits have to be stripped out in private so that they can still run their "legacy story" and no one knows any better.
So now do we understand why the management is going to be so munificently rewarded by APA? Guess who knows where the hollow logs are and whats in them. Whats the book value of the engines these days guys? Whats the market value vs. the book value of your spares? How much can you trim working capital guys? Whats the state of your superannuation funds boys? I watched a shipping line takeover another and finance it out of the surplus in the Super fund.
I am sure however that everything is perfectly legal and above board, and complies with continuous disclosure rules.
To me that translates to the "hollow logs" are bursting at the seams with cash!
To put it another way, its not a broken down Holden they are selling under all the mud and slime they have heaped on it - its actually a Rolls Royce!
"Legacy Airline" indeed! Its a cash generating powerhouse, but they cannot keep running the story about being a poor little legacy airline and getting rid of Australian staff and at the same time generate massive windfall profits can they?
The profits have to be stripped out in private so that they can still run their "legacy story" and no one knows any better.
So now do we understand why the management is going to be so munificently rewarded by APA? Guess who knows where the hollow logs are and whats in them. Whats the book value of the engines these days guys? Whats the market value vs. the book value of your spares? How much can you trim working capital guys? Whats the state of your superannuation funds boys? I watched a shipping line takeover another and finance it out of the surplus in the Super fund.
I am sure however that everything is perfectly legal and above board, and complies with continuous disclosure rules.
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YesTAM...Well said...
or another way of putting it..
"If it looks like a duck,sounds like a duck and walks like a duck you can bet money it's a duck..."
or another way of putting it..
"If it looks like a duck,sounds like a duck and walks like a duck you can bet money it's a duck..."
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Scott Rochort
OK.....we've all seen Capt Travolta swanning around as the QF " Ambassador -at-Large. BIG DEAL
I reckon we have our own working for the SMH.
Each day his news stories on the rat are objective and show no fear.
Hip Hip Hooraay.
Finally someone in the press with the gonads to stand up to the bullies in the Qantas spin team/Public Affairs.
Unlike some of the other lackies on the " Secret Press Upgrade list".....he has got the APA goons squirming each morning as they trudge across the lawn to pick up their morning copy.
Love it !!!
I reckon we have our own working for the SMH.
Each day his news stories on the rat are objective and show no fear.
Hip Hip Hooraay.
Finally someone in the press with the gonads to stand up to the bullies in the Qantas spin team/Public Affairs.
Unlike some of the other lackies on the " Secret Press Upgrade list".....he has got the APA goons squirming each morning as they trudge across the lawn to pick up their morning copy.
Love it !!!
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Will History Be Repeated ???
Does this whole thing seem something familiar to the early 80's when 2 "equity partners" bought Ansett?As YesTam aptly describes, where did the "hollow logs stuffed with cash" disappear to?
So why did TNT / NEWS buy Ansett - CASHFLOW!!
Think back to how large those two Corporations were when they bought Ansett and how they were able to grow from then on by borrowing huge ammounts to finance their respective global expansion; based on what? cashflow from Ansett.
And how much did they re-invest in the "cashcow" -
And what did they do when it had served it's purpose?
Yes, they brought in some "airline management guru" (from Hong Kong if I remember rightly) who proceeded to flog off assets such that Ansett miraculously made a huge 6 months profit.
It was then sold to "the incompetants" ---- the rest is history !!!!!!!!!!!
Role on...
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AFP - Wednesday, April 18
SYDNEY (AFP) - The private equity consortium bidding to take over Australian national airline Qantas said Wednesday that its interest in the carrier had dropped to 28.86 percent from 30.06 percent a fortnight ago.
It is the first time that the Airline Partners Australia (APA) consortium behind the 9.0 billion US dollar bid has experienced a fall in acceptances since it launched the offer late last year.
APA said a number of institutions had opted to sell their stock below the 5.45 dollar (4.36 US) a share offer price ahead of the May 4 deadline for the consortium's bid.........
My question is ...If APA did not buy the shares who did?
SYDNEY (AFP) - The private equity consortium bidding to take over Australian national airline Qantas said Wednesday that its interest in the carrier had dropped to 28.86 percent from 30.06 percent a fortnight ago.
It is the first time that the Airline Partners Australia (APA) consortium behind the 9.0 billion US dollar bid has experienced a fall in acceptances since it launched the offer late last year.
APA said a number of institutions had opted to sell their stock below the 5.45 dollar (4.36 US) a share offer price ahead of the May 4 deadline for the consortium's bid.........
My question is ...If APA did not buy the shares who did?
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Anyone could've bought - it's still (as at today, at least!) a listed company with shares freely trading on the stock market.
Indeed APA may have actually bought only a very small number to date - the bulk of what they've got are simply commitments to sell to them, some of which can, apparently, be rescinded.
Indeed APA may have actually bought only a very small number to date - the bulk of what they've got are simply commitments to sell to them, some of which can, apparently, be rescinded.
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Well done to everyone on a interesting thread. My two cents worth
- If you own Qantas shares and your happy with the performance thus far why sell? Your up for capital gains tax as well as trying to find somewhere else to put your money.
-APA have apparently under written the costs of fellow bidders to the tune of $35million. Thus APA have a very powerful insentive to make this bid fly.
-I wonder if their is a legal eagle reading this thread as to the appropriatness of a board staying in situ whom have agreed to a bid that as yet has not received at the least a glowing response from shareholders. After recomending the bid would it have been wiser for the board to stand down and be replaced with a new management team to take over the running of the airline in the interim?
- Warren Buffetts view re airlines is interesting. The other quote I have in my mind when Qantas management refer to the stockmarket not truly valuing its shares is "in the short term the stock market is a voting machine, in the long run its is a weighing machine" I think Benjamin Graham wrote this quote. I think the inability of the current management to grow the business consistently each year is the reason for its under performance on the market. Considering Buffett is the 3rd wealthiest man in the world and shares in his holding company Berkshire Hathaway will put you back over $100,000 US I take notice of any of his opinions. He has 40+ years of runs on the board.
The only negative statement re APA generally that I would make is that they are absorbing a mangement team very strong on financial wizadry but very weak on solid business building skills (IMHO). Starting Jetstar and Australian airlines not withstanding! I think one has failed and with the near entrance of tiger and perhaps a virgin lite the pressure on this new vehicle will be imense. I also note that investments in Asia have thus far not been stellar performers. Maybe it would have been wiser to concentrate on the higher yield higher service level mainline operation than dilute your airline product. Perhaps some real effort in growing the fantastic transport/ catering and engineering assets that Qantas own, making them into growing and valuable parts of the Qantas group eg like TOLL have done. I dont know? Perhaps the extremely generous levels of pay and options being given to Australian company executives is another area that should be looked at? Wishful thinking I know. I mean once you own your house and car how much do you really need to live on in this great country??
Current shareholders are rightly asking what specifically is it that APA can achieve under a private highly indebted structure that cant be achieved under the current public structure. The fact that the CEO has to spend some time briefing analysts that in his view are a pain in the bum and dont understand business is a little shallow in my view.
Qantas have a fantastic brand and should have a bright future. Lets hope the management guys are up to it!!!!
- If you own Qantas shares and your happy with the performance thus far why sell? Your up for capital gains tax as well as trying to find somewhere else to put your money.
-APA have apparently under written the costs of fellow bidders to the tune of $35million. Thus APA have a very powerful insentive to make this bid fly.
-I wonder if their is a legal eagle reading this thread as to the appropriatness of a board staying in situ whom have agreed to a bid that as yet has not received at the least a glowing response from shareholders. After recomending the bid would it have been wiser for the board to stand down and be replaced with a new management team to take over the running of the airline in the interim?
- Warren Buffetts view re airlines is interesting. The other quote I have in my mind when Qantas management refer to the stockmarket not truly valuing its shares is "in the short term the stock market is a voting machine, in the long run its is a weighing machine" I think Benjamin Graham wrote this quote. I think the inability of the current management to grow the business consistently each year is the reason for its under performance on the market. Considering Buffett is the 3rd wealthiest man in the world and shares in his holding company Berkshire Hathaway will put you back over $100,000 US I take notice of any of his opinions. He has 40+ years of runs on the board.
The only negative statement re APA generally that I would make is that they are absorbing a mangement team very strong on financial wizadry but very weak on solid business building skills (IMHO). Starting Jetstar and Australian airlines not withstanding! I think one has failed and with the near entrance of tiger and perhaps a virgin lite the pressure on this new vehicle will be imense. I also note that investments in Asia have thus far not been stellar performers. Maybe it would have been wiser to concentrate on the higher yield higher service level mainline operation than dilute your airline product. Perhaps some real effort in growing the fantastic transport/ catering and engineering assets that Qantas own, making them into growing and valuable parts of the Qantas group eg like TOLL have done. I dont know? Perhaps the extremely generous levels of pay and options being given to Australian company executives is another area that should be looked at? Wishful thinking I know. I mean once you own your house and car how much do you really need to live on in this great country??
Current shareholders are rightly asking what specifically is it that APA can achieve under a private highly indebted structure that cant be achieved under the current public structure. The fact that the CEO has to spend some time briefing analysts that in his view are a pain in the bum and dont understand business is a little shallow in my view.
Qantas have a fantastic brand and should have a bright future. Lets hope the management guys are up to it!!!!
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Fact and Emotions.......
"So can anyone guess who gets the blame if Qantas gets into trouble? Thats right - not APA - the Government for letting it proceed! Can you imagine the public outcry if Qantas announces its in financial trouble? How big do you think the demonstrations would be if Qantas announces that it is considering a takeover bid by Koreans or Chinese companies? "we tried our hardest" APA said "We thought we could succeed, and so did the Government" says APA. But guess who wears the stink? Thats right! The Government!"
Interesting quote
I am not a QF employee. I have a vested interest in how QF spends their money on those silver tubes with the little wings attached.
I think that APA's resolve to get this done has been grossly underestimated by several QF investors, AIPA and other Unions. The pieces, while a bit jagged, all fit and have fit all along. APA would never have entered into this without plan A,B,C,D,E,F,G,H...... you get my drift.
Additionally, APA would not have entered into this without recognizing that this is an election year. They don't want to muddy the waters for Howard (seems he does a fine job of that himself) or for his potential successor.
And most importantly in this puzzle, APA would not have entered into this without having a good sized safety net. Australia has already suffered the loss of Ansett, they will not let their QF suffer the same fate, under any circumstances. Australian emotion over the potential demise of QF is the ace in the hole for APA.
It is an interesting time to be affiliated with QF, be it by employment or investment. Regardless if APA takes over of GD and gang carry on, times are going to change in the very near future. How we adapt to that change will be up to us.
Interesting quote
I am not a QF employee. I have a vested interest in how QF spends their money on those silver tubes with the little wings attached.
I think that APA's resolve to get this done has been grossly underestimated by several QF investors, AIPA and other Unions. The pieces, while a bit jagged, all fit and have fit all along. APA would never have entered into this without plan A,B,C,D,E,F,G,H...... you get my drift.
Additionally, APA would not have entered into this without recognizing that this is an election year. They don't want to muddy the waters for Howard (seems he does a fine job of that himself) or for his potential successor.
And most importantly in this puzzle, APA would not have entered into this without having a good sized safety net. Australia has already suffered the loss of Ansett, they will not let their QF suffer the same fate, under any circumstances. Australian emotion over the potential demise of QF is the ace in the hole for APA.
It is an interesting time to be affiliated with QF, be it by employment or investment. Regardless if APA takes over of GD and gang carry on, times are going to change in the very near future. How we adapt to that change will be up to us.
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Overseas hedge funds did. They bought with the comfort of the offer price and will sell out to APA at a moments notice come May.
So, it does not look good at all for Qantas employees in Engineering. They will be the first victims of APA (after a "suitably civilized pause") as they are not employed in a money making arm of the Qantas group.
The first steps of the APA business plan will outsource what can be provided CHEAPER for greater profits.
Morals, Ethics and Sentiment have no place in the "new" Qantas.........so stand by and hold onto your hat because it's REALLY going to "hit the fan" when APA get going!!!
So, it does not look good at all for Qantas employees in Engineering. They will be the first victims of APA (after a "suitably civilized pause") as they are not employed in a money making arm of the Qantas group.
The first steps of the APA business plan will outsource what can be provided CHEAPER for greater profits.
Morals, Ethics and Sentiment have no place in the "new" Qantas.........so stand by and hold onto your hat because it's REALLY going to "hit the fan" when APA get going!!!
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W880i
just to add a bit of facts to your views. Qantas has returned 14,7 % return for the last 5 years or so. the business has grown substiantlialy in these times with the addition of star express/ 50% australia post express/cargo business in asia/ J* domestic and international and othres. look at the last 5 AGM reports and it gives you more details. why the share price hasn,t performed as well is anyone guess. then again warren buffett wouldn,t invest in airlines either. too many variables and too much government interferences
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Boys and Girls
The share price of any company is decided by how the company is looked at.With us GD puts the company down at every opportunity even when the news is good .So anyone from mums and Dads to anyone else watches him and thinks ohh I'll give QF the flick and buy shares in....
More than a few people have suggested that this was part of his plan but who knows maybe he is just a half empty glass kind of guy
The share price of any company is decided by how the company is looked at.With us GD puts the company down at every opportunity even when the news is good .So anyone from mums and Dads to anyone else watches him and thinks ohh I'll give QF the flick and buy shares in....
More than a few people have suggested that this was part of his plan but who knows maybe he is just a half empty glass kind of guy
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What about all the poor little children?????
If the sale doesnt get up and "Saint Darth" doesnt get his AUD $64 million how will he afford to set up the orphanage?
The one that he planned to build to care for the needs of the "cast off" illegitimate children of Australia's Corporate, "Elite"............
The one that he planned to build to care for the needs of the "cast off" illegitimate children of Australia's Corporate, "Elite"............
My question is ...If APA did not buy the shares who did?
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This is something that bugs me about all of this and that is that half if not more of these financial groups do not give a rats backside about QF or whatever company they buy shares in.
They are only in this for what they can syphon out of the market.
They are only in this for what they can syphon out of the market.
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Lowerlobe,
By "financial groups", do you mean the likes of UBS GAM and Balanced, ie. the 'institutions'?
If so, you're right - they invest in companies in order to extract income from them, by way of dividend and capital growth.
You should hope they do very well at it, as it's very likely that part of your wherewithall in your retirement will depend on their success.
"Institutional investors" are the AMPs, BTs, MLCs, etc. of the world - who still have faaaaar more assets under management than the hedge funds & private-equity people. In the industry they're known as 'real money' (as opposed to leveraged money in the hedge fund & PE caper); the non-glamourous, but generally pretty dependable, end of the spectrum. They have a legal duty to do their level best to provide good returns to their policyholders (ie. the mums & dads). They also have to ensure that, as companies, they do the best for their shareholders.
By "financial groups", do you mean the likes of UBS GAM and Balanced, ie. the 'institutions'?
If so, you're right - they invest in companies in order to extract income from them, by way of dividend and capital growth.
You should hope they do very well at it, as it's very likely that part of your wherewithall in your retirement will depend on their success.
"Institutional investors" are the AMPs, BTs, MLCs, etc. of the world - who still have faaaaar more assets under management than the hedge funds & private-equity people. In the industry they're known as 'real money' (as opposed to leveraged money in the hedge fund & PE caper); the non-glamourous, but generally pretty dependable, end of the spectrum. They have a legal duty to do their level best to provide good returns to their policyholders (ie. the mums & dads). They also have to ensure that, as companies, they do the best for their shareholders.