Qantas Profit
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I have to question the wisdom of making this profit, at this time. I understand that there are times when the $$ are moved into different columns- some years its spent buying aircraft etc, some years its profit. Just looking at the capacity growth of competitors really makes me question whether this short-term outlook (booking a big profit now) isn't going to have long-term consequences. How much profit could there be if QF matched that capacity growth?
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some years its spent buying aircraft etc, some years its profit. Just looking at the capacity growth of competitors really makes me question whether this short-term outlook (booking a big profit now) isn't going to have long-term consequences. How much profit could there be if QF matched that capacity growth?
Capital expenditure does not go (directly) through the income statement. Only the interest expenses related to the loans and the depreciation expenses related to fixed assets hit the P&L which in turn effect profit.
Although if profits are not distributed to shareholders then they are usually put into equity reserves which usually along with a combination of debt is used for major aquisitions.....
Sorry, You ARe All Wrong!
My first boss as a young Mechanical Engineer pounded this into me:
"The job of management is to maximise the value of the firm in the long term".
And he severely punished some of my well meaning and apparently profitable "short term thinking" (in this case it was postponing a maintenace program a few months to get its expense into the next financial year).
I think most employees in most companies understand this subconsciously, which is why I think you bang your heads against the wall when you see it all the time.
As for shareholders, OK you want a Biiiiiig dividend this year, but of course you want to see them again the following year don't you? And you want a bit of capital appreciation as a result of farsighted thinking as well?
What is NOT wanted by shareholders is short term thinking by managers who are focussing on maximising their annual bonuses at the expense of long term decisions, especially when their salaries are so large that they can leave anytime and never have to work again.
And by all accounts Qantas management is governed by short term thinkers right?
Obviously shareholders want dividends.
Obviously money has to be invested in capital equipment.
Obviously a company has to attract and retain suitably skilled staff.
F**k up the balance between any of those elements in the long term and you screw everyone, investors and employees alike.
Please think about that for a while.
"The job of management is to maximise the value of the firm in the long term".
And he severely punished some of my well meaning and apparently profitable "short term thinking" (in this case it was postponing a maintenace program a few months to get its expense into the next financial year).
I think most employees in most companies understand this subconsciously, which is why I think you bang your heads against the wall when you see it all the time.
As for shareholders, OK you want a Biiiiiig dividend this year, but of course you want to see them again the following year don't you? And you want a bit of capital appreciation as a result of farsighted thinking as well?
What is NOT wanted by shareholders is short term thinking by managers who are focussing on maximising their annual bonuses at the expense of long term decisions, especially when their salaries are so large that they can leave anytime and never have to work again.
And by all accounts Qantas management is governed by short term thinkers right?
Obviously shareholders want dividends.
Obviously money has to be invested in capital equipment.
Obviously a company has to attract and retain suitably skilled staff.
F**k up the balance between any of those elements in the long term and you screw everyone, investors and employees alike.
Please think about that for a while.
Last edited by Sunfish; 24th Feb 2008 at 08:11.
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Ok, Ramyon, instead of make I should have said distribute the profit. At the end of the day, it's just creative accounting. ie. we've got x dollars, what do we call them?
The point was that while there may be orders for aircraft, where is the growth of the airline. Only asking because as a frequent traveller, I know how few QF options there are, compared to any other airline you'd care to name (EK, TG, CX etc). I recall reading over the last few years on these boards the laments by various people about how QF seemed to be shrinking, reducing, cutting, and other carriers have taken up the capacity. I realise it's no good being a big, unprofitable airline, but with a bit of forsight how much profit could there be in the good times (now) if your airline was able to cater to the demand (which is obviously there).
It might look clever posting this profit; but is it really? If the management had've been focussed on growing the airline for the last few years instead of paring it down for sale, what might the numbers have been?
The point was that while there may be orders for aircraft, where is the growth of the airline. Only asking because as a frequent traveller, I know how few QF options there are, compared to any other airline you'd care to name (EK, TG, CX etc). I recall reading over the last few years on these boards the laments by various people about how QF seemed to be shrinking, reducing, cutting, and other carriers have taken up the capacity. I realise it's no good being a big, unprofitable airline, but with a bit of forsight how much profit could there be in the good times (now) if your airline was able to cater to the demand (which is obviously there).
It might look clever posting this profit; but is it really? If the management had've been focussed on growing the airline for the last few years instead of paring it down for sale, what might the numbers have been?
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The point was that while there may be orders for aircraft, where is the growth of the airline. Only asking because as a frequent traveller, I know how few QF options there are, compared to any other airline you'd care to name (EK, TG, CX etc). I recall reading over the last few years on these boards the laments by various people about how QF seemed to be shrinking, reducing, cutting, and other carriers have taken up the capacity. I realise it's no good being a big, unprofitable airline, but with a bit of forsight how much profit could there be in the good times (now) if your airline was able to cater to the demand (which is obviously there).
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posted by PAF.....Well given the profit result it seems GD has done a pretty good job of it. I guess you've just advocated an easy way to increase profits. You really should lecture at the AICD
PAF it sounds as though you advocate the easy,non thinking and minimalistic approach to management.In the long run however the results are nowhere near what they could have been and should be.
As far as myself lecturing, I think my fee would be too high and the other sticking point is that I have morals.....but let me know when next your spouting advice and if I need a laugh I'll see if I can get there....
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employees as an asset instead of a neccessary liability.
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Even Darth understands that employees are necessary but he would prefer them to be cost neutral at worst and if at all possible a positive source of revenue...
In other words he would like us to pay for our jobs...
In other words he would like us to pay for our jobs...
