Qantas will be dead in 6 months
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To expand on my argument. The price of kerosene increasing will hurt the airlines bottom line, but with hedging and price fluctuations, airlines can absorb the extra costs and survive, but they will need to cut costs in other areas (T&C the next biggest cost on the books).
And of course, oil prices only effect the airline industry...not. If oil continues like it was before the GFC, then it won't only be airline managers trying to "cut costs" We'll have plenty more to worry about.
And as Butterfield says, price is partly a function of demand...obviously. Personally, I don't care if oil goes to $1000 a barrel. I won't be the only person scratching my head and wondering where my job went!
It will also bring alternatives into the market, and there are alternatives. The market has a way of sorting these things out...as it did in the previous oil price spikes.
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Why do we always look to the U.S for MGT? Are they really any better?
Were it so easy. However, as the Professor has stated, there is very little price elasticity in the modern airline marketplace. Increase ticket prices a little, and there is a disproportionate decrease in demand. That is why the airlines only passed through a very small percentage of the high oil prices last year onto the ticket price.
Correct me where wrong but the fuel surcharge corresponded with the years of record profit and rising oil costs.
Maybe mgt should be a bit more proactive about business building for the long term not bonus building for the short term. Staff are usually ineffectively utilised or facilitated costing far more losses like 20 -40% than their meagre pay rises of 3 or 4%.
But how can you manage a business when you have no idea what it is or what the staff do and your not interested in listening to them?
Falling Leaf your Autumn has come, time to fly with the wind.
All the best
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it is difficult to get a man to understand something when his salary depends upon his not understanding it - Upton Sinclair
The world has a surfeit of people who believe that they are of a higher intelligence than is apparent to others.....
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While the price of oil is a factor in any economic cycle it is only one factor.
The price of oil was very high 18 months ago.Aircraft were full and the Australian economy was in overdrive.
Now the price has fallen the economy is still ok.
If wages keep pace with the increase in oil prices and everybody has a job the economy continues to chug along.
Falling Leaf your Autumn has come, time to fly with the wind.
I'll blow away now and see where the winds of change take the industry. Hope I'm proved to be totally wrong, for all of our sakes.
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Seems not everyone thinks the Kangaroo is on its last legs?
According to Alan Kohler's Eureka Report today:
"Investors are advised to buy Qantas at current levels"
'Qantas has downgraded orders for its fleet, cancelling the delivery of 15 Boeing 787s and delaying the delivery of another 15 aircraft, which will reduce some of the pressure on the flying kangaroo’s balance sheet, giving many stock pickers reason to cheer.
However, with May traffic stats showing a decline in profit margins, some of them are also pointing out the greater risk that is now associated with airlines in general. One newsletter says the lower fleet orders will reduce group capital expenditure by about $3 billion, but the downgrade will delay the many of the airline’s highly anticipated initiatives.
While the lower traffic numbers may have already been factored in by management when they cut their full-year profit forecast by 80% and jettisoned almost 2000 staff, the recent entry of US carrier Delta Air Lines into the lucrative Australia-US route will certainly not be welcomed by Qantas, especially as demand for international travel remains weak.
The one thing in Qantas’ favour is that its management is continuing to prudently manage costs and capacity says one stock picker, who adds despite the impact of swine flu and general weakness in demand, Qantas stock represents good value and is well positioned to bounce back as market conditions improve.
Another stock picker says the airline is being priced more on an asset-based valuation rather than earnings potential, and although the valuation gap is closing the stock is still the best pick in the sector.'
According to Alan Kohler's Eureka Report today:
"Investors are advised to buy Qantas at current levels"
'Qantas has downgraded orders for its fleet, cancelling the delivery of 15 Boeing 787s and delaying the delivery of another 15 aircraft, which will reduce some of the pressure on the flying kangaroo’s balance sheet, giving many stock pickers reason to cheer.
However, with May traffic stats showing a decline in profit margins, some of them are also pointing out the greater risk that is now associated with airlines in general. One newsletter says the lower fleet orders will reduce group capital expenditure by about $3 billion, but the downgrade will delay the many of the airline’s highly anticipated initiatives.
While the lower traffic numbers may have already been factored in by management when they cut their full-year profit forecast by 80% and jettisoned almost 2000 staff, the recent entry of US carrier Delta Air Lines into the lucrative Australia-US route will certainly not be welcomed by Qantas, especially as demand for international travel remains weak.
The one thing in Qantas’ favour is that its management is continuing to prudently manage costs and capacity says one stock picker, who adds despite the impact of swine flu and general weakness in demand, Qantas stock represents good value and is well positioned to bounce back as market conditions improve.
Another stock picker says the airline is being priced more on an asset-based valuation rather than earnings potential, and although the valuation gap is closing the stock is still the best pick in the sector.'
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I certainly don’t agree with the title of this thread – BUT, I think the evidence is continuing to mount that some ‘full service’ airlines are facing some big issues demonstrating their ‘value proposition’ to a wide spectrum of customers.
This appeared in today’s Airline Transport World.
Cheers
Pedota
BA fears 'permanent' fall in premium demand, surging pension deficit
Wednesday July 15, 2009
British Airways CEO Willie Walsh continued to maintain yesterday that the carrier is in a "fight for survival" and that "just hoping for old high-roller times to return is the road to oblivion" at the company's annual shareholders meeting in London.
"There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base. These changes are essential to our short-term survival and more importantly to our long-term viability," he said. BA is in talks with unions to reduce its about 40,000-strong workforce by some 3,700 employees (ATWOnline, July 7).
Chairman Martin Broughton said the continuous fall in premium demand is "extremely grave news for major full-service airlines" and cautioned that the premium market may never recover fully. "There is evidence that business customers no longer place the same value on the levels of flexibility offered in the highest fare categories. This represents permanent structural change in the market and poses a fundamental challenge to our traditional business model," he said.
(The article continues focusing on the difficulties in getting the Iberia deal done).
This appeared in today’s Airline Transport World.
Cheers
Pedota
BA fears 'permanent' fall in premium demand, surging pension deficit
Wednesday July 15, 2009
British Airways CEO Willie Walsh continued to maintain yesterday that the carrier is in a "fight for survival" and that "just hoping for old high-roller times to return is the road to oblivion" at the company's annual shareholders meeting in London.
"There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base. These changes are essential to our short-term survival and more importantly to our long-term viability," he said. BA is in talks with unions to reduce its about 40,000-strong workforce by some 3,700 employees (ATWOnline, July 7).
Chairman Martin Broughton said the continuous fall in premium demand is "extremely grave news for major full-service airlines" and cautioned that the premium market may never recover fully. "There is evidence that business customers no longer place the same value on the levels of flexibility offered in the highest fare categories. This represents permanent structural change in the market and poses a fundamental challenge to our traditional business model," he said.
(The article continues focusing on the difficulties in getting the Iberia deal done).
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LCC's versus Premium carriers is a bit like..........
"Television will see the demise of picture theatres"
"Video Casette Recorders will replace going to the pictures"
"Home theatre will see the end of going to the movies"
"Television will see the demise of picture theatres"
"Video Casette Recorders will replace going to the pictures"
"Home theatre will see the end of going to the movies"
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Resurrection
QF dead ? Doubt it.
For those who have worked in the 'inner sanctum', or at least been fortunate to have been on talking terms with one of the upper echelon would know that the plan for QF to revert back to a Red Tail International entity while flicking domestic operations over to a cheaper brand was on the drawing board 6 years ago, in ink, it is nothing new !
This is not a new strategy, nor should it be seen as a new concept, its just that as economies decline worldwide the QF Group hasten to achieve this objective planned a long time ago.
Sorry to disapoint or be the bearer of bad tidings. But the strategy, not very complex in itself, is actually old old news.
From today's Australian -
Jetstar's Bruce Buchanan says the domestic expansion is expected to generate more than 200 jobs. Source: The Australian
JETSTAR will add 700,000 domestic seats and 77 new return flights in the first half of next year as it ramps up its Australian presence and embarks on one of its biggest expansions since starting service in 2004.
The airline will bring in five additional domestic aircraft in the first half, one of them an operational spare, as it significantly boosts services between Melbourne and Sydney and popular east coast leisure destinations.
The move will increase Jetstar's market share to about 18 per cent, ensuring Qantas Group meets its self-imposed rule that it retain at least 65 per cent of the domestic market.
It expects passenger numbers to increase by 7 per cent from the 2009 financial year total of 8.1 million.
"It's a big step for us," Jetstar chief executive Bruce Buchanan said yesterday. "We did the biggest ever launch back in 2004 and this step up is about half what we launched with back then."
The low-cost Qantas offshoot is responding to strong demand on routes from Sydney and Melbourne to the Gold Coast, Sunshine Coast, Cairns, Newcastle and Tasmania.
Mr Buchanan said 700,000 seats would ensure there was enough low-fare capacity in the market to enable Jetstar to meet its commitment to have the lowest fares in the marketplace
He said the domestic expansion was expected to generate more than 200 flight and cabin crew jobs, as well as a string of promotions for pilots.
He said there would also be jobs in engineering, airports, call centres and the like.
"So it does create a lot of excitement and energy in the organisation and that's quite good," Mr Buchanan said.
The expansion comes after a year of uncharacteristically flat capacity growth for the airline.
However, Jetstar was one of the few profitable divisions for Qantas in 2009, recording an 18 per cent increase in pre-tax profit to $137 million, while its parent posted a $117m net profit for the year ending on June 30, down from $969m the previous year.
The move is also part of a bigger expansion -- Jetstar will next year add 15 aircraft to its narrow body fleet.
As well as the five planes coming to Australia, three will go to Singapore in the first half. The group will also add a widebody Airbus A330 this month and two more are due to arrive late next year.
Mr Buchanan said a decision was yet to be made on where the remaining seven aircraft would be deployed in the second half.
He said the airline was expanding into its heartland from a position of strength after a record 2008-09 profit of $137m and a profit margin 23 per cent better than its competitors.
Mr Buchanan said this meant the airline would be able to expand profitably.
"It's where we started in 2004 and it's really going in and continuing to cement what have been very strong positions for us in those markets over quite a number of years," he said.
For those who have worked in the 'inner sanctum', or at least been fortunate to have been on talking terms with one of the upper echelon would know that the plan for QF to revert back to a Red Tail International entity while flicking domestic operations over to a cheaper brand was on the drawing board 6 years ago, in ink, it is nothing new !
This is not a new strategy, nor should it be seen as a new concept, its just that as economies decline worldwide the QF Group hasten to achieve this objective planned a long time ago.
Sorry to disapoint or be the bearer of bad tidings. But the strategy, not very complex in itself, is actually old old news.
From today's Australian -
Jetstar's Bruce Buchanan says the domestic expansion is expected to generate more than 200 jobs. Source: The Australian
JETSTAR will add 700,000 domestic seats and 77 new return flights in the first half of next year as it ramps up its Australian presence and embarks on one of its biggest expansions since starting service in 2004.
The airline will bring in five additional domestic aircraft in the first half, one of them an operational spare, as it significantly boosts services between Melbourne and Sydney and popular east coast leisure destinations.
The move will increase Jetstar's market share to about 18 per cent, ensuring Qantas Group meets its self-imposed rule that it retain at least 65 per cent of the domestic market.
It expects passenger numbers to increase by 7 per cent from the 2009 financial year total of 8.1 million.
"It's a big step for us," Jetstar chief executive Bruce Buchanan said yesterday. "We did the biggest ever launch back in 2004 and this step up is about half what we launched with back then."
The low-cost Qantas offshoot is responding to strong demand on routes from Sydney and Melbourne to the Gold Coast, Sunshine Coast, Cairns, Newcastle and Tasmania.
Mr Buchanan said 700,000 seats would ensure there was enough low-fare capacity in the market to enable Jetstar to meet its commitment to have the lowest fares in the marketplace
He said the domestic expansion was expected to generate more than 200 flight and cabin crew jobs, as well as a string of promotions for pilots.
He said there would also be jobs in engineering, airports, call centres and the like.
"So it does create a lot of excitement and energy in the organisation and that's quite good," Mr Buchanan said.
The expansion comes after a year of uncharacteristically flat capacity growth for the airline.
However, Jetstar was one of the few profitable divisions for Qantas in 2009, recording an 18 per cent increase in pre-tax profit to $137 million, while its parent posted a $117m net profit for the year ending on June 30, down from $969m the previous year.
The move is also part of a bigger expansion -- Jetstar will next year add 15 aircraft to its narrow body fleet.
As well as the five planes coming to Australia, three will go to Singapore in the first half. The group will also add a widebody Airbus A330 this month and two more are due to arrive late next year.
Mr Buchanan said a decision was yet to be made on where the remaining seven aircraft would be deployed in the second half.
He said the airline was expanding into its heartland from a position of strength after a record 2008-09 profit of $137m and a profit margin 23 per cent better than its competitors.
Mr Buchanan said this meant the airline would be able to expand profitably.
"It's where we started in 2004 and it's really going in and continuing to cement what have been very strong positions for us in those markets over quite a number of years," he said.
Last edited by gobbledock; 10th Dec 2009 at 06:27. Reason: Resurection
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Lets join the dots a little more:
The ACCC has justed approved a tie up between Virgin and Delta across the Pacific.
http://www.asx.com.au/asx/statistics...idsId=01021466
Any bets on J* running to the US of A within two years? Better odds than Collingwood winning the big one.
The ACCC has justed approved a tie up between Virgin and Delta across the Pacific.
http://www.asx.com.au/asx/statistics...idsId=01021466
Any bets on J* running to the US of A within two years? Better odds than Collingwood winning the big one.
Simple maths
Nunc est bibendum
30 commands and 50-60 F/O slots assuming six crew per aircraft. Congratulations to those that get the upgrades and to those that come in off the street. We'll keep working to try and get those terms and conditions better than what they currently are.