QF's got it wrong!
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QF's got it wrong!
The following extract from a McKinsey article on the value of flexibility clearly indicates that QF's present inability to swiftly reallocate aircraft together with the pilots required between market segments will continue to hamper its ability to profit from changing consumer demand.
Copyright McKinsey & Company, 21 South Clark Street, Chicago, Illinois 60603
As an employee shareholder I am concerned that QF's segregation of its pilots will cost it much more than the IR savings it produces.
The value of flexibility
Corporations rethinking their operational footprint often consider only a single set of cost, profitability, and demand assumptions. McKinsey’s client experience shows what’s missing: a careful assessment of the value of operational flexibility. Flexibility can take a variety of forms—the ability to adjust production volumes efficiently, to change the production mix among different products or models, to move production from one location to another, or to reconfigure the timing of production, for example. Such strategies help companies respond to changes in local demand, currency levels, labour rates, tariffs, taxes, transportation costs, and so forth.
Consider a heavy-equipment corporation trying to decide between two potential strategies involving moves such as new operations in foreign countries and reallocating the mix and capacity between existing operations.....the company’s original analysis of options A and B—without taking flexibility into account—suggested that option B made the most sense, given its higher net present value and lower unit costs (shown on the exhibit’s vertical axis and calculated within an 80 percent confidence interval). When the analysis factored in the increased risk from currency exposure and transportation costs, however, option A emerged as the better bet.
Consider a heavy-equipment corporation trying to decide between two potential strategies involving moves such as new operations in foreign countries and reallocating the mix and capacity between existing operations.....the company’s original analysis of options A and B—without taking flexibility into account—suggested that option B made the most sense, given its higher net present value and lower unit costs (shown on the exhibit’s vertical axis and calculated within an 80 percent confidence interval). When the analysis factored in the increased risk from currency exposure and transportation costs, however, option A emerged as the better bet.
As an employee shareholder I am concerned that QF's segregation of its pilots will cost it much more than the IR savings it produces.
When you live....
Personally, I'd be more concerned that anyone took notice of this junk put out by Management consultants and deal-do-ers (of which McKinseys is one of the worst) - the purpose of which is to make management concerned that they're not at the cutting edge and need to hire.............management consultants.........!
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Be that as it may Radar, companies that don’t have the management skills to win in this world will be acquired cheaply by those that have that skill – subject of course to the ACCC and global competition and IMHO, nible reployement of QF aircraft is not assisted by intra-company competition between group pilots. It's an idea well past its use by date. 
Last edited by Gingerbread; 24th Jul 2009 at 04:57. Reason: Edited for Clarity
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SS QF Titanic
Ironically the Captain's of QF Titanic keep running into the iceberg they created, constantly gouging holes in the side of the mother ship rather than just steering around it and forging fwd, leaving mistakes to melt away!
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More Evidence from another Thread
According to Robert Gottliebsen at Business Spectator, and Etihad Airways CEO James Hogan, there is little or no truth in:
Quote: ..."they are different companies and if anyboby starts mixing the two then management from both sides will have a field day."
Quite the opposite it seems.
RG: 'So, those legacy carriers that don’t change their work practices are likely to go out of business?'
JH: 'Well, I think you’ve seen that recently what’s happening in Europe, especially with British Airways. British Airways has been very open in saying they need to reshape their work practices and they need to look at a solution where they can work with other carriers, because I guess one would say the greatest example of a legacy carrier tackling this issue has been KLM and Air France, where they’ve been able to integrate and share those support services and wind down what they don’t need.'
And that was before the tie up with Delta & Northwest.
IMHO, the future is Intergration - not Segmentation.
According to Robert Gottliebsen at Business Spectator, and Etihad Airways CEO James Hogan, there is little or no truth in:
Quote: ..."they are different companies and if anyboby starts mixing the two then management from both sides will have a field day."
Quite the opposite it seems.
RG: 'So, those legacy carriers that don’t change their work practices are likely to go out of business?'
JH: 'Well, I think you’ve seen that recently what’s happening in Europe, especially with British Airways. British Airways has been very open in saying they need to reshape their work practices and they need to look at a solution where they can work with other carriers, because I guess one would say the greatest example of a legacy carrier tackling this issue has been KLM and Air France, where they’ve been able to integrate and share those support services and wind down what they don’t need.'
And that was before the tie up with Delta & Northwest.
IMHO, the future is Intergration - not Segmentation.
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Interesting thread, but don't agree with Radar's take on consultants. Nevertheless, accept that understanding stakeholders and their concerns is not confined to just Bizoids.
Reckon the the following quote from Business Technology in the US just about sums up what QF has to get on top of.
Looks like a big job ahead for the Roo. 
Reckon the the following quote from Business Technology in the US just about sums up what QF has to get on top of.
As governments respond to the financial crisis and its reverberations in the real economy, a company’s reputation has begun to matter more now than it has in decades. Companies and industries with reputation problems are more likely to incur the wrath of legislators, regulators, and the public. What’s more, the credibility of the private sector will influence its ability to weigh in on contentious issues, such as protectionism, that have serious implications for the global economy’s future.
Senior executives are acutely aware of how serious today’s reputational challenge is. Most recognize the perception that some companies in certain sectors (particularly financial services) have violated their social contract with consumers, shareholders, regulators, and taxpayers. They also know that this perception seems to have spilled over to business more broadly.
Senior executives are acutely aware of how serious today’s reputational challenge is. Most recognize the perception that some companies in certain sectors (particularly financial services) have violated their social contract with consumers, shareholders, regulators, and taxpayers. They also know that this perception seems to have spilled over to business more broadly.
