QF's Dilemma and the Reasons Why.
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QF's Dilemma and the Reasons Why.
'The pain the Qantas international business is experiencing has its seeds in fleet purchasing decisions made well before Joyce took the reins.'
'Qantas is not meeting its cost of capital and it needs to spend a lot of money to renew the fleet.'
'The problems within Qantas international have been festering for years. They are no longer just about the economic cycle - they are structural issues born of increased competition and poor management decisions.'
The insiders who say management would sell the Qantas international business tomorrow if there was a buyer probably know what lies ahead.
Get the full story from Elizabeth Knight at Plenty of flight risk in Qantas catch-up
'Qantas is not meeting its cost of capital and it needs to spend a lot of money to renew the fleet.'
'The problems within Qantas international have been festering for years. They are no longer just about the economic cycle - they are structural issues born of increased competition and poor management decisions.'
The insiders who say management would sell the Qantas international business tomorrow if there was a buyer probably know what lies ahead.
Get the full story from Elizabeth Knight at Plenty of flight risk in Qantas catch-up
Last edited by GlobalMaster; 10th Feb 2011 at 06:06.
Neither do Aust Air Exspress or Startrack Exspress which cost $750 million. But we never hear about them!
Right now the rest of the Qantas operations - its frequent flyer business, the low-cost Jetstar division and the freight operations - are having to cross-subsidise the international operations. Cross-subsidisation is a common feature in many businesses with a broad portfolio of operations but this is not sustainable in the long term.
Not unlike the News Ltd-Ansett scenario really.
Cross subsidisation is never sustainable, and in fact may even be illegal in QF's case. Unfortunately there aren't any forensic aviation accountants around, since QF's invention of Jetstar may have been illegal under competition law in my opinion.
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Originally Posted by Neville Nobody
That's a quote from the article which fails to recognise that the mainline business has been propping up Jetstar for years on end. When they should have reinvested in QF .
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Qantas Cost Apportioning
......and it costs Qantas 60% off its bottom line to receive the 6-8% return from JetStar.Not a good return on capital invested.Plus it deprives Qantas mainline of funds to invest in its own product.The reason mainline is going down the crapper.
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Well if JetStar is so flipping great, (some Qantas management guru even put a figure of $350 million on it) Flog it off, and invest and reinvigorate the primary brand.
Then everyone would see just how great a business model Jetstar really is, wouldn't we!
Then everyone would see just how great a business model Jetstar really is, wouldn't we!
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having a look at staff travel for flights to melbourne later in the week and it appears that the 767 (old) is being replaced by 320/330 (new). is this happening every week on a daily basis?
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T-vasis, your comment regarding Jetstar returning 6-8% would mean a lot more if anyone had any faith in the actual financial reports Qantas feed the public. You only need to read of the recent revelations about Jetconnect the 'company' to realise these figures cannot be trusted.
Anyone who has worked in Qantas for any length of time could give you many examples of mainline subsidising Jetstar since their inception.
Anyone who has worked in Qantas for any length of time could give you many examples of mainline subsidising Jetstar since their inception.
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-438
Just wondering if you could elaborate on the cross subsidising?
I've read here and heard from mates about:
-cheap mainline seats after jq breakdowns
-free maintenance / equipment etc
The problem is, the people telling me these stories are usually front line staff without the first clue as to commercial accounting. (So I have to take it as rumour, or a guess!)
Do you have any other examples and could you say for certain that this is happening?
Just wondering if you could elaborate on the cross subsidising?
I've read here and heard from mates about:
-cheap mainline seats after jq breakdowns
-free maintenance / equipment etc
The problem is, the people telling me these stories are usually front line staff without the first clue as to commercial accounting. (So I have to take it as rumour, or a guess!)
Do you have any other examples and could you say for certain that this is happening?
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novice110, perhaps this link may clear things up:Qantas Paid Jetconnects bills.
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Thanks burrito.
Sure isn't a good look for the Jetconnect situation, and I guess you could apply the same to any other QF company.
That's my point though. I'm still guessing. Maybe we need a similair investigation into the Jetstar books for me to get my answer!
Thanks all the same.
Sure isn't a good look for the Jetconnect situation, and I guess you could apply the same to any other QF company.
That's my point though. I'm still guessing. Maybe we need a similair investigation into the Jetstar books for me to get my answer!
Thanks all the same.
and...
... since Jetconnect has overlapped the JQ evolution, I don't think it's too long a bow to draw to infer that such creative accounting has been going on for JQ's entire existence too. 
The view of many is that:
- inept fleet decisions,
- short-sighted engineering decisions,
- marketing budgets skewed in favour of the JQ "brand",
- cost-cutting which has affected the premium and high-yield product,
- dysfunctional internal competition driven by KPIs and bonuses rather than true efficiencies,
- alternately praising then demonising employees depending on the EA negotiation phase,
- deliberate misrepresentation of the pilots’ claims in the media, and
- convenient cost apportionment to make L/H look bad while other parts of the group become the darlings of profitability has
- done real damage to the QF brand.
Is anyone still confused as to why QF employees are annoyed? And there's a certain irony in the fact that JQ staff are also annoyed because they too are facing job exports! At least the 'group' employees are finally seeing the true agenda here.
The view of many is that:
- inept fleet decisions,
- short-sighted engineering decisions,
- marketing budgets skewed in favour of the JQ "brand",
- cost-cutting which has affected the premium and high-yield product,
- dysfunctional internal competition driven by KPIs and bonuses rather than true efficiencies,
- alternately praising then demonising employees depending on the EA negotiation phase,
- deliberate misrepresentation of the pilots’ claims in the media, and
- convenient cost apportionment to make L/H look bad while other parts of the group become the darlings of profitability has
- done real damage to the QF brand.
Is anyone still confused as to why QF employees are annoyed? And there's a certain irony in the fact that JQ staff are also annoyed because they too are facing job exports! At least the 'group' employees are finally seeing the true agenda here.
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Novice 110
An example of Qantas Airways directly subsidising Jetstar.
This was straight from a management pilot whilst briefing some mainline pilots in late 2010.
"We're not sure how it happened, but we've just found out that Qantas has been paying the ACARS bills for the Jetstar 330's since they've had them. Of course now that it has been identified they will have to start paying for it themselves."
I think it about sums up the whole situation rather well...
An example of Qantas Airways directly subsidising Jetstar.
This was straight from a management pilot whilst briefing some mainline pilots in late 2010.
"We're not sure how it happened, but we've just found out that Qantas has been paying the ACARS bills for the Jetstar 330's since they've had them. Of course now that it has been identified they will have to start paying for it themselves."
I think it about sums up the whole situation rather well...
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I am truly sickened by these events and the deceptions that have gone on and are continuing.
These guys are the Australian version of US bankers pre GFC without the profits.
Since when is it ok for Boards and management to behave this way and nothing happens to keep them in check until there is a train wreck.
The hypocrisy is only exceeded by the arrogance.
There is immeasurable public interest in the Rat surviving so where are the politicians in all of this given they will be called upon if the thing ends up in a heap. They cannot hide behind some half baked and incomplete Senate inquiry.
These guys are the Australian version of US bankers pre GFC without the profits.
Since when is it ok for Boards and management to behave this way and nothing happens to keep them in check until there is a train wreck.
The hypocrisy is only exceeded by the arrogance.
There is immeasurable public interest in the Rat surviving so where are the politicians in all of this given they will be called upon if the thing ends up in a heap. They cannot hide behind some half baked and incomplete Senate inquiry.
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The comments around Qantas subsidising Jetstar I struggle to believe, unless someone has solid evidence to prove it... Jetstar runs its own P + L and yes, initially would have been provided with some working capital to start-up and all returns go back to Qantas, so I am not sure how Qantas subsidises it. All Qantas Group companies operate as independent business and are responsible for their own P + L...
Qantas is audited and has rigid corporate governence. I am not sure how they'd get away with "creative accounting" by the auditors which I think are PWC.
Qantas is audited and has rigid corporate governence. I am not sure how they'd get away with "creative accounting" by the auditors which I think are PWC.