Memo to Lesley Grant
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QANshareholder, fuel hedging
Source:Jetstar's Buchanan Interview on Business Strategy March 10, 2010 at the 5:24 point in the interview.
You appear to have a handle on the, how can I put this delicately, the "official" Qantas story, but obviously lack the nuanced industry depth of understanding, or you would have known of this interview. There is no transcript of this interview available on the web, so it only those with experience in the industry would be able to remember. Poster such as sunfish, have excellent management background info that you should listen too. Many other posters have equally valid "inside" information that will never be disseminated through written channels ranging from engineering, IT & cabin & pilot issues.
Almost everyone here wants to see Qantas succeed, I suspect this even includes our competitors, as they know if Qantas fails, then there will be short term gain, at a long term cost.
The fundemental issue is that management decided many years ago to work against the staff, rather than with them (People Agenda). The pilots offered a deal to get Australian Airlines up and running, the pilots where willing to negotiate & talk, but management decided that it would rather destroy one side of the business, whilst building the other side. It would rather employ 200 hour cadets in its jets in the right hand seat, than those with 3000 or even 5000 hours jet experience, with the eventual aim of making these pilots redundant.
I also feel you are willing to open your mind, look, listen, learn & decide if you still want to be a shareholder in Qantas. There is fantastic industry knowledge on this board that can be tapped if you are constructive.
“In terms of fuel hedging, we hedge with Qantas, so we do it completely together. There's no point, Jetstar is 100% owned subsiduary owned by Qantas doing something that would completely counteract what Qantas is doing, which is largely a cash flow issue, its about mitagating potential losses through fuel or currency hedging so it would be silly for us, given we pool our cash together and we operate a common treasury function to be out in the market doing something completely counter to Qantas”
You appear to have a handle on the, how can I put this delicately, the "official" Qantas story, but obviously lack the nuanced industry depth of understanding, or you would have known of this interview. There is no transcript of this interview available on the web, so it only those with experience in the industry would be able to remember. Poster such as sunfish, have excellent management background info that you should listen too. Many other posters have equally valid "inside" information that will never be disseminated through written channels ranging from engineering, IT & cabin & pilot issues.
Almost everyone here wants to see Qantas succeed, I suspect this even includes our competitors, as they know if Qantas fails, then there will be short term gain, at a long term cost.
The fundemental issue is that management decided many years ago to work against the staff, rather than with them (People Agenda). The pilots offered a deal to get Australian Airlines up and running, the pilots where willing to negotiate & talk, but management decided that it would rather destroy one side of the business, whilst building the other side. It would rather employ 200 hour cadets in its jets in the right hand seat, than those with 3000 or even 5000 hours jet experience, with the eventual aim of making these pilots redundant.
I also feel you are willing to open your mind, look, listen, learn & decide if you still want to be a shareholder in Qantas. There is fantastic industry knowledge on this board that can be tapped if you are constructive.
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Your intelligence must be seriously questioned if you buy shares in ANY airline. Most airlines return on investment is appalling. The risk/reward ratio investing in airline shares doesn't stack up under any measurement.
Institutions that are forced to invest in Qantas must sh!t themselves.
Institutions that are forced to invest in Qantas must sh!t themselves.
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I thank black condor for the sensible post.Kremin also fo rhis research and thoughtful approach.
QF had to create jetstar or die.Another major would have filled the space and eaten QF alive.
I also agree that the way JQ is used to lever staff and their conditions is deplorable as is the less than transparent reporting of pax numbers and costs to suit the cause.
It does not need to be that way.They can co-exist as complementary entities.
I fail to see what a committee of 20 can do that thousands of staff have been telling them for ten years or more.
Or could I be a cynic and suggest they know QF Int is doing better and the committee will reap the rewards knowing the outcome already?
QF had to create jetstar or die.Another major would have filled the space and eaten QF alive.
I also agree that the way JQ is used to lever staff and their conditions is deplorable as is the less than transparent reporting of pax numbers and costs to suit the cause.
It does not need to be that way.They can co-exist as complementary entities.
I fail to see what a committee of 20 can do that thousands of staff have been telling them for ten years or more.
Or could I be a cynic and suggest they know QF Int is doing better and the committee will reap the rewards knowing the outcome already?
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So let me get this straight:
- the CEO is saying that QF mainline international is a drag on the rest of the business and needs radical work to stop it dragging down the rest of the company;
- the JPMC analyst is saying that QF mainline international is the standout performer and will continue to be the standout performer, benefitting from a strong recovery in that segment.
These statements appear to be entirely contradictory.
How can two supposedly intelligent people be 180 degrees apart on the same set of numbers?
On another issue:
I don't understand how JQ doing its own hedging, would necessarily "completely counteract what Qantas is doing".
- the CEO is saying that QF mainline international is a drag on the rest of the business and needs radical work to stop it dragging down the rest of the company;
- the JPMC analyst is saying that QF mainline international is the standout performer and will continue to be the standout performer, benefitting from a strong recovery in that segment.
These statements appear to be entirely contradictory.
How can two supposedly intelligent people be 180 degrees apart on the same set of numbers?
On another issue:
In terms of fuel hedging, we hedge with Qantas, so we do it completely together. There's no point, Jetstar is 100% owned subsiduary owned by Qantas doing something that would completely counteract what Qantas is doing
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Taildragger, they could be taking the opposite trade to each other (actually, that would be a "perfect hedge" assuming they were for identical amounts). Given that they use appear to use options, running two hedge books could actually increase systemic risks for the company. Options need to be continuously monitored and the hedge adjusted periodically to account for movements in the underlying, time decay, volatility & interest rates to ensure that you are actually hedged against the risk you seek to mitigate.
But that is all just bunk, in reality is its all the same company underneath, with a different top coat of paint, as per the "Jetconnect bills paid by Qantas" revalation. Buchanan even admits it in the clip with a common treasury. The figures appear to me to be just "book entries, with Qantas & Jetstar P&L statements completely notional.
But that is all just bunk, in reality is its all the same company underneath, with a different top coat of paint, as per the "Jetconnect bills paid by Qantas" revalation. Buchanan even admits it in the clip with a common treasury. The figures appear to me to be just "book entries, with Qantas & Jetstar P&L statements completely notional.
Last edited by breakfastburrito; 3rd Mar 2011 at 07:40.
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Taildragger,
The statements do appear contradictory but only since taken out of context. The JPM note is commenting on the January traffic figures and in terms of load factors international was 'the standout performer'. I think he's missed the fact that the A380s weren't back on the US route from the start of January so load factors inflated a bit, impact perhaps not as significant though as in December.
The problem though is the yields, they have improved very significantly from the prior year and hence international profit has been the biggest improvement to group profit. So it is the most improved, but due to shifting from huge losses to near break even.
The statements do appear contradictory but only since taken out of context. The JPM note is commenting on the January traffic figures and in terms of load factors international was 'the standout performer'. I think he's missed the fact that the A380s weren't back on the US route from the start of January so load factors inflated a bit, impact perhaps not as significant though as in December.
The problem though is the yields, they have improved very significantly from the prior year and hence international profit has been the biggest improvement to group profit. So it is the most improved, but due to shifting from huge losses to near break even.
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Which part of the Group pays the bills for treasury dept, these fuel & currency traders do not come cheap?
In fact which part of the group pays all the executive wages, I'd be very surprised if any of the AJ's wage comes off Jetstar's bottom line.
I would guess it would funded by the same part of the Group that spawned a low cost carrier with dozens of new jets, ground service equipment, flight training services, terminal space, undercost engineering services, advertising budgets etc over a short period of a few years.
Since day one Jetstar have always turned a profit and Qantas mainline has been a major drag on the Group's bottom line...........?
In fact which part of the group pays all the executive wages, I'd be very surprised if any of the AJ's wage comes off Jetstar's bottom line.
I would guess it would funded by the same part of the Group that spawned a low cost carrier with dozens of new jets, ground service equipment, flight training services, terminal space, undercost engineering services, advertising budgets etc over a short period of a few years.
Since day one Jetstar have always turned a profit and Qantas mainline has been a major drag on the Group's bottom line...........?
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Hey Lislee, here's an idea.
Spin off JQ.........flog it off, get rid of it, sell it, cash it in......pocket the cash ...then we can back to how it was.
Then we may have a premium brand again
PS: the cash we get......can buy /lease a few triplers whilst waiting for the Dry "dream" Liner.
Spin off JQ.........flog it off, get rid of it, sell it, cash it in......pocket the cash ...then we can back to how it was.
Then we may have a premium brand again
PS: the cash we get......can buy /lease a few triplers whilst waiting for the Dry "dream" Liner.
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438,
See interim financial report p19, corporate costs are reported separately from Qantas and Jetstar. I don't know for a fact but I would imagine treasury and AJ's salary are included within corporate hence not allocated to the operating divisions.
I appreciate that some won't believe it but I am trying to be objective. I could choose to sell Qantas shares today if I thought they were overvalued. I think that gives me more objectivity than if my family income was paid by Qantas and if I moved elsewhere I might need to take a 40% pay cut. Some valid points have been made, I am intrigued enough to take a closer look at whether some J* long haul flights have such low load factors that they must be heavily loss making, but some of the other comments are poorly informed and deliberately misleading.
See interim financial report p19, corporate costs are reported separately from Qantas and Jetstar. I don't know for a fact but I would imagine treasury and AJ's salary are included within corporate hence not allocated to the operating divisions.
I appreciate that some won't believe it but I am trying to be objective. I could choose to sell Qantas shares today if I thought they were overvalued. I think that gives me more objectivity than if my family income was paid by Qantas and if I moved elsewhere I might need to take a 40% pay cut. Some valid points have been made, I am intrigued enough to take a closer look at whether some J* long haul flights have such low load factors that they must be heavily loss making, but some of the other comments are poorly informed and deliberately misleading.
Back to the point of the thread.
I see that the Top 10 airlines for onboard cuisine were announced today - Emirates, Singapore, Malaysian, Thai all mentioned .... Qantas never rated. Last time I paxed in First, the main meal was a skinless chicken breast with peas and carrots! Back in Economy, lunch on domestic flights is often a glad-wrapped sandwich and a piece of fruit.
Why would people bother paying a full-fare premium ticket price when they could buy the same stuff on a Jetstar flight, probably for less than the difference in fare price between Qantas and Jetstar. To me, this is where the problem lies. People will pay more if they consider they are getting what they pay for. While reducing the cost of a meal makes weasly beancounters ecstatic, it does not impress those who pay many, many thousands of dollars to fly in Business or First.
Lesley, put the premium product back to where it once was and charge more for it. Make it the BEST food and inflight product and CHARGE accordingly. People will pay if they are getting what they pay for. But I keep forgetting that Jetstar is just AMAZING while long-haul is a dud!!
I see that the Top 10 airlines for onboard cuisine were announced today - Emirates, Singapore, Malaysian, Thai all mentioned .... Qantas never rated. Last time I paxed in First, the main meal was a skinless chicken breast with peas and carrots! Back in Economy, lunch on domestic flights is often a glad-wrapped sandwich and a piece of fruit.
Why would people bother paying a full-fare premium ticket price when they could buy the same stuff on a Jetstar flight, probably for less than the difference in fare price between Qantas and Jetstar. To me, this is where the problem lies. People will pay more if they consider they are getting what they pay for. While reducing the cost of a meal makes weasly beancounters ecstatic, it does not impress those who pay many, many thousands of dollars to fly in Business or First.
Lesley, put the premium product back to where it once was and charge more for it. Make it the BEST food and inflight product and CHARGE accordingly. People will pay if they are getting what they pay for. But I keep forgetting that Jetstar is just AMAZING while long-haul is a dud!!
Flew QF BNE-MEL Tuesday....cloth fabric seat faling apart. average minus service and late.
flew home Jetstar from Avalon yesterday. Nice clean aircraft with leather seats and very friendly and happy crew [all for $79.00] and on-time....
All of you who work for QF had better wake up. You can't blame management for everything...
flew home Jetstar from Avalon yesterday. Nice clean aircraft with leather seats and very friendly and happy crew [all for $79.00] and on-time....
All of you who work for QF had better wake up. You can't blame management for everything...
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Back to the point of the thread.
I see that the Top 10 airlines for onboard cuisine were announced today - Emirates, Singapore, Malaysian, Thai all mentioned .... Qantas never rated. Last time I paxed in First, the main meal was a skinless chicken breast with peas and carrots! Back in Economy, lunch on domestic flights is often a glad-wrapped sandwich and a piece of fruit.
Lesley, put the premium product back to where it once was and charge more for it. Make it the BEST food and inflight product and CHARGE accordingly. People will pay if they are getting what they pay for. But I keep forgetting that Jetstar is just AMAZING while long-haul is a dud!!
I see that the Top 10 airlines for onboard cuisine were announced today - Emirates, Singapore, Malaysian, Thai all mentioned .... Qantas never rated. Last time I paxed in First, the main meal was a skinless chicken breast with peas and carrots! Back in Economy, lunch on domestic flights is often a glad-wrapped sandwich and a piece of fruit.
Lesley, put the premium product back to where it once was and charge more for it. Make it the BEST food and inflight product and CHARGE accordingly. People will pay if they are getting what they pay for. But I keep forgetting that Jetstar is just AMAZING while long-haul is a dud!!
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Flew QF BNE-MEL Tuesday....cloth fabric seat faling apart. average minus service and late.
flew home Jetstar from Avalon yesterday. Nice clean aircraft with leather seats and very friendly and happy crew [all for $79.00] and on-time....
All of you who work for QF had better wake up. You can't blame management for everything...
flew home Jetstar from Avalon yesterday. Nice clean aircraft with leather seats and very friendly and happy crew [all for $79.00] and on-time....
All of you who work for QF had better wake up. You can't blame management for everything...
QF
- Cloth fabric seating.... Management CHECK
- minus service.... Crew CHECK
- late... Crew or management issue, who could say?
J*
- Nice Clean aircraft... Management CHECK.
- leather Seats... Management CHECK.
- Happy crew... Crew CHECK.
- on-time... Crew or management, who could say?
- Price... Management CHECK.
So, I see lots of things on your list that management control, and really only one that the crew can make a difference (minus service, vs happy crew). So, yes management can be blamed for most of the problems at Qantas by your own measure.
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Embarrassment
Its very difficult to be motivated at work when you are embarrassed by the product you are offering.
Going to HNL for example you will spend the first two hours of the flighrt apologizing to passengers for the below standard product.The Cabin interior of a 20 year old 767 leaves a lot to be desired.No inseat IFE,multiple seat problem,reading light problems,Av gas fumes in cabin at start up.The list is endless.
Apology Airlines,the Flying Cicus.Either one is an apt name for Qantas.Qantas is about to spend a fortune upgrading their office buildings at Mascot.Pity they couldnt spend the money on the hard product.
Ms Grant come down out of the tower and have a look at the mess you have created thorugh both incompetence and neglect.You do not neeed six months and a twenty strong task force to find out whats wrong.
Talk to your front line staff for ten minutes and they will tell you
Going to HNL for example you will spend the first two hours of the flighrt apologizing to passengers for the below standard product.The Cabin interior of a 20 year old 767 leaves a lot to be desired.No inseat IFE,multiple seat problem,reading light problems,Av gas fumes in cabin at start up.The list is endless.
Apology Airlines,the Flying Cicus.Either one is an apt name for Qantas.Qantas is about to spend a fortune upgrading their office buildings at Mascot.Pity they couldnt spend the money on the hard product.
Ms Grant come down out of the tower and have a look at the mess you have created thorugh both incompetence and neglect.You do not neeed six months and a twenty strong task force to find out whats wrong.
Talk to your front line staff for ten minutes and they will tell you
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What agenda?
So, you starve your premium product of the facilities needed to satisfy customers. Everyone can see this. Management cannot be THAT stupid.
So, what is the agenda? Bearing in mind that QF is a public company, would it not be possible to get a group of shareholders to ask the question that everybody wants answered. 'What is the agenda?'
Maybe we could send Sunfish into bat, I am sure he would enjoy it!
I too flew J* last week, MEL-TSV, new A320, nice.
So, what is the agenda? Bearing in mind that QF is a public company, would it not be possible to get a group of shareholders to ask the question that everybody wants answered. 'What is the agenda?'
Maybe we could send Sunfish into bat, I am sure he would enjoy it!
I too flew J* last week, MEL-TSV, new A320, nice.