The Orange Cancer Spreads
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QAN_Shareholder
I would appreciate if you able to point that figure out in the Consolidated Interim Financial Report for the Half-Year ended 31 December 2010
Otherwise, to quote yourself from Feb 15th when you said
The figure was S$17m and is shown in Qantas' results presentation from February.
Otherwise, to quote yourself from Feb 15th when you said
I wouldn't put much weight on auditing for ensuring the accuracy of transactions between Qantas and Jetstar. I worked as an auditor for a spell and internal transactions are way down the priority list, there is very little risk to the auditor from internal transactions being mis-stated.
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Trent,
Slide 68 in http://www.asx.com.au/asxpdf/2011021...s2vl1rgknv.pdf
J* Asia profit should be more reliable since based in Singapore and has other shareholders. Wholly owned Australian based operations would be different and these could be mis-stated, but I have yet to see the evidence.
Sunstar,
Could you be a bit more precise how you work it out? Is this from filed accounts in Singapore?
I would appreciate if you able to point that figure out
J* Asia profit should be more reliable since based in Singapore and has other shareholders. Wholly owned Australian based operations would be different and these could be mis-stated, but I have yet to see the evidence.
Sunstar,
Could you be a bit more precise how you work it out? Is this from filed accounts in Singapore?
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A big problem affecting the QF brand is the sale of QF tickets on J* aircraft. It may not seem like much to industry people but to the guy who buys the ticket it is a turning point in their brand loyalty.
This is a real life example...
I was flying from Bangkok to Melbourne on the once weekly J* A330 service about 6-8 months ago. I purchased my own full fare Star Class ticket for the ride which gave me access to the Qantas Club at Suvarnabhumi in Bangkok where I met a very nice elderly couple travelling on the same flight. They were on the last leg of a 4 month multi country holiday they had purchased full fare business class tickets from Qantas for.
To say they were surprised that the QF flight numbered ticket they had purchased from Qantas had them lining up at the J* counter in Thailand would be an understatement. They were seated directly behind me in the cabin and they were extremely dissapointed with the whole situation. The premium fare they had paid was not returned in what they received compared to what they would have received had they been on board a Qantas aircraft, or any of the business class code share airlines they had travelled on around the world over the preceeding 4 months on their Qantas tickets.
The worst part for them was that (in their minds) they were misled by Qantas when purchasing the tickets that they were not told the service would be operated by J*. If it had been pointed out verbally by the ticketing agent they would have changed the date of travel to ensure they were on a Qantas aircraft.
I spoke with them in the departure hall at Melbourne airport and they both said the decades long association they had with Qantas, travelling regularly business class in both the husbands professional role and the familys leisure travel was at an end because of the situation. They were not interested in complaining and possibly receiving a refund or future free upgrade. They simply were going to end the association and spend their money elsewhere.
And that is where Qantas are going wrong with J*. People generally dont want to have to complain to get what they are entitled to. They want it delivered as they expected when they handed the money over.
I remember seeing a sign a many years ago that read something like this -
I am the person in your shop that is waiting patiently for service...
I am the person in your shop who does not complain about the long queue...
I am the person in your shop who does not complain about the abrupt attendant...
I am the person in your shop who does not complain about the faulty product you have sold me...
I am the person who does not return to your shop because of these things...
Most importantly I am the person who you spend millions of dollars on advertising to get to come to your shop when I was there in the first place...
Food for thought QF?
GB
This is a real life example...
I was flying from Bangkok to Melbourne on the once weekly J* A330 service about 6-8 months ago. I purchased my own full fare Star Class ticket for the ride which gave me access to the Qantas Club at Suvarnabhumi in Bangkok where I met a very nice elderly couple travelling on the same flight. They were on the last leg of a 4 month multi country holiday they had purchased full fare business class tickets from Qantas for.
To say they were surprised that the QF flight numbered ticket they had purchased from Qantas had them lining up at the J* counter in Thailand would be an understatement. They were seated directly behind me in the cabin and they were extremely dissapointed with the whole situation. The premium fare they had paid was not returned in what they received compared to what they would have received had they been on board a Qantas aircraft, or any of the business class code share airlines they had travelled on around the world over the preceeding 4 months on their Qantas tickets.
The worst part for them was that (in their minds) they were misled by Qantas when purchasing the tickets that they were not told the service would be operated by J*. If it had been pointed out verbally by the ticketing agent they would have changed the date of travel to ensure they were on a Qantas aircraft.
I spoke with them in the departure hall at Melbourne airport and they both said the decades long association they had with Qantas, travelling regularly business class in both the husbands professional role and the familys leisure travel was at an end because of the situation. They were not interested in complaining and possibly receiving a refund or future free upgrade. They simply were going to end the association and spend their money elsewhere.
And that is where Qantas are going wrong with J*. People generally dont want to have to complain to get what they are entitled to. They want it delivered as they expected when they handed the money over.
I remember seeing a sign a many years ago that read something like this -
I am the person in your shop that is waiting patiently for service...
I am the person in your shop who does not complain about the long queue...
I am the person in your shop who does not complain about the abrupt attendant...
I am the person in your shop who does not complain about the faulty product you have sold me...
I am the person who does not return to your shop because of these things...
Most importantly I am the person who you spend millions of dollars on advertising to get to come to your shop when I was there in the first place...
Food for thought QF?
GB
Last edited by Gas Bags; 13th Mar 2011 at 09:35.
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Thankyou QAN_Shareholder.
One more request, if you would be so kind.
Are you also able to show me whereabouts the table showing how the statutory profit has been adjusted to arrive at the underlying profit in this presentation?
One more request, if you would be so kind.
Are you also able to show me whereabouts the table showing how the statutory profit has been adjusted to arrive at the underlying profit in this presentation?
Or
Whereabouts QANTAS describes their transparent and consistent approach to the reporting of underlying profit, which includes reporting both positive and negative adjustments to the statutory profit figure, or a narrative to explain the adjustments?
Or
Are they using the smoke and mirrors principle?
Edit. Please don't refer me to slide 42, that table is not clear and unambiguous.
Whereabouts QANTAS describes their transparent and consistent approach to the reporting of underlying profit, which includes reporting both positive and negative adjustments to the statutory profit figure, or a narrative to explain the adjustments?
Or
Are they using the smoke and mirrors principle?
Edit. Please don't refer me to slide 42, that table is not clear and unambiguous.
Last edited by Trent 972; 13th Mar 2011 at 09:07.
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Gas bags you've hit the nail on the head. My rellys purchased a ticket on Qantas from London to chch last year. They were disgusted when the last 3 hours of their long haul flight was spent on a jetstar flight from Mel to chc. Qantas don't even fly that route anymore. They had been loyal Qantas customers for years but now travel emirates. Did not complain, just voted with their feet. I can't believe this management team can't see this? 
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Trent,
p18 of interim financial statements is pretty clear. Generally speaking I don't think Qantas is particularly aggressive with accounting disclosures. I believe some airlines adjusted last year's profit for impact from Icelandic volcano which Qantas didn't. They also didn't adjust for impact of A380 explosion.
There is one area which is a bit suspect though and that is treatment of accounting change from Frequent Flyer. I don't believe they had much choice in making the change but the non-recurring profits which result are included in underlying profit. This isn't any Enron type accounting, it has all been disclosed in multiple presentations, but if you're looking for things to criticise this may be the best example.
p18 of interim financial statements is pretty clear. Generally speaking I don't think Qantas is particularly aggressive with accounting disclosures. I believe some airlines adjusted last year's profit for impact from Icelandic volcano which Qantas didn't. They also didn't adjust for impact of A380 explosion.
There is one area which is a bit suspect though and that is treatment of accounting change from Frequent Flyer. I don't believe they had much choice in making the change but the non-recurring profits which result are included in underlying profit. This isn't any Enron type accounting, it has all been disclosed in multiple presentations, but if you're looking for things to criticise this may be the best example.
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QAN Shareholder,
Has any analysis been carried out as to how much could be saved by moving Qantas group clerical / office jobs to lower cost centres, eg. Singapore?
Surely the presence of only senior management within Australia (using a similar control test as that used to determine corporate tax residence) would satisfy s.7(h) of the Qantas Sale Act 1992?
Hence why not save the company some real money, and so generate a real return to you and other shareholders, and shift functions like accounting, accounts, marketing, HR, etc. to Singapore? Surely the necessary skills are there? And the company would avoid pesky things like super guarantee, payroll tax, etc.!
If such an analysis has not been carried out, then perhaps as an interested shareholder, you might like to ask management, why not?
Has any analysis been carried out as to how much could be saved by moving Qantas group clerical / office jobs to lower cost centres, eg. Singapore?
Surely the presence of only senior management within Australia (using a similar control test as that used to determine corporate tax residence) would satisfy s.7(h) of the Qantas Sale Act 1992?
Hence why not save the company some real money, and so generate a real return to you and other shareholders, and shift functions like accounting, accounts, marketing, HR, etc. to Singapore? Surely the necessary skills are there? And the company would avoid pesky things like super guarantee, payroll tax, etc.!
If such an analysis has not been carried out, then perhaps as an interested shareholder, you might like to ask management, why not?
I don't think QAN shareholder would like to be shifted offshore.
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Taildragger, 438,
This thread is drifting a bit, but from a shareholder's perspective the best solution may be cutting international routes rather than offshoring pilots. International long haul routes use a lot of the group's capital, have very volatile earnings and struggle to be competitive. I wonder if it would be better to cancel most of the 787s for both J* and QF international routes and gradually scale back the network to the routes that can clearly justify the investment. I can't see management advocating this since it is a very rare CEO that is willing to shrink a business. The board could push for this outcome but I'm not sure they devote much time to thinking about options that aren't presented by management, it would probably need shareholders to lead them in this direction.
As for offshoring maintenance, I guess there is plenty in common with Australian manufacturing which is bleeding pretty badly with the current exchange rate. If it was my decision I guess I'd treat it the same way as buying a plane ticket, I'll pay a premium for Qantas but if the premium gets too high then I'll go elsewhere.
This thread is drifting a bit, but from a shareholder's perspective the best solution may be cutting international routes rather than offshoring pilots. International long haul routes use a lot of the group's capital, have very volatile earnings and struggle to be competitive. I wonder if it would be better to cancel most of the 787s for both J* and QF international routes and gradually scale back the network to the routes that can clearly justify the investment. I can't see management advocating this since it is a very rare CEO that is willing to shrink a business. The board could push for this outcome but I'm not sure they devote much time to thinking about options that aren't presented by management, it would probably need shareholders to lead them in this direction.
As for offshoring maintenance, I guess there is plenty in common with Australian manufacturing which is bleeding pretty badly with the current exchange rate. If it was my decision I guess I'd treat it the same way as buying a plane ticket, I'll pay a premium for Qantas but if the premium gets too high then I'll go elsewhere.
[
A bit like tree pruning. I think qantas management watched this video for inspiration.
YouTube - Shotgun Tree Trimming 101
I wonder if it would be better to cancel most of the 787s for both J* and QF international routes and gradually scale back the network to the routes that can clearly justify the investment.
A bit like tree pruning. I think qantas management watched this video for inspiration.
YouTube - Shotgun Tree Trimming 101
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QAN Shareholder,
My question is independent of flight operations; that is, even if management & board decided that the best option was to close every route except (say) Sydney-Melb, money could still be saved by shifting office jobs out of Australia.
Offshoring - much like other enterprises (eg. banks) have done.
So why the destructive focus on the pilots? How much $$$ could have been saved over, say, the last 10 years if clerical positions had been moved?
My question is independent of flight operations; that is, even if management & board decided that the best option was to close every route except (say) Sydney-Melb, money could still be saved by shifting office jobs out of Australia.
Offshoring - much like other enterprises (eg. banks) have done.
So why the destructive focus on the pilots? How much $$$ could have been saved over, say, the last 10 years if clerical positions had been moved?
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Taildragger,
Taking a dispassionate view, banks lend themselves well to offshoring, developing and maintaining IT systems is a large part of what they do and Indians tend to be better and cheaper at it. I guess you need a quite well defined activity to make it worthwhile though and a lot of admin work doesn't fit too well. The management consultants that push this stuff do practice what they preach though, I recall working with some who were getting their presentation slides produced in India overnight.
Taking a dispassionate view, banks lend themselves well to offshoring, developing and maintaining IT systems is a large part of what they do and Indians tend to be better and cheaper at it. I guess you need a quite well defined activity to make it worthwhile though and a lot of admin work doesn't fit too well. The management consultants that push this stuff do practice what they preach though, I recall working with some who were getting their presentation slides produced in India overnight.
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Qan Shareholder,
Have you ever heard the saying "you have to spend money to make money"?
QF is supposed to be premium product but has not had any real capital injected into it to maintain a high quality product for a long while. Even the A380, the new flagship, the internal product compared to other airlines (on the kangaroo route, not so much the US) is still a substandard product. In a nutshell they cheeped out! Other airlines provide door to door service for premium customers, not QF. The examples are endless, these are real world reasons why the longhaul airline is failing, they have become uncompetitive due to management neglect, nothing more, nothing less.
On the note of cutting more routes, I don't see CX and Singair, Ek, Malay,Etc etc cutting longhaul routes, even Air nz are expanding routes! That is a narrow minded view that is made by individuals that have no plans for sustainability, just short turn bonuses. Shareholders want year in, year out sustainable growth, healthy dividends and a stable business with direction, they do not have that with Qantas at the moment. Are you happy with your QF portfolio?????
I question if you are really a shareholder?
If so, and you observed your assets being stripped away from your high yield, high premium product to then be allocated to a low yield, lower product with marginal profits I would have serious concerns of why I was holding that stock. Basic maths, allocate 50 aircraft to one entity, 50 to the other, charge $50 fares on one, $250 on the other but provide $50 of service, which one makes the profit? And before you mention labour costs on the $250 seat, fuel price has already negated the profit on the $50 seat.
Its no coincidence that QF shares and profits have proportionally declined inversely to Jetstars expansion.
Make no mistake about it, Jetstars costs are being hidden in mainlines bottom line, unfortunately for AJ the bottom line, due to reducing yields and neglect at mainline, is starting to be exposed and where will the costs be hidden then?
Hence the urgency to rescue QF mainline.
Qf Shareholder, I suggest you put your calculator back in your pocket, put your uni books back on the shelf and step into the real world.
Oh, and by the way, the QF graduate program just opened up for applications, maybe you should apply, management needs more stooges like you, if you are not already there!
On another note, Please inform us,
1, Who is Orangestar?
2, Who are the directors?
3, Who are their shareholders?
4, Where are they based?
5, Who would profit if the above entity was sold and on what market can it be sold (e.g ASX, SING etc)??
6, Does this entity have the ability to circumvent the Qantas sales act?
The answers to these questions may enlighten us all as to the real drive behind the growth of Jetstar at the expense of Qantas.
Have you ever heard the saying "you have to spend money to make money"?
QF is supposed to be premium product but has not had any real capital injected into it to maintain a high quality product for a long while. Even the A380, the new flagship, the internal product compared to other airlines (on the kangaroo route, not so much the US) is still a substandard product. In a nutshell they cheeped out! Other airlines provide door to door service for premium customers, not QF. The examples are endless, these are real world reasons why the longhaul airline is failing, they have become uncompetitive due to management neglect, nothing more, nothing less.
On the note of cutting more routes, I don't see CX and Singair, Ek, Malay,Etc etc cutting longhaul routes, even Air nz are expanding routes! That is a narrow minded view that is made by individuals that have no plans for sustainability, just short turn bonuses. Shareholders want year in, year out sustainable growth, healthy dividends and a stable business with direction, they do not have that with Qantas at the moment. Are you happy with your QF portfolio?????
I question if you are really a shareholder?
If so, and you observed your assets being stripped away from your high yield, high premium product to then be allocated to a low yield, lower product with marginal profits I would have serious concerns of why I was holding that stock. Basic maths, allocate 50 aircraft to one entity, 50 to the other, charge $50 fares on one, $250 on the other but provide $50 of service, which one makes the profit? And before you mention labour costs on the $250 seat, fuel price has already negated the profit on the $50 seat.
Its no coincidence that QF shares and profits have proportionally declined inversely to Jetstars expansion.
Make no mistake about it, Jetstars costs are being hidden in mainlines bottom line, unfortunately for AJ the bottom line, due to reducing yields and neglect at mainline, is starting to be exposed and where will the costs be hidden then?
Hence the urgency to rescue QF mainline.
Qf Shareholder, I suggest you put your calculator back in your pocket, put your uni books back on the shelf and step into the real world.
Oh, and by the way, the QF graduate program just opened up for applications, maybe you should apply, management needs more stooges like you, if you are not already there!
On another note, Please inform us,
1, Who is Orangestar?
2, Who are the directors?
3, Who are their shareholders?
4, Where are they based?
5, Who would profit if the above entity was sold and on what market can it be sold (e.g ASX, SING etc)??
6, Does this entity have the ability to circumvent the Qantas sales act?
The answers to these questions may enlighten us all as to the real drive behind the growth of Jetstar at the expense of Qantas.
Last edited by Stalins ugly Brother; 15th Mar 2011 at 05:21. Reason: more points
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Stalin,
Plenty of stockbrokers, perhaps even a majority, will tell you that you shouldn't invest in Qantas since it can't earn it's cost of capital through the cycle. They are not telling me "you have to spend money to make money" they are telling me I shouldn't spend money to make losses. They have lots of evidence on their side of international airlines that have attempted plenty of different strategies yet failed to make an acceptable return. If they are right it would be the duty of directors to ensure that Qantas never buy another aeroplane. The airline should be run for cash and at the end of every year cash should be returned to shareholders and the company would gradually be wound down.
So I could be in the minority, but I don't believe this. I think parts of Qantas can earn cost of capital and this includes the domestic business and parts of the international business. I know the arguments about synergies between domestic and international but I'm not convinced it is necessary to retain all the international network particularly since the nearest competitor only flies to 2 long haul destinations.
Interesting that when comparing to other airlines you mention Emirates, Cathay and Singapore. To me Qantas looks a lot more like the US and European airlines with regard to cost structures and industrial issues, and none of their airlines are looking too great just now, but maybe they all have the wrong strategy too.
Plenty of stockbrokers, perhaps even a majority, will tell you that you shouldn't invest in Qantas since it can't earn it's cost of capital through the cycle. They are not telling me "you have to spend money to make money" they are telling me I shouldn't spend money to make losses. They have lots of evidence on their side of international airlines that have attempted plenty of different strategies yet failed to make an acceptable return. If they are right it would be the duty of directors to ensure that Qantas never buy another aeroplane. The airline should be run for cash and at the end of every year cash should be returned to shareholders and the company would gradually be wound down.
So I could be in the minority, but I don't believe this. I think parts of Qantas can earn cost of capital and this includes the domestic business and parts of the international business. I know the arguments about synergies between domestic and international but I'm not convinced it is necessary to retain all the international network particularly since the nearest competitor only flies to 2 long haul destinations.
Interesting that when comparing to other airlines you mention Emirates, Cathay and Singapore. To me Qantas looks a lot more like the US and European airlines with regard to cost structures and industrial issues, and none of their airlines are looking too great just now, but maybe they all have the wrong strategy too.
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Oh boy
studying QFshareholders comments its rather difficult to understand why he still holds shares in QF. Some of his comments are very valid however comparing costs between airlines is marked with controversy. Having seen comparison between QF and Asian/Middle East carriers , when challenged by persons with credible knowledge there were no answers(don't ask for details0.
One major item seems to be forgotten is that QF managment is the most expensive managment in the airline industry.
One major item seems to be forgotten is that QF managment is the most expensive managment in the airline industry.
Let's not forget only a few years Qantas (when Jetstar was quite small) was making record profits (billion or so $), and that includes Mainline International. So what has changed? Qantas has contracted and Jetstar has expanded, any coincidence here?
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All I suggest is dont even bother with QAN_Shareholder, he is just another troll, the point is you dont need to justify to that idiot just do your stuff and he will snuff out.
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QAN,
I think we are talking about two different things.
Presently, the current direction of QF is cancerous and potentially terminal, and is providing a very poor return to shareholders.
Qantas needs to spend money on its product to attract back the premium travels who in turn will bolster profits who will in turn provide a return to its institutional shareholders.
In regard to your stockbroker buddies, stockbrokers are purely speculators (and some are just gamblers), if they were to become the cornerstone of any economy and the basic fundamentals of running a business were lost we would all be in a hell of a lot of trouble.
Based on your views of managing an airline QAN, maybe you should change your name to Bud Fox!
I think we are talking about two different things.
Presently, the current direction of QF is cancerous and potentially terminal, and is providing a very poor return to shareholders.
Qantas needs to spend money on its product to attract back the premium travels who in turn will bolster profits who will in turn provide a return to its institutional shareholders.
In regard to your stockbroker buddies, stockbrokers are purely speculators (and some are just gamblers), if they were to become the cornerstone of any economy and the basic fundamentals of running a business were lost we would all be in a hell of a lot of trouble.
Based on your views of managing an airline QAN, maybe you should change your name to Bud Fox!