Future of Qantas in jeopardy: Joyce (Merged)
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Old Mate, I posted this on another thread, but it may help your answer -
Problem is that the Global share market tanked in general yesterday, down 2.2% in total with Wall Street copping a hiding. Australia lost around $33 billion on shares. Of course the Australian economists are naturally painting a healthy glowing forecast which is a croc. We have a two speed economy and if you are one of the minority involved in the resource sector you then Santa has been rewarding you with lots of lovely gifts but if you work in any other sector like the majority of us then you are not only bleeding but you are having your short and long term wealth stripped away from you. The USA is close to collapse, as a result China will slow off (the Yanks can't afford to pay back the billions they have borrowed from them) and then our economy will take an even bigger hit. Qf redundancies are just the tip of the iceberg......
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Does anybody have any educated theories about why the QF share price took such a dive today? I doubt the announced redundancies would have wiped nearly 4%.
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Qantas Talk
Q Management talk down everything except their bonuses.In so doing they have destroyed shareholder value.The institutions holding this stock must have poorly thought out investment strategies.
The sky gravy train for incompetent poorly educated management muppets
The sky gravy train for incompetent poorly educated management muppets
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Macquarie is the Culprit
Macquarie downgraded QAN shares from outperform to neutral.The shares fell in a market already skittish from recent data on the US economy.Under current circumstances QF is a $1.75 share.Its over valued at $2.03.Look at the data and do the sums.It ain't pretty
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They could always make some Positive contribution to the debate and put a floor under the share price by freezing Exec bonuses....sorry I am dreaming again.
Wonder how they will justify it this year???
Wonder how they will justify it this year???
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Packrat,
I wonder if you could enlighten me as to which 'data and sums' you use to get to $1.75.
Under current circumstances QF is a $1.75 share.Its over valued at $2.03.Look at the data and do the sums.
I wonder if you could enlighten me as to which 'data and sums' you use to get to $1.75.
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Arnold,
My point is that Packrat has probably not looked at any data and not done any sums, I suspect he has pulled a number out of thin air. But perhaps he has done the work and if so I'd like to hear how he gets to a valuation of $1.75. He quotes Macquarie who I believe have a valuation quite a bit higher and I'm convinced they will have looked at plenty of data and done lots of sums.
How much do you think your investment is worth then??
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QAN Share holder Due Diligence
My friend pretend you are interested in buying the Qantas business.
Start by looking at its assets and liabilities.Look at the industry it is in and how it differentiates itself.Look at its management and gauge their competence.Determine the debt to equity ratio.Ask yourself if the business is competitive.Look at their fixed costs and how they are managed.Are they astute in the way they manage their revenue base?.Is the business capital intensive?What are their borrowing costs?What are the business future prospects.In short do a Warren Buffett evaluation.The information and data is available you just have to look.If you have invested in a company without some fundamental research then you are foolish with your money.Ask yourself why you hold shares in the business.Ask yourself if your money would provide a better return elewhere.
After you have completed your research I guarantee you will sell your shares tomorrow.If you dont then you have made the fatal investor mistake of having an emotional attachement to the business .
You will do your dough.
I've done my research and to me Qantas is worth a $1.75.With a declining market share and a mangement team who dont have a clue I have determined that my money is better being invested elsewhere.Even banks will give you 6.5%.
What return did you receive on your Qantas investment this financial year?
Have your shares grown in value?
If the answers to the last to questions are zero and no and you still hold shares after monday then you are a poor manager of your own funds
As for Macquarie all their research counted for nought with the GFC.If they are so good why didnt they see it coming?
They make mistakes all the time.The mistakes just arent big enough to bring their business down.
Give it awhile and Macquarie will change their evaluation of Qantas to underperform.Their research is thorough but generally slow for the longterm
Start by looking at its assets and liabilities.Look at the industry it is in and how it differentiates itself.Look at its management and gauge their competence.Determine the debt to equity ratio.Ask yourself if the business is competitive.Look at their fixed costs and how they are managed.Are they astute in the way they manage their revenue base?.Is the business capital intensive?What are their borrowing costs?What are the business future prospects.In short do a Warren Buffett evaluation.The information and data is available you just have to look.If you have invested in a company without some fundamental research then you are foolish with your money.Ask yourself why you hold shares in the business.Ask yourself if your money would provide a better return elewhere.
After you have completed your research I guarantee you will sell your shares tomorrow.If you dont then you have made the fatal investor mistake of having an emotional attachement to the business .
You will do your dough.
I've done my research and to me Qantas is worth a $1.75.With a declining market share and a mangement team who dont have a clue I have determined that my money is better being invested elsewhere.Even banks will give you 6.5%.
What return did you receive on your Qantas investment this financial year?
Have your shares grown in value?
If the answers to the last to questions are zero and no and you still hold shares after monday then you are a poor manager of your own funds
As for Macquarie all their research counted for nought with the GFC.If they are so good why didnt they see it coming?
They make mistakes all the time.The mistakes just arent big enough to bring their business down.
Give it awhile and Macquarie will change their evaluation of Qantas to underperform.Their research is thorough but generally slow for the longterm
Last edited by packrat; 3rd Jun 2011 at 12:22.
My point is that Packrat has probably not looked at any data and not done any sums, I suspect he has pulled a number out of thin air. But perhaps he has done the work and if so I'd like to hear how he gets to a valuation of $1.75. He quotes Macquarie who I believe have a valuation quite a bit higher and I'm convinced they will have looked at plenty of data and done lots of sums
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Packrat,
So, a justification for a valuation of $1.75 without quoting a single number?
Arnold,
I'll give my view once I see Packrat's valuation!
Start by looking at its assets and liabilities.Look at the industry it is in and how it differentiates itself.Look at its management and gauge their competence.Determine the debt to equity ratio.Ask yourself if the business is competitive.Look at their fixed costs and how they are managed.Are they astute in the way they manage their revenue base?.Is the business capital intensive?What are their borrowing costs?What are the business future prospects.In short do a Warren Buffett evaluation.The information and data is available you just have to look.If you have invested in a company without some fundamental research then you are foolish with your money.Ask yourself why you hold shares in the business.Ask yourself if your money would provide a better return elewhere.
Arnold,
I'll give my view once I see Packrat's valuation!
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Justification?
I have been investing in the market for a long time and I've learnt to trust my gut.The $1.75 ?...its an opinion based on research and my transcending colon.
The stock market and company shares prices are based on fuzzy and imprecise science coupled with a herd mentality.As I said for me its a $1.75 share .Your research and gut may come up with a different number.You have to live with that number just like I do.
Maquarie will tell you that there is a rough margin of error around 15% with their valuations.They could be off by 30 cents either way.If they had survived the GFC unscathed they would have more credibility.They didnt and for me they dont
What was your purchase price for your QF shares ?
Buy a book called The Intelligent Investor by Benjamin Graham.Its a game changer
The intrinsic value of a share
An investor may calculate the intrinsic value of a share by differing methods and will eventually come up with a price that he or she believes represents good buying value. Graham had his methods of calculating intrinsic value, Warren Buffett has his, other successful investors have theirs.
Graham acknowledges, however, that calculations may be wrong, or that external events may take place to affect the value of the share. These cannot be predicted. For these reasons, the investor must have a margin of safety, an inbuilt factor that allows for these possibilities.
~ Benjamin Graham
$1.75 allows me my margin of safety.If Q shares drop to this price they will be within my margin of safety and for me they are a buy
The stock market and company shares prices are based on fuzzy and imprecise science coupled with a herd mentality.As I said for me its a $1.75 share .Your research and gut may come up with a different number.You have to live with that number just like I do.
Maquarie will tell you that there is a rough margin of error around 15% with their valuations.They could be off by 30 cents either way.If they had survived the GFC unscathed they would have more credibility.They didnt and for me they dont
What was your purchase price for your QF shares ?
Buy a book called The Intelligent Investor by Benjamin Graham.Its a game changer
The intrinsic value of a share
An investor may calculate the intrinsic value of a share by differing methods and will eventually come up with a price that he or she believes represents good buying value. Graham had his methods of calculating intrinsic value, Warren Buffett has his, other successful investors have theirs.
Graham acknowledges, however, that calculations may be wrong, or that external events may take place to affect the value of the share. These cannot be predicted. For these reasons, the investor must have a margin of safety, an inbuilt factor that allows for these possibilities.
~ Benjamin Graham
$1.75 allows me my margin of safety.If Q shares drop to this price they will be within my margin of safety and for me they are a buy
Based on the 2009 annual report on the QF website, the asset backing of the shares is $2.54.
In other words, QF is trading at less than the value of its assets.
Airlines have huge cash flows and can make, or lose, a lot of money very fast, but this number is ridiculous.
One therefore has to ask if there is another buyer waiting in the wings? The APA bid failed, will someone try an on market raid?
Will Jamie Packer come in and take J.P. Morgans slice?
There appear to be wheels within wheels spinning around the way QF is being run, and I wonder if a deeper game is being played?
The APA bid revolved around inside information in my opinion. I wonder if the same players are setting up for a second try?
I also wonder if the ATO and ASIC have ever taken an interest in the IATA Montreal clearing house and what that means from the point of view of moving money around the world?
In other words, QF is trading at less than the value of its assets.
Airlines have huge cash flows and can make, or lose, a lot of money very fast, but this number is ridiculous.
One therefore has to ask if there is another buyer waiting in the wings? The APA bid failed, will someone try an on market raid?
Will Jamie Packer come in and take J.P. Morgans slice?
There appear to be wheels within wheels spinning around the way QF is being run, and I wonder if a deeper game is being played?
The APA bid revolved around inside information in my opinion. I wonder if the same players are setting up for a second try?
I also wonder if the ATO and ASIC have ever taken an interest in the IATA Montreal clearing house and what that means from the point of view of moving money around the world?
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Qantas chairman Clifford denies rift with Joyce
Rumours of a rift and reservations by some board members about the developing battle with the airline's pilots and engineers have been swirling around the industry along with speculation about changes at the top.
But in a forthright interview with The Weekend Australian, Mr Clifford moved to emphatically quash the rumours while emphasising the need for a major revamp of the carrier's beleaguered international operations.
He also attacked the leadership of the pilot and engineering unions for its failure to understand the competitive threats facing Qantas.
As Qantas shares yesterday slumped to $2.03, their lowest point in nearly two years, Mr Clifford said he had worked with Mr Joyce for three years, and as chief executive for two, and enjoyed working with him.
He said the board had discussed in detail the airline's industrial relations issues, particularly the nature of claims by the pilots and the engineers. He and Mr Joyce spoke regularly about the issue although he was "very conscious" the chief executive was running the business". He had also personally canvassed every board member as part of an annual review and given each an opportunity to raise concerns.
"The board is absolutely right behind Alan and very comfortable with how he's running the business," he said. "Now that doesn't mean we're happy with where the business is, but absolutely Alan and I are in lockstep."
Operations at Qantas international are under review as the long-haul airline continues to fail to make a return on capital in the face of increasing competition. At the same time, the airline is also facing industrial action by unions over job security issues.
Mr Clifford said the board was aware of the challenges facing the industry and the directors were "absolutely on the same page about the importance of making changes", including to the loss-making international airline.
"They understand the predicament of the international business and we are looking at alternatives," he said.
"And what I can assure you is it will be different going forward -- make no bones about it, it will be different going forward -- it cannot remain as it is."
Asked whether this included a full-service airline in Asia, Mr Clifford pointed to comments by Mr Joyce that alternatives were being considered.
"We're looking at a variety of alternatives and one of the discussions I've had with Alan is 'let's not constrain ourselves'," he said. "What we've got to do is have something which can ensure the viability of the business going forward and an adequate return on capital and that's not what we're getting at the moment. That's the best way to secure jobs. Writing pieces of paper is not the way to do it, whether you're in the auto industry or any other industry."
The Qantas chairman said he had briefed major shareholders on the airline's situation and they had rightly highlighted their concern about the airline's economic performance, particularly in the international business, as well as the lack of reality in union claims.
He said he was aware the union leadership was briefing analysts but "wise and experienced people" would know the union objective was to create concern and disharmony, and pressure management.
But management already had plenty of pressure from the share price, the profit performance and the encroachment of Emirates and AirAsia.
"We can handle the competitive environment, we can't do it sitting on our hands," he said "We've got to be creative, we've got to be thoughtful and we're willing to do that. That's how we'll respond to the share price and, frankly, I'd say every investor I've spoken to is right behind that."
Mr Clifford said he was also concerned that employees were being misinformed by their union leaders. He said anyone who understood what was going on in the aviation industry understood the magnitude of the challenges facing the company.
"Frankly, I've spent more time on some of those claims than the other board members in discussion with Alan," he said. "You have to say to yourself, 'What planet are these people on given the competitive environment?' Haven't they heard of AirAsia, haven't they heard of the challenges coming from Emirates, from Etihad, from Qatar.
"They only have to speak to Airbus so see what the order books look like to understand some of the challenges
Qantas chairman Clifford denies rift with Joyce | The Australian
- Steve Creedy
- From: The Australian
- June 04, 2011 12:00AM
Rumours of a rift and reservations by some board members about the developing battle with the airline's pilots and engineers have been swirling around the industry along with speculation about changes at the top.
But in a forthright interview with The Weekend Australian, Mr Clifford moved to emphatically quash the rumours while emphasising the need for a major revamp of the carrier's beleaguered international operations.
He also attacked the leadership of the pilot and engineering unions for its failure to understand the competitive threats facing Qantas.
As Qantas shares yesterday slumped to $2.03, their lowest point in nearly two years, Mr Clifford said he had worked with Mr Joyce for three years, and as chief executive for two, and enjoyed working with him.
He said the board had discussed in detail the airline's industrial relations issues, particularly the nature of claims by the pilots and the engineers. He and Mr Joyce spoke regularly about the issue although he was "very conscious" the chief executive was running the business". He had also personally canvassed every board member as part of an annual review and given each an opportunity to raise concerns.
"The board is absolutely right behind Alan and very comfortable with how he's running the business," he said. "Now that doesn't mean we're happy with where the business is, but absolutely Alan and I are in lockstep."
Operations at Qantas international are under review as the long-haul airline continues to fail to make a return on capital in the face of increasing competition. At the same time, the airline is also facing industrial action by unions over job security issues.
Mr Clifford said the board was aware of the challenges facing the industry and the directors were "absolutely on the same page about the importance of making changes", including to the loss-making international airline.
"They understand the predicament of the international business and we are looking at alternatives," he said.
"And what I can assure you is it will be different going forward -- make no bones about it, it will be different going forward -- it cannot remain as it is."
Asked whether this included a full-service airline in Asia, Mr Clifford pointed to comments by Mr Joyce that alternatives were being considered.
"We're looking at a variety of alternatives and one of the discussions I've had with Alan is 'let's not constrain ourselves'," he said. "What we've got to do is have something which can ensure the viability of the business going forward and an adequate return on capital and that's not what we're getting at the moment. That's the best way to secure jobs. Writing pieces of paper is not the way to do it, whether you're in the auto industry or any other industry."
The Qantas chairman said he had briefed major shareholders on the airline's situation and they had rightly highlighted their concern about the airline's economic performance, particularly in the international business, as well as the lack of reality in union claims.
He said he was aware the union leadership was briefing analysts but "wise and experienced people" would know the union objective was to create concern and disharmony, and pressure management.
But management already had plenty of pressure from the share price, the profit performance and the encroachment of Emirates and AirAsia.
"We can handle the competitive environment, we can't do it sitting on our hands," he said "We've got to be creative, we've got to be thoughtful and we're willing to do that. That's how we'll respond to the share price and, frankly, I'd say every investor I've spoken to is right behind that."
Mr Clifford said he was also concerned that employees were being misinformed by their union leaders. He said anyone who understood what was going on in the aviation industry understood the magnitude of the challenges facing the company.
"Frankly, I've spent more time on some of those claims than the other board members in discussion with Alan," he said. "You have to say to yourself, 'What planet are these people on given the competitive environment?' Haven't they heard of AirAsia, haven't they heard of the challenges coming from Emirates, from Etihad, from Qatar.
"They only have to speak to Airbus so see what the order books look like to understand some of the challenges
Qantas chairman Clifford denies rift with Joyce | The Australian