QF shares hit $2.00, discuss
The AGM will probably see the QANTAS group dissolved, not long now until it's all over. That is unless someone else steps in an buys the QANTAS group, otherwise the current mob in charge will see it out until the end. 
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jeebus you blokes are big on the negative!! Sure the results aren't great, Alan is a tool etc etc, but dissolving the group?!?!
Aviation around the world is struggling, (except in the ME) Look at the one off extraordinary items in this years results.
Domestic making a motza, FF 'making' a motza...
Of course..the further the share market drops...the more guys will fly until 100, which isn't good for anyone.
This management won't be around much longer. Things will improve. Just hope we all hold on for long enough.
Aviation around the world is struggling, (except in the ME) Look at the one off extraordinary items in this years results.
Domestic making a motza, FF 'making' a motza...
Of course..the further the share market drops...the more guys will fly until 100, which isn't good for anyone.
This management won't be around much longer. Things will improve. Just hope we all hold on for long enough.
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Originally Posted by Jetro6UL
Calling dibs now to be the thread starter for "QF shares hit $1.00, discuss"
.It'd just be cut and added to this thread anyway, so I'll pass on the new thread.
This CEO will be gone by the end of the month.
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Hold on for long enough! - if you are still holding you are holding on for way too long based on hope only. Good luck with that. The fundamentals of this company are in the toilet. Nothing else really matters.
Think of the snowball beginning now - As a potential passenger - before I book with Qantas I think of Ansett and then I will book with someone who will definitely be around still on the date of flight. Nothing is guaranteed here - except I won't be losing my money and time on a ticket on an airline that might not be around tomorrow. Call it whatever you want - I'm looking after number 1 and so will most people that remember Ansett.
If I had FF points I'd be cashing them in for what ever I can get. They won't be worth a pinch of s..t if it all keep going like this. Look after number 1 and let those dumby managers do their thing - share price is the judge of their ability. Retards.
Think of the snowball beginning now - As a potential passenger - before I book with Qantas I think of Ansett and then I will book with someone who will definitely be around still on the date of flight. Nothing is guaranteed here - except I won't be losing my money and time on a ticket on an airline that might not be around tomorrow. Call it whatever you want - I'm looking after number 1 and so will most people that remember Ansett.
If I had FF points I'd be cashing them in for what ever I can get. They won't be worth a pinch of s..t if it all keep going like this. Look after number 1 and let those dumby managers do their thing - share price is the judge of their ability. Retards.
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Great to see Steve thinks this is funny. Where do your union fees come from? Qf are in big trouble and anyone who thinks a private equity will come in and buy qf why would they? They may have 3bil in the bank but have over 6 in debt and 2bil per year in committed expenditure. Oh also there would have to be a sign off from govt. They are in trouble but I can't see them going the way of ansett.
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Alan or no Alan, QF International is fundamentally rooted.
The Australian economy is apparently booming, although a few would say otherwise.
However, due to the strength of the economy the Australian Dollar is ridiculously strong compared to other currencies. For businesses and families in America and Europe......go to Australia and do business or vacation? Hell no, its way to expensive.
If Barnaby and co want to "save" Qantas, they need to either lower the value of the Aussie Dollar, or lower the cost base of Qantas.
So, Alan or no Alan, disregarding the boards remuneration and a supposedly bloated Headquarters what changes do the glitterati here propose that would make Qantas mean and efficient?
The Australian economy is apparently booming, although a few would say otherwise.
However, due to the strength of the economy the Australian Dollar is ridiculously strong compared to other currencies. For businesses and families in America and Europe......go to Australia and do business or vacation? Hell no, its way to expensive.
If Barnaby and co want to "save" Qantas, they need to either lower the value of the Aussie Dollar, or lower the cost base of Qantas.
So, Alan or no Alan, disregarding the boards remuneration and a supposedly bloated Headquarters what changes do the glitterati here propose that would make Qantas mean and efficient?
Last edited by TallestPoppy; 8th Jun 2012 at 10:18.
More good news....
Public wins as Qantas searches for a partner before the music stops
Structural changes are no longer a choice because of changing routes and losses by the international brand, writes Elizabeth Knight.
It's all the chatter in corporate marketing circles.
When was the last time anyone saw those angelic children standing on the precipice of an outback gorge, inspiring us to support our national aviation carrier?
For years the Qantas trademark, Peter Allen's stirring parochial song I Still Call Australia Home is set to be dropped. Apparently Qantas is turning its focus to a more contemporary feel.
It's emerged as a metaphor for the future of the airline, leaving aviation watchers wondering if a new campaign will contain a more international flavour - and some Middle Eastern inspiration, given speculation over the need for Qantas to join forces with a major competitor.
Aviation watchers are waiting for the announcement that Qantas will tie up with Dubai-based Emirates as the first and most pivotal in several international collaborations that the flying kangaroo will need to embrace in order to survive in the new world of commercial aviation.
The task is both large and urgent.
Qantas ... its share price plunged more than 30 per cent this week.
This week, the airline's boss, Alan Joyce, delivered the staggering news that the airline's international division would lose $450 million this year and the Qantas group would deliver a post-tax loss - a first since it was privatised by the government.
Its share price plunged more than 30 per cent this week and there were suggestions that at least one institutional shareholder had been sounded out about the possibility of a rights issue.
The chairman of Qantas, Leigh Clifford, says a balance sheet-bolstering capital issue is not being contemplated. But he says asset sales are on the agenda.
John Borghetti ... chief executive of Virgin Australia. Photo: Glenn Hunt
Qantas shares slumped below $1 for the first time yesterday, closing at 97¢, as ratings agency Standard & Poor's put the company on a credit watch.
The flying kangaroo is on the cusp of some major changes. It is no longer a choice - it's a matter of survival.
The size of the task can be exemplified by this statistic: its mainline Qantas international business accounts for only 17 per cent of Australia's inbound and outbound market. About 30 years ago, it was about 50 per cent.
And here is another alarming statistic: over the past six months, about 25 per cent of air traffic to Europe has moved from using an Asian stopover to a Middle East stopover.
The route matrix is rapidly changing on international destinations but Qantas retains major crucial partners from another era.
Qantas mainline is devoid of Middle Eastern partners and is light on Asian tie-ups. Its most significant commercial family member is still its old colonial stalwart, British Airways.
When Joyce made his announcement this week, investors had been bracing themselves for a poor result. This shocked even the pessimists.
Not surprisingly, it raised immediate questions around Joyce's tenure and strategy.
Clifford this week went into bat for the 45-year-old Irishman he installed in the top job.
''I have heard rumblings that 'Leigh and Alan have been fighting' … but I can tell you we have absolute confidence in him. This isn't about having total confidence in the football coach. He is extremely highly regarded in terms of intellect and strength,'' Clifford told Weekend Business.
The company was quick to lay the blame for this atrocious performance at the feet of the European economic crisis, the rising fuel bill and the cost of the industrial relations-led grounding of the fleet last year.
But one-off events and the European crisis are far from being the full story. The fact is that the international division of Qantas has been struggling for years. Last year it lost $218 million without any drag from groundings or the European malaise.
Qantas has structural issues that a poor external environment exposes. This week's announcement highlighted the extent to which Qantas's outdated model was in need of a major overhaul.
Clifford doesn't dispute this. ''In three years, this business won't be the same as it is now. Traditional solutions aren't sufficient and we can't say that serendipity will fix it,'' he says.
He is not expecting investors to tolerate this for too long.
''Whether the international brand is losing [$300 million, $400 million] or $500 million - we can't have that degree of bleed from the business,'' he says. ''Shareholders say to me that the last thing they want is for us to buy planes now that lose money.''
Not since Paul Keating's government embraced a major opening of the skies policy has Qantas been a protected species. The industry has been gradually globalised over the past 20 years and Qantas has had its market share exposed and picked at by overseas carriers.
The Middle Eastern carrier Etihad is a classic example of a new breed of government-owned (and fuel-subsidised) airline that is making inroads into the Australian market. Boasting a new fleet of planes, cheaper airfares plus a strategic tie up with Virgin, Etihad is aggressively targeting the Australian flying public.
For consumers, the entry of new carriers into Australia has been a bonus. It brings lower airfares and loads of choice. But it raises the question of whether Qantas can survive as an international carrier.
The federal government doesn't want to talk about it. As far as the minister responsible for aviation, Anthony Albanese, is concerned, his spokesman told Weekend Business it was not the government's job to get involved in the commercial operations of the airlines nor to comment on profits when they rise or fall.
In theory, he is right. It is not government's job to protect the commercial interests of Qantas - although there are many other industries that governments have helped in the face of structural issues.
Not surprisingly, not all agree with this hands-off approach. A large investor, who did not wish to be named, says the government can't have it both ways.
He argues the government's industrial relations system increases Qantas's operating costs relative to its competitors. At the same time, the government is allowing in foreign carriers with lower labour costs but offering the airline no protection.
Regardless, successive Australian governments since Keating's have merely been walking in lockstep with international aviation regulators that have been engaged in a liberalisation process that has involved allowing more overseas entrants into previously protected markets.
Qantas has been afforded the same chance to enter new international routes.
Still, no government would want to preside over the demise of a national carrier - be it for reasons of international stature or security. There would be a public outcry.
To date, the only concession the government is prepared to offer is to relax some of Qantas's onerous legislated foreign ownership provisions - but these have not been supported by the opposition nor the Greens.
Former Qantas boss Geoff Dixon, who has been a loud critic of allowing foreign carriers to dump capacity, makes the point: ''If Qantas can find the right partners, it will take a level of maturity in some areas of Canberra that hasn't been there in the past.''
Despite the difficulties, Qantas - and other legacy carriers around the world, which are competing in the new globalised airline industry - needs to adapt.
According to Peter Harbison, from the Centre for Asia Pacific Aviation, Qantas (or, more particularly, Australia) sits at the end of the world as a destination. The global aviation market is far easier for airlines that are geographic hubs. As he so neatly says: ''Qantas is at the end of a long piece of rope''.
He believes Qantas cannot survive in its current form - in this state, ''there is no term future for it''.
There is certainly no financial future in investing the capital needed in aircraft to fly to a myriad of destinations.
The answer is to develop a virtual network - one in which strategic global partnerships are formed using the bilateral rights of partners that allow customers to mix and match seamlessly and travel to numerous destinations.
Harbison agrees with others in the industry, including Joyce, that alliances will increasingly become the way of the future.
Call it ''other people's money'' or ''other people's aircraft''.
Virgin Australia's international model is grounded on this strategy. Being a relatively new and significantly smaller operation, it has infiltrated the international market using a capital-lite model. It offers customers services to Europe through its Etihad tie up, across the Tasman in partnership with Air New Zealand, to the US with a complimentary relationship with Delta and, in the Asian region, Singapore Airlines forms part of the network family.
The issue for Qantas, Harbison says, is that there are ''not many dance partners left''.
And rumours abound that one of Qantas's more profitable partnerships with South African Airways may be lost next year and Virgin might take the opportunity to tap Qantas on the shoulder and embrace the South Africans.
Qantas clearly doesn't relish the thought of being the wallflower at the international airline hoedown.
Last year it announced, as part of its international division's revival strategy, the establishment of an intra-Asian premium airline. But investors didn't like the idea of Qantas risking too much capital and its would-be dance partner, Malaysia Airlines, was weighed down by its own financial problems. The premium Asian airline idea was dumped but the Jetstar start-up in Japan was pursued.
A link with Emirates makes sense. But as one industry expert told Weekend Business, it makes sense in theory but the devil is in the detail. He says he was aware Qantas ''had people up there in Dubai'' but queries whether the two groups could strike a deal.
''Emirates would like to have a code share with Qantas but that wouldn't work for Qantas,'' the expert says.
A code share would risk haemorrhaging Qantas customers to Emirates. In his view, a tie up would only work for Qantas if it was a profit share - ''a joint venture without equity''.
Harbison takes the view an alliance between the two airlines offers benefits for Emirates, which would be able to feed traffic into Qantas's domestic operations.
In the meantime, Joyce is busy closing unprofitable routes and postponing the delivery of the highly sought-after A380 and Dreamliner planes to protect valuable capital.
Qantas's war with the pilots and the licensed engineers continues in the background, as both groups are at various stages of arbitration.
It is all part of Joyce's grand plan to first move the international business into the black and beyond to make enough money to meet what in financial jargon is called ''cost of capital''.
The division's performance this week illustrates there is a long way to go. At this point, Qantas International is a drag on the wider company's performance. But closing it down is not an option. Joyce told Weekend Business that having an international premium airline was integral to running a successful premium domestic airline and a profitable (and highly valuable) frequent-flyer division.
In doing so, Joyce has probably nailed the real sleeper in the airline industry - the domestic airline and its ability to deliver robust earnings in the face of its new competitive threat from a revitalised and hungry Virgin Australia.
For Qantas, it is all about the line in the sand - the 65 per cent market share that successive managements have defined as the point beneath which it is cannot fall.
For Virgin, the game is breaking into the high yielding and lucrative domestic business market. But make no mistake - this new battleground will get bloody.
Dixon says: ''A [fair] bit of the action is going to be in the domestic market.''
Joyce is upfront about the fact that Qantas is prepared to sustain financial wounds (read profits) to win the war for the corporate customer. In airline speak, the most commonly used measure of profit performance is yields, and Qantas is prepared to sacrifice them in order to protect its 85 per cent hold on the premium corporate market.
The financial and public relations war has become so intense that newspaper column inches are being devoted to carriers winning individual corporate contracts. The latest of these involved Joyce travelling to the outer reaches of the West Australian Pilbara to publicise being awarded a fly-in, fly-out contract by Andrew Forrest's Fortescue.
Putting the public relations aside, the fight for the premium end of the market is a serious commercial issue and one that could well have a larger long-term impact on the profitability of domestic carriers than their international performance.
Qantas has increased capacity on the domestic market by more than 10 per cent over the past three months and this is intensely focused on the golden triangle of Sydney, Melbourne and Brisbane. And, thanks to the resources boom, Perth is a new battlefield.
The supply-demand dynamics are simple enough. More seats and softening demand equals fare cutting. By how much? This is a question Joyce won't answer.
Clifford says the board is right behind Joyce and his domestic strategy, noting that the war was started by Virgin.
This is certainly true in one sense. Until former Qantas mainline boss John Borghetti defected to Virgin two years ago, these two airlines generally operated in a fairly cosy duopoly.
Borghetti's war strategy did not involve taking market share from the broader domestic market but he has made a massive pitch for the corporate customers.
He told Weekend Business that Virgin's market share had remained relatively stable and that the number of aircraft has not risen, although some of the newer replacement planes have more seats.
''The facts are that our market share is still only 30 per cent, so what's their [Qantas'] beef?''
While Virgin's yield is still in double-digit growth, Joyce has warned that Qantas's are falling.
Harbison estimates Qantas yields are down 5 per cent across the board in six weeks. ''How long can they sustain the pain?'' In Joyce's mind, there needs to be only one answer: longer than Virgin can.
The Qantas boss explains that protecting its share of the business market is all important, and that in order to do this his airline has to maintain and protect that frequency and network advantage.
There are suggestions this air war could catch the eye of the competition regulator.
The Australian Competition and Consumer Commission chairman, Rod Sims, told Weekend Business yesterday that certain pricing behaviour does attract his attention. But ''at this stage, it seems to be no more than robust competitive behaviour'', adding he will be keeping an eye on it.
In the public relations war, the focus has been on customer satisfaction - which, according to the latest Roy Morgan poll, Virgin seems to be winning.
But it seems like everyone must love airlines.
Joyce said last week that Qantas's customer satisfaction numbers were the highest they had been in the company's history. He also likes to highlight the airline's safety.
But what about the brand? ''The brand has returned to pre-dispute/fleet grounding levels after only six months,'' Joyce says.
This is a classic battle that while being played out will have a clear winner - the flying public - and a clear loser - the shareholders.
Structural changes are no longer a choice because of changing routes and losses by the international brand, writes Elizabeth Knight.
It's all the chatter in corporate marketing circles.
When was the last time anyone saw those angelic children standing on the precipice of an outback gorge, inspiring us to support our national aviation carrier?
For years the Qantas trademark, Peter Allen's stirring parochial song I Still Call Australia Home is set to be dropped. Apparently Qantas is turning its focus to a more contemporary feel.
It's emerged as a metaphor for the future of the airline, leaving aviation watchers wondering if a new campaign will contain a more international flavour - and some Middle Eastern inspiration, given speculation over the need for Qantas to join forces with a major competitor.
Aviation watchers are waiting for the announcement that Qantas will tie up with Dubai-based Emirates as the first and most pivotal in several international collaborations that the flying kangaroo will need to embrace in order to survive in the new world of commercial aviation.
The task is both large and urgent.
Qantas ... its share price plunged more than 30 per cent this week.
This week, the airline's boss, Alan Joyce, delivered the staggering news that the airline's international division would lose $450 million this year and the Qantas group would deliver a post-tax loss - a first since it was privatised by the government.
Its share price plunged more than 30 per cent this week and there were suggestions that at least one institutional shareholder had been sounded out about the possibility of a rights issue.
The chairman of Qantas, Leigh Clifford, says a balance sheet-bolstering capital issue is not being contemplated. But he says asset sales are on the agenda.
John Borghetti ... chief executive of Virgin Australia. Photo: Glenn Hunt
Qantas shares slumped below $1 for the first time yesterday, closing at 97¢, as ratings agency Standard & Poor's put the company on a credit watch.
The flying kangaroo is on the cusp of some major changes. It is no longer a choice - it's a matter of survival.
The size of the task can be exemplified by this statistic: its mainline Qantas international business accounts for only 17 per cent of Australia's inbound and outbound market. About 30 years ago, it was about 50 per cent.
And here is another alarming statistic: over the past six months, about 25 per cent of air traffic to Europe has moved from using an Asian stopover to a Middle East stopover.
The route matrix is rapidly changing on international destinations but Qantas retains major crucial partners from another era.
Qantas mainline is devoid of Middle Eastern partners and is light on Asian tie-ups. Its most significant commercial family member is still its old colonial stalwart, British Airways.
When Joyce made his announcement this week, investors had been bracing themselves for a poor result. This shocked even the pessimists.
Not surprisingly, it raised immediate questions around Joyce's tenure and strategy.
Clifford this week went into bat for the 45-year-old Irishman he installed in the top job.
''I have heard rumblings that 'Leigh and Alan have been fighting' … but I can tell you we have absolute confidence in him. This isn't about having total confidence in the football coach. He is extremely highly regarded in terms of intellect and strength,'' Clifford told Weekend Business.
The company was quick to lay the blame for this atrocious performance at the feet of the European economic crisis, the rising fuel bill and the cost of the industrial relations-led grounding of the fleet last year.
But one-off events and the European crisis are far from being the full story. The fact is that the international division of Qantas has been struggling for years. Last year it lost $218 million without any drag from groundings or the European malaise.
Qantas has structural issues that a poor external environment exposes. This week's announcement highlighted the extent to which Qantas's outdated model was in need of a major overhaul.
Clifford doesn't dispute this. ''In three years, this business won't be the same as it is now. Traditional solutions aren't sufficient and we can't say that serendipity will fix it,'' he says.
He is not expecting investors to tolerate this for too long.
''Whether the international brand is losing [$300 million, $400 million] or $500 million - we can't have that degree of bleed from the business,'' he says. ''Shareholders say to me that the last thing they want is for us to buy planes now that lose money.''
Not since Paul Keating's government embraced a major opening of the skies policy has Qantas been a protected species. The industry has been gradually globalised over the past 20 years and Qantas has had its market share exposed and picked at by overseas carriers.
The Middle Eastern carrier Etihad is a classic example of a new breed of government-owned (and fuel-subsidised) airline that is making inroads into the Australian market. Boasting a new fleet of planes, cheaper airfares plus a strategic tie up with Virgin, Etihad is aggressively targeting the Australian flying public.
For consumers, the entry of new carriers into Australia has been a bonus. It brings lower airfares and loads of choice. But it raises the question of whether Qantas can survive as an international carrier.
The federal government doesn't want to talk about it. As far as the minister responsible for aviation, Anthony Albanese, is concerned, his spokesman told Weekend Business it was not the government's job to get involved in the commercial operations of the airlines nor to comment on profits when they rise or fall.
In theory, he is right. It is not government's job to protect the commercial interests of Qantas - although there are many other industries that governments have helped in the face of structural issues.
Not surprisingly, not all agree with this hands-off approach. A large investor, who did not wish to be named, says the government can't have it both ways.
He argues the government's industrial relations system increases Qantas's operating costs relative to its competitors. At the same time, the government is allowing in foreign carriers with lower labour costs but offering the airline no protection.
Regardless, successive Australian governments since Keating's have merely been walking in lockstep with international aviation regulators that have been engaged in a liberalisation process that has involved allowing more overseas entrants into previously protected markets.
Qantas has been afforded the same chance to enter new international routes.
Still, no government would want to preside over the demise of a national carrier - be it for reasons of international stature or security. There would be a public outcry.
To date, the only concession the government is prepared to offer is to relax some of Qantas's onerous legislated foreign ownership provisions - but these have not been supported by the opposition nor the Greens.
Former Qantas boss Geoff Dixon, who has been a loud critic of allowing foreign carriers to dump capacity, makes the point: ''If Qantas can find the right partners, it will take a level of maturity in some areas of Canberra that hasn't been there in the past.''
Despite the difficulties, Qantas - and other legacy carriers around the world, which are competing in the new globalised airline industry - needs to adapt.
According to Peter Harbison, from the Centre for Asia Pacific Aviation, Qantas (or, more particularly, Australia) sits at the end of the world as a destination. The global aviation market is far easier for airlines that are geographic hubs. As he so neatly says: ''Qantas is at the end of a long piece of rope''.
He believes Qantas cannot survive in its current form - in this state, ''there is no term future for it''.
There is certainly no financial future in investing the capital needed in aircraft to fly to a myriad of destinations.
The answer is to develop a virtual network - one in which strategic global partnerships are formed using the bilateral rights of partners that allow customers to mix and match seamlessly and travel to numerous destinations.
Harbison agrees with others in the industry, including Joyce, that alliances will increasingly become the way of the future.
Call it ''other people's money'' or ''other people's aircraft''.
Virgin Australia's international model is grounded on this strategy. Being a relatively new and significantly smaller operation, it has infiltrated the international market using a capital-lite model. It offers customers services to Europe through its Etihad tie up, across the Tasman in partnership with Air New Zealand, to the US with a complimentary relationship with Delta and, in the Asian region, Singapore Airlines forms part of the network family.
The issue for Qantas, Harbison says, is that there are ''not many dance partners left''.
And rumours abound that one of Qantas's more profitable partnerships with South African Airways may be lost next year and Virgin might take the opportunity to tap Qantas on the shoulder and embrace the South Africans.
Qantas clearly doesn't relish the thought of being the wallflower at the international airline hoedown.
Last year it announced, as part of its international division's revival strategy, the establishment of an intra-Asian premium airline. But investors didn't like the idea of Qantas risking too much capital and its would-be dance partner, Malaysia Airlines, was weighed down by its own financial problems. The premium Asian airline idea was dumped but the Jetstar start-up in Japan was pursued.
A link with Emirates makes sense. But as one industry expert told Weekend Business, it makes sense in theory but the devil is in the detail. He says he was aware Qantas ''had people up there in Dubai'' but queries whether the two groups could strike a deal.
''Emirates would like to have a code share with Qantas but that wouldn't work for Qantas,'' the expert says.
A code share would risk haemorrhaging Qantas customers to Emirates. In his view, a tie up would only work for Qantas if it was a profit share - ''a joint venture without equity''.
Harbison takes the view an alliance between the two airlines offers benefits for Emirates, which would be able to feed traffic into Qantas's domestic operations.
In the meantime, Joyce is busy closing unprofitable routes and postponing the delivery of the highly sought-after A380 and Dreamliner planes to protect valuable capital.
Qantas's war with the pilots and the licensed engineers continues in the background, as both groups are at various stages of arbitration.
It is all part of Joyce's grand plan to first move the international business into the black and beyond to make enough money to meet what in financial jargon is called ''cost of capital''.
The division's performance this week illustrates there is a long way to go. At this point, Qantas International is a drag on the wider company's performance. But closing it down is not an option. Joyce told Weekend Business that having an international premium airline was integral to running a successful premium domestic airline and a profitable (and highly valuable) frequent-flyer division.
In doing so, Joyce has probably nailed the real sleeper in the airline industry - the domestic airline and its ability to deliver robust earnings in the face of its new competitive threat from a revitalised and hungry Virgin Australia.
For Qantas, it is all about the line in the sand - the 65 per cent market share that successive managements have defined as the point beneath which it is cannot fall.
For Virgin, the game is breaking into the high yielding and lucrative domestic business market. But make no mistake - this new battleground will get bloody.
Dixon says: ''A [fair] bit of the action is going to be in the domestic market.''
Joyce is upfront about the fact that Qantas is prepared to sustain financial wounds (read profits) to win the war for the corporate customer. In airline speak, the most commonly used measure of profit performance is yields, and Qantas is prepared to sacrifice them in order to protect its 85 per cent hold on the premium corporate market.
The financial and public relations war has become so intense that newspaper column inches are being devoted to carriers winning individual corporate contracts. The latest of these involved Joyce travelling to the outer reaches of the West Australian Pilbara to publicise being awarded a fly-in, fly-out contract by Andrew Forrest's Fortescue.
Putting the public relations aside, the fight for the premium end of the market is a serious commercial issue and one that could well have a larger long-term impact on the profitability of domestic carriers than their international performance.
Qantas has increased capacity on the domestic market by more than 10 per cent over the past three months and this is intensely focused on the golden triangle of Sydney, Melbourne and Brisbane. And, thanks to the resources boom, Perth is a new battlefield.
The supply-demand dynamics are simple enough. More seats and softening demand equals fare cutting. By how much? This is a question Joyce won't answer.
Clifford says the board is right behind Joyce and his domestic strategy, noting that the war was started by Virgin.
This is certainly true in one sense. Until former Qantas mainline boss John Borghetti defected to Virgin two years ago, these two airlines generally operated in a fairly cosy duopoly.
Borghetti's war strategy did not involve taking market share from the broader domestic market but he has made a massive pitch for the corporate customers.
He told Weekend Business that Virgin's market share had remained relatively stable and that the number of aircraft has not risen, although some of the newer replacement planes have more seats.
''The facts are that our market share is still only 30 per cent, so what's their [Qantas'] beef?''
While Virgin's yield is still in double-digit growth, Joyce has warned that Qantas's are falling.
Harbison estimates Qantas yields are down 5 per cent across the board in six weeks. ''How long can they sustain the pain?'' In Joyce's mind, there needs to be only one answer: longer than Virgin can.
The Qantas boss explains that protecting its share of the business market is all important, and that in order to do this his airline has to maintain and protect that frequency and network advantage.
There are suggestions this air war could catch the eye of the competition regulator.
The Australian Competition and Consumer Commission chairman, Rod Sims, told Weekend Business yesterday that certain pricing behaviour does attract his attention. But ''at this stage, it seems to be no more than robust competitive behaviour'', adding he will be keeping an eye on it.
In the public relations war, the focus has been on customer satisfaction - which, according to the latest Roy Morgan poll, Virgin seems to be winning.
But it seems like everyone must love airlines.
Joyce said last week that Qantas's customer satisfaction numbers were the highest they had been in the company's history. He also likes to highlight the airline's safety.
But what about the brand? ''The brand has returned to pre-dispute/fleet grounding levels after only six months,'' Joyce says.
This is a classic battle that while being played out will have a clear winner - the flying public - and a clear loser - the shareholders.
Last edited by Fonz121; 8th Jun 2012 at 15:46.
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Issues
A lengthy piece that skirts around the issues.The management of Qantas have squandered opportunities on many fronts:aircraft type,route structure and the ongoing war with its employees have all depleted the Qantas stamina.If you look at the board and management you will find a sparcity of airline expertise.Lyell Strambi is the only one with any real skillset for running an airline.Joyce is a glorified penciller who has come from a brief stint running a low cost carrier.
The one true Qantas man who had a clue was let go with a number of other knowledgeable execs who now work for Virgin.In 18 months Borghetti has ilustrated perfectly how an airline should be run.Qantas management have however run around in circles of ever decreasing radius blaming every but themselves.
Grounding the airline was simply the most contemptible act ever perpetrated on the travelling public.It cost the airline $100 mil when it could least afford it and destroyed what was left of an iconic brand.Have contempt for your customer base and it will desert you.It has alpha male dinosaur Clifford written all over it
The one true Qantas man who had a clue was let go with a number of other knowledgeable execs who now work for Virgin.In 18 months Borghetti has ilustrated perfectly how an airline should be run.Qantas management have however run around in circles of ever decreasing radius blaming every but themselves.
Grounding the airline was simply the most contemptible act ever perpetrated on the travelling public.It cost the airline $100 mil when it could least afford it and destroyed what was left of an iconic brand.Have contempt for your customer base and it will desert you.It has alpha male dinosaur Clifford written all over it
Last edited by Race Bannon; 8th Jun 2012 at 21:19.
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Race you seem to be channeling Ben Sandilands.
Qantas reporting gradually approaches the real issue | Plane Talking
I'd agree that the punters have rushed off much faster than the papers have on this.
Qantas reporting gradually approaches the real issue | Plane Talking
I'd agree that the punters have rushed off much faster than the papers have on this.
Today’s continued apologetic treatment of Qantas in the mainstream media leaves Fairfax and News some distance behind its long term investors, who have bailed out.
But gradually, the emphasis is shifting. It may not be long before the issues reported are not about the obvious problems that affect Qantas, and for that matter, many airlines, all of whom have fuel costs and eurozone jitters in common, but the dismal performance of its managers in dealing with them.
Qantas isn’t just challenged by geography, or the competitors that it continually slanders, but bad management.
Qantas group CEO Alan Joyce, has a habit of making big attention grabbing statements or decisions, like suddenly waking up and deciding to break an industrial situation of his own making by stranding 100,000 people all around the world, or experiencing death threats that the police found incapable of further action, or announcing ludicrous luxury Asian airline plans he couldn’t deliver and which Asian authorities first learned about from Australian reports.
These were with the benefit of hindsight, nothing more than headline generating nonsense that took place while the financial state of the carrier gushed down the gurgler.
Of course Joyce is right about what the problems are, apart from his critical inability to engage his staff as part of the solution rather than the problem. But if he knows the answers, he certainly hasn’t delivered on implementing any of them, and talking about five year recovery plans for the international Qantas business when it has shrunk below 18% of the market on his watch and according to his belated profit guidance, doubled its losses in a year while retreating from the market is enough to frighten off attentive shareholders.
By any bankable metric, Joyce as CEO and Leigh Clifford as chairman of the board have been damaging, costly failures.
The on going disaster with market share and the mismanagement of the Jetstar/Qantas relationship that drives loyal customers into the welcoming arms of Virgin Australia is bleeding the brand and loyalty at the domestic level, where Qantas says it is making its money out of flying.
Threatening to have a capacity and fare war with Virgin Australia is one of the signs of desperation that would have scared the heck out of investors with any grasp of what such threats have lead to in the US and Europe. Qantas no longer has the ability to carry out its threat to price or dilute Virgin Australia into oblivion because it has been financially weakened by management failures in strategy and competency.
It can’t even afford new jets on the necessary scale, or of the necessary design for that matter, to meet what is left of demand from its loyal following on international routes, leaving the high volume ports to major A380 operators Emirates and Singapore Airlines, and trying to fill in elsewhere with a museum fleet strategy of refurbishments of 747s that burn punitive amounts of fuel and and maintenance dollars compared to the 777s, A330s and A380s that each cover very specific payload/range combinations with unbeatable competency in their class.
Qantas made some very astute decisions in recent years that were let down by second rate implementation. Jetstar was a very clever move, as was morphing it into a trans border low cost franchise in Asia. But the returns never quite matched the rhetoric, and turning it into some sort of joke where it offers fares that are often higher than those available on Qantas for similarly timed departures on key interstate routes like Sydney-Melbourne is not a smart way of competing for profitable corporate passengers against single branded Virgin Australia.
To work, Jetstar has to be less than $100 each way on that route, not over $200 at times when the writer and his family found Qantas for $117 or Virgin Australia for $195.
On any close reading of ATSB reports of Jetstar incidents investigated by the safety body there is something seriously wrong with its approach to flying standards. When Joyce was CEO of Jetstar the airline inexplicably decided to change the approved flight manual for A320s in relation to missed approaches so that pilots didn’t immediately check the throttle settings in a go-around or missed approach situation, an act of operational madness that nearly destroyed one of its flights making a missed approach to Melbourne Airport in July 2007.
It was as monumentally stupid and dangerous as the Qantas decision way back in the late 90s not to use full reverse thrust on landings on 747s in order to save $1 million a year on brakes and fuel, which BASI, the previous incarnation of the ATSB, found was at the core of the crash landing of a Qantas 747-400 at Bangkok in 1999.
The focus of the board and management at Qantas seems at various times in recent years to have been more about selling out at the highest possible price, or having prolonged and damaging labor wars that, whatever the merits of labor reforms, have alienated the very people, the pilots, engineers and support staff, whose standards and professionalism are the basis for the Qantas brand value. If you lose your talented people you will also lose your customers, as the loss of John Borghetti to Virgin Australia, and those he took with him, amply shows.
These are all some of the matters that the media has, in general, avoided getting into.
But not the investors, who have bolted.
But gradually, the emphasis is shifting. It may not be long before the issues reported are not about the obvious problems that affect Qantas, and for that matter, many airlines, all of whom have fuel costs and eurozone jitters in common, but the dismal performance of its managers in dealing with them.
Qantas isn’t just challenged by geography, or the competitors that it continually slanders, but bad management.
Qantas group CEO Alan Joyce, has a habit of making big attention grabbing statements or decisions, like suddenly waking up and deciding to break an industrial situation of his own making by stranding 100,000 people all around the world, or experiencing death threats that the police found incapable of further action, or announcing ludicrous luxury Asian airline plans he couldn’t deliver and which Asian authorities first learned about from Australian reports.
These were with the benefit of hindsight, nothing more than headline generating nonsense that took place while the financial state of the carrier gushed down the gurgler.
Of course Joyce is right about what the problems are, apart from his critical inability to engage his staff as part of the solution rather than the problem. But if he knows the answers, he certainly hasn’t delivered on implementing any of them, and talking about five year recovery plans for the international Qantas business when it has shrunk below 18% of the market on his watch and according to his belated profit guidance, doubled its losses in a year while retreating from the market is enough to frighten off attentive shareholders.
By any bankable metric, Joyce as CEO and Leigh Clifford as chairman of the board have been damaging, costly failures.
The on going disaster with market share and the mismanagement of the Jetstar/Qantas relationship that drives loyal customers into the welcoming arms of Virgin Australia is bleeding the brand and loyalty at the domestic level, where Qantas says it is making its money out of flying.
Threatening to have a capacity and fare war with Virgin Australia is one of the signs of desperation that would have scared the heck out of investors with any grasp of what such threats have lead to in the US and Europe. Qantas no longer has the ability to carry out its threat to price or dilute Virgin Australia into oblivion because it has been financially weakened by management failures in strategy and competency.
It can’t even afford new jets on the necessary scale, or of the necessary design for that matter, to meet what is left of demand from its loyal following on international routes, leaving the high volume ports to major A380 operators Emirates and Singapore Airlines, and trying to fill in elsewhere with a museum fleet strategy of refurbishments of 747s that burn punitive amounts of fuel and and maintenance dollars compared to the 777s, A330s and A380s that each cover very specific payload/range combinations with unbeatable competency in their class.
Qantas made some very astute decisions in recent years that were let down by second rate implementation. Jetstar was a very clever move, as was morphing it into a trans border low cost franchise in Asia. But the returns never quite matched the rhetoric, and turning it into some sort of joke where it offers fares that are often higher than those available on Qantas for similarly timed departures on key interstate routes like Sydney-Melbourne is not a smart way of competing for profitable corporate passengers against single branded Virgin Australia.
To work, Jetstar has to be less than $100 each way on that route, not over $200 at times when the writer and his family found Qantas for $117 or Virgin Australia for $195.
On any close reading of ATSB reports of Jetstar incidents investigated by the safety body there is something seriously wrong with its approach to flying standards. When Joyce was CEO of Jetstar the airline inexplicably decided to change the approved flight manual for A320s in relation to missed approaches so that pilots didn’t immediately check the throttle settings in a go-around or missed approach situation, an act of operational madness that nearly destroyed one of its flights making a missed approach to Melbourne Airport in July 2007.
It was as monumentally stupid and dangerous as the Qantas decision way back in the late 90s not to use full reverse thrust on landings on 747s in order to save $1 million a year on brakes and fuel, which BASI, the previous incarnation of the ATSB, found was at the core of the crash landing of a Qantas 747-400 at Bangkok in 1999.
The focus of the board and management at Qantas seems at various times in recent years to have been more about selling out at the highest possible price, or having prolonged and damaging labor wars that, whatever the merits of labor reforms, have alienated the very people, the pilots, engineers and support staff, whose standards and professionalism are the basis for the Qantas brand value. If you lose your talented people you will also lose your customers, as the loss of John Borghetti to Virgin Australia, and those he took with him, amply shows.
These are all some of the matters that the media has, in general, avoided getting into.
But not the investors, who have bolted.
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They plan to get rid of one of the most recognizable and successful pieces of marketing ever created....brilliant idea. Another piece of Joyce inspired incompetency. Surely the shareholders have had enough, how much loss can they tolerate before they boot the hopeless lot.
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Why does mainstream media protect Joyce so defiantly? Is it corporate bribery?
Or get hold of the Paul Barry's book "The rise and rise of Kerry Packer" if you would like some insight as to how these things work.
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Writing on the wall
Well it looks like its time for "Change Management"!
Time for the Board and the CEO to leave, they obviously have mismanaged Qantas the airline & undermined Qantas International to the point of extinction...one of the main reasons why Borgetti resigned as he didn't agree with the rubbery way the International Operation was wearing the Costs of Jetstar Operations, fuel, leasing costs, Maintenance etc...
The days are numbered for Joyce and the Board, the share price reflects that, the shareholders and stakeholders will only tolerate so much...
As for buying the A380, an aircraft with similar fuel burn as a B744 and a costs maintenance base of almost triple, why would you....
The B777 would have been a smarter move to replace the B744, with the B744 for long distance non ETOPS routes..
The justification of the A380 just isnt there, except keeping up with the "Jones"..
The Board and Management have to accept responsibility of the continual losses of Qantas International and heads should role!
I cant see shareholders waiting another 5 years for Qantas to "Turn Around", not with no dividend for the past 3 years....
Time for the Board and the CEO to leave, they obviously have mismanaged Qantas the airline & undermined Qantas International to the point of extinction...one of the main reasons why Borgetti resigned as he didn't agree with the rubbery way the International Operation was wearing the Costs of Jetstar Operations, fuel, leasing costs, Maintenance etc...
The days are numbered for Joyce and the Board, the share price reflects that, the shareholders and stakeholders will only tolerate so much...
As for buying the A380, an aircraft with similar fuel burn as a B744 and a costs maintenance base of almost triple, why would you....
The B777 would have been a smarter move to replace the B744, with the B744 for long distance non ETOPS routes..
The justification of the A380 just isnt there, except keeping up with the "Jones"..
The Board and Management have to accept responsibility of the continual losses of Qantas International and heads should role!
I cant see shareholders waiting another 5 years for Qantas to "Turn Around", not with no dividend for the past 3 years....