AUGUST 24th - QANTAS
Wasn't tomorrow's big news given last week?
QF Management (taken with a grain of salt) advised employees that the AUG 24th announcements were brought forward as the plans approved by the board needed to be shared with the market immediately.
QF Management (taken with a grain of salt) advised employees that the AUG 24th announcements were brought forward as the plans approved by the board needed to be shared with the market immediately.
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Qantas chiefs face no-confidence vote as shares go into tailspin
And quoting Airline Hub Buzz on FB
And quoting Airline Hub Buzz on FB
BREAKING NEWS: The QF 'No Confidence' Vote makes it on the agenda. Over 1000 QF shareholders have supported the no confidence motion in the carrier’s board meaning resolutions against directors incl CEO Alan Joyce and Leigh Clifford will be circulated in the lead-up to the QF AGM in October. Well done! That's fantastic stuff!
It appears 583,000 shares shares were awarded to Alan Joyce on 12 August at no cost from the trustee of the ESP Trust. In view of the disasterous QF performance it is difficult to see how Alan would be entitled to $875,00 approx. worth of shares.
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Well I got an email from EK pointing me to this today - Discover a new way to travel the world | Special Offers | Destinations & Offers | Emirates Australia seems that they are going to leverage Qantas's new strategy for all it's worth!
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From Plane Talking blog
A preliminary forensic financial examination of the Qantas group commissioned by the Qantas pilots union casts serious doubts on claims by the company’s CEO Alan Joyce that its international division is losing $200 million a year.
In fact the examination by PPB Advisory found that there is no defined international division for accounting purposes in the Qantas annual reports up to last year’s, although it notes that Qantas may properly define such a segment in the results for the year to June 30 which will be released tomorrow morning.
Among the key early problems PPB Advisory identifies is that although the Qantas frequent flyer program generated EBIT or earnings before interest of tax as a percentage of revenue of 30%, this measure of profitability for the combined international, domestic and regional operations under the full service brand produced only a 0.6% return and Jetstar’s operations produced a 6% return.
It says “the frequent flyer segment is clearly dependent on the Qantas segment for revenue (i.e. the Qantas network) yet profit is not allocated there.
“In fact, the Qantas segment wears the liability for the frequent flyer segment, but doesn’t reap any of the rewards. At least not so long as Frequent Flyer is expanding.”
The preliminary report also says there is a “huge question mark over the mysterious corporate/unallocated segment, which reported a loss of $123 million in the Qantas Group accounts to June 30 last year.” It doesn’t show how much, if any, of that loss was put down to the undefined* ‘International Division’ to make up the $200 million loss figure frequently quoted by group CEO Alan Joyce.
PPB Advisory provides strategic advice and forensic accounting services to companies, government bodies, and investment institutions.
Although its examination of the Qantas financials, based on ASX filings and other publicly available information is incomplete, PPB Advisory draws attention to the 100% owned Jetconnect subsidiary based in Auckland, and says “Jetconnect is nothing but a labour hire company.”
Jetconnect is paid 12.5%*extra*for costs relating to the maintenance and operation of Qantas painted NZ registered 737s operating trans Tasman services as well as 10.4% extra*for costs*relating to personnel.
PPB Advisory says that if Jetconnect, which flies NZ registered jets identified misleadingly as Qantas ‘The Spirit of Australia’ incurs no other overheads these mark ups represent a profit before tax that is significantly higher than the 1.3% earnings of the Qantas group as a whole in the year to June 30, 2010.
It also held $NZ 140 million in cash, 3% of the groups total cash yet only 0.5% of its assets, on which it was earning only 3%, much less than was available to the group.
The preliminary report identifies a number of other factual issues which would support the conclusion that Qantas is misrepresenting the relative performances of Jetstar and the full service international brand to the detriment of the long haul carrier and the pilots and engineers who are in an industrial dispute with the company.
A preliminary forensic financial examination of the Qantas group commissioned by the Qantas pilots union casts serious doubts on claims by the company’s CEO Alan Joyce that its international division is losing $200 million a year.
In fact the examination by PPB Advisory found that there is no defined international division for accounting purposes in the Qantas annual reports up to last year’s, although it notes that Qantas may properly define such a segment in the results for the year to June 30 which will be released tomorrow morning.
Among the key early problems PPB Advisory identifies is that although the Qantas frequent flyer program generated EBIT or earnings before interest of tax as a percentage of revenue of 30%, this measure of profitability for the combined international, domestic and regional operations under the full service brand produced only a 0.6% return and Jetstar’s operations produced a 6% return.
It says “the frequent flyer segment is clearly dependent on the Qantas segment for revenue (i.e. the Qantas network) yet profit is not allocated there.
“In fact, the Qantas segment wears the liability for the frequent flyer segment, but doesn’t reap any of the rewards. At least not so long as Frequent Flyer is expanding.”
The preliminary report also says there is a “huge question mark over the mysterious corporate/unallocated segment, which reported a loss of $123 million in the Qantas Group accounts to June 30 last year.” It doesn’t show how much, if any, of that loss was put down to the undefined* ‘International Division’ to make up the $200 million loss figure frequently quoted by group CEO Alan Joyce.
PPB Advisory provides strategic advice and forensic accounting services to companies, government bodies, and investment institutions.
Although its examination of the Qantas financials, based on ASX filings and other publicly available information is incomplete, PPB Advisory draws attention to the 100% owned Jetconnect subsidiary based in Auckland, and says “Jetconnect is nothing but a labour hire company.”
Jetconnect is paid 12.5%*extra*for costs relating to the maintenance and operation of Qantas painted NZ registered 737s operating trans Tasman services as well as 10.4% extra*for costs*relating to personnel.
PPB Advisory says that if Jetconnect, which flies NZ registered jets identified misleadingly as Qantas ‘The Spirit of Australia’ incurs no other overheads these mark ups represent a profit before tax that is significantly higher than the 1.3% earnings of the Qantas group as a whole in the year to June 30, 2010.
It also held $NZ 140 million in cash, 3% of the groups total cash yet only 0.5% of its assets, on which it was earning only 3%, much less than was available to the group.
The preliminary report identifies a number of other factual issues which would support the conclusion that Qantas is misrepresenting the relative performances of Jetstar and the full service international brand to the detriment of the long haul carrier and the pilots and engineers who are in an industrial dispute with the company.
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Well done AIPA! Keeps getting better doesn't it. This Board & CEO are getting paid millions of dollars, whilst people are losing their jobs, & families are possibly losing their homes, due to their greed!
Over to you Prime Minister.
Over to you Prime Minister.
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I can't help thinking pprune.org had something to do with this news as well.
Well done AIPA and well done all on here, an amazing few months really.
LC & AJ sleep tight.
Well done AIPA and well done all on here, an amazing few months really.
LC & AJ sleep tight.
Though it is still a VERY long road, may I publicly thank:
Qf Engineers and Steve Purvinas
AIPA comm (particular mention Lurch and the 'other'(HKG) Steve)
Ben Sandilands
At least if we go down now, we go down with some real provable runs on the board. Strangely it means a lot to me that there is some real proof at last.
Qf Engineers and Steve Purvinas
AIPA comm (particular mention Lurch and the 'other'(HKG) Steve)
Ben Sandilands
At least if we go down now, we go down with some real provable runs on the board. Strangely it means a lot to me that there is some real proof at last.
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Absolute congratulations to all those involved for managing to get this high profile enough to have a segment on potentially & alleged dodgy accounting on the 7:30 Report with Leigh Sales. If you missed it, hopefully it will be online soon.
As an outsider, it seemed positive to you guys - well done.
As an outsider, it seemed positive to you guys - well done.
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It's all going to come out.
Xenophon attacks Qantas management
INDEPENDENT senator Nick Xenophon has launched a scathing attack on Qantas management, accusing it of fudging the books with Jetstar's hidden costs to justify gutting the flying kangaroo.
Speaking under parliamentary privilege, Senator Xenophon told the Senate tonight that Qantas management's claim that its international operations were unprofitable needed "forensic examination".
Last week Qantas Airways set a five-year target to return its struggling international operations to profitability, cutting some long-haul routes, deferring orders for Airbus A380 superjumbos, and confirming it was looking to set up a new full-service premium carrier in Asia.
As part of the restructure, Qantas will cut 1000 jobs, including pilots, cabin crew, management and engineering staff.
Senator Xenophon questioned whether Qantas was really losing money.
"Or is it actually profitable, but losing money on paper because it's carrying so many costs incurred by Jetstar?" he asked.
Start of sidebar. Skip to end of sidebar.
Related Coverage
End of sidebar. Return to start of sidebar.
He detailed a long list, provided by insider sources, "where costs should have been billed back to Jetstar but were paid for by Qantas.
"These are practices that Qantas and Jetstar management need to explain," he said.
"Jetstar's costs are magically becoming Qantas' costs."
Senator Xenophon alleged that when Jetstar took over the Cairns, Darwin and Singapore routes, replacing Qantas flights, a deal was struck requiring Qantas to provide Jetstar with $6 million a year in revenue.
He said in Melbourne, Jetstar did not pay for the use of gates and instead Qantas picked up the tab.
"Why does Qantas lease five checking counters in Sydney Terminal Two, only to let Jetstar use one for free?" he said.
Senator Xenophon said when flights were cancelled and people needed to be rebooked, Qantas did the heavy lifting.
"Jetstar never pays Qantas for the cost of rebooked passengers, but Jetstar gets to keep the revenue of the original bookings."
He said this was worth millions of dollars a year.
Senator Xenophon said Jetstar didn't have to pay for the use of replacement aircraft provided by Qantas when its own planes broke down.
"We've been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas International is losing money," he told the Senate.
"But given the insider information I've just detailed I would argue those claims need to be reassessed.
"It would be foolish to take management's word Qantas International is losing money."
Senator Xenophon speculated that Qantas was using "a strategy of private equity selloff by stealth" to avoid breaching the Qantas Sale Act.
"That doesn't stop you moving assets out of Qantas and into an airline you own, but isn't controlled by the Act."
He said Qantas group would end up with a whole lot of subsidiaries it could base overseas, using poorly paid foreign crews and engineering and safety standards that do not match Australian standards.
"In time, if the Qantas group wants to make a buck it can flog these subsidiaries off for a tidy profit," he said.
- From: AAP
- August 23, 2011 10:44PM
INDEPENDENT senator Nick Xenophon has launched a scathing attack on Qantas management, accusing it of fudging the books with Jetstar's hidden costs to justify gutting the flying kangaroo.
Speaking under parliamentary privilege, Senator Xenophon told the Senate tonight that Qantas management's claim that its international operations were unprofitable needed "forensic examination".
Last week Qantas Airways set a five-year target to return its struggling international operations to profitability, cutting some long-haul routes, deferring orders for Airbus A380 superjumbos, and confirming it was looking to set up a new full-service premium carrier in Asia.
As part of the restructure, Qantas will cut 1000 jobs, including pilots, cabin crew, management and engineering staff.
Senator Xenophon questioned whether Qantas was really losing money.
"Or is it actually profitable, but losing money on paper because it's carrying so many costs incurred by Jetstar?" he asked.
Start of sidebar. Skip to end of sidebar.
Related Coverage
- Qantas attacked by Lounge chair critics The Daily Telegraph, 5 days ago
- Qantas offers scrutiny of books The Australian, 5 days ago
- Qantas unions ramp up jobs fight Courier Mail, 6 days ago
- Labor under pressure to stop Qantas cuts Perth Now, 6 days ago
- Unions fear Qantas will cut and run The Daily Telegraph, 6 days ago
End of sidebar. Return to start of sidebar.
He detailed a long list, provided by insider sources, "where costs should have been billed back to Jetstar but were paid for by Qantas.
"These are practices that Qantas and Jetstar management need to explain," he said.
"Jetstar's costs are magically becoming Qantas' costs."
Senator Xenophon alleged that when Jetstar took over the Cairns, Darwin and Singapore routes, replacing Qantas flights, a deal was struck requiring Qantas to provide Jetstar with $6 million a year in revenue.
He said in Melbourne, Jetstar did not pay for the use of gates and instead Qantas picked up the tab.
"Why does Qantas lease five checking counters in Sydney Terminal Two, only to let Jetstar use one for free?" he said.
Senator Xenophon said when flights were cancelled and people needed to be rebooked, Qantas did the heavy lifting.
"Jetstar never pays Qantas for the cost of rebooked passengers, but Jetstar gets to keep the revenue of the original bookings."
He said this was worth millions of dollars a year.
Senator Xenophon said Jetstar didn't have to pay for the use of replacement aircraft provided by Qantas when its own planes broke down.
"We've been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas International is losing money," he told the Senate.
"But given the insider information I've just detailed I would argue those claims need to be reassessed.
"It would be foolish to take management's word Qantas International is losing money."
Senator Xenophon speculated that Qantas was using "a strategy of private equity selloff by stealth" to avoid breaching the Qantas Sale Act.
"That doesn't stop you moving assets out of Qantas and into an airline you own, but isn't controlled by the Act."
He said Qantas group would end up with a whole lot of subsidiaries it could base overseas, using poorly paid foreign crews and engineering and safety standards that do not match Australian standards.
"In time, if the Qantas group wants to make a buck it can flog these subsidiaries off for a tidy profit," he said.
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It's all going to come out.
As a side point, Senator Xenaphons call for QF to open the books needs to be pushed hard and supported by all. If, hypotheticaly a take-over occurs this morning and there is even the remotest whiff of Darth in it then some very very serious questions need to be raised.
I am assuming that an organisation wouldn't be so brash as to drive down a companies value so that some former mates can stroll back in and scoop a small fortune ?? I am not saying that is the case, but it has been rumoured.
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from
Qantas slams report questioning losses | The Australian
"you seem committed to providing incorrect, misleading and ill-informed comments to the press."
but it is OK when QF spin does it?
Qantas slams report questioning losses | The Australian
But in a letter to AIPA, Qantas chief financial officer Gareth Evans expressed disappointment that the union was continuing to pursue its claims after a briefing on the airline's finances last week.
Mr Evans said management had a legal, commercial and moral obligation to report results accurately and not to misrepresent its performance.
"These reports are audited by independent auditors," he said. "In the face of this open and detailed approach, you seem committed to providing incorrect, misleading and ill-informed comments to the press."
Mr Evans said management had a legal, commercial and moral obligation to report results accurately and not to misrepresent its performance.
"These reports are audited by independent auditors," he said. "In the face of this open and detailed approach, you seem committed to providing incorrect, misleading and ill-informed comments to the press."
but it is OK when QF spin does it?
Gareth Evans protests far too much!
Dear Gareth, no doubt you are perfectly correct and not only is everything above board and legal, I'm sure you have discharged your responsibilities to the letter; However:
Dear Gareth, you and I know perfectly well that the statutory accounts do not provide the whole truth, they are a limited set of truths that are required by Government to be disclosed. What matters is the management accounts which are a whole other set of books.
Furthermore, while the Auditors have no doubt performed a thorough and no doubt totally legal and praiseworthy audit of the groups accounts, you and I both know that the little audit teams, composed as they are of the cream of commerce/law graduates who are at best Two years out of University, wouldn't know a FADEC from a brake pack.
To put it another way, no matter how diligent those audit teams are, they do not have the expertise to even know what the right questions are to even ask in an airline setting, let alone have the experience to evaluate the answer.
To put that yet another way; do you really believe that a fresh faced commerce graduate is going to walk up to some Qantas middle manager and say:
"Sir, I note that on the Qantas finger Brisbane at Gate 25, Qantas Crews have been unable to dock when all other gates were taken. Gate 25 in some cases was not being used for several hours but the aircraft and passengers have waited, burning Jet fuel in the process until another bay was free. Why was this gate in the Qantas Brisbane finger not available for Qantas use? Are there any other Gates in Qantas fingers that Qantas weren’t able to regularly use"
or;
"Sir, I note that all Qantas groups aircraft are fitted with ACARS, who paid the bill for ACARS use and what cost was allocated to each segment of the Group? What amount was paid by or allocated to the Qantas International business?"
Qantas engineers serve carrier with Jetstar cost questions | Plane Talking
Lets face it Gareth, the average audit junior wouldn't know what an ACARS was if it bit her on the leg. You can tell them anything you like.
By way of explanation to Ppruners; Auditing is dead boring. The professional services firms hire hundreds of fresh faced commerce/law graduates to do this work each year, knowing that they will be bored out of their minds after about Three years and leave. There is thus no body of experience built up at the junior levels.
Every year we always got a fresh team foisted on us and as the youngest and least senior guy it was my job to "entertain" them. I answered their less than penetrating questions for a few hours, showed them the data they wanted to see, then took them for a hangar tour and then had them sat in the pilots seat of a B767 for a minute or Two. After that it was lunch and they departed all smiles until next year....never the wiser to our nefarious schemes
"These reports are audited by independent auditors," he said. "In the face of this open and detailed approach, you seem committed to providing incorrect, misleading and ill-informed comments to the press."
Dear Gareth, you and I know perfectly well that the statutory accounts do not provide the whole truth, they are a limited set of truths that are required by Government to be disclosed. What matters is the management accounts which are a whole other set of books.
Furthermore, while the Auditors have no doubt performed a thorough and no doubt totally legal and praiseworthy audit of the groups accounts, you and I both know that the little audit teams, composed as they are of the cream of commerce/law graduates who are at best Two years out of University, wouldn't know a FADEC from a brake pack.
To put it another way, no matter how diligent those audit teams are, they do not have the expertise to even know what the right questions are to even ask in an airline setting, let alone have the experience to evaluate the answer.
To put that yet another way; do you really believe that a fresh faced commerce graduate is going to walk up to some Qantas middle manager and say:
"Sir, I note that on the Qantas finger Brisbane at Gate 25, Qantas Crews have been unable to dock when all other gates were taken. Gate 25 in some cases was not being used for several hours but the aircraft and passengers have waited, burning Jet fuel in the process until another bay was free. Why was this gate in the Qantas Brisbane finger not available for Qantas use? Are there any other Gates in Qantas fingers that Qantas weren’t able to regularly use"
or;
"Sir, I note that all Qantas groups aircraft are fitted with ACARS, who paid the bill for ACARS use and what cost was allocated to each segment of the Group? What amount was paid by or allocated to the Qantas International business?"
Qantas engineers serve carrier with Jetstar cost questions | Plane Talking
Lets face it Gareth, the average audit junior wouldn't know what an ACARS was if it bit her on the leg. You can tell them anything you like.
By way of explanation to Ppruners; Auditing is dead boring. The professional services firms hire hundreds of fresh faced commerce/law graduates to do this work each year, knowing that they will be bored out of their minds after about Three years and leave. There is thus no body of experience built up at the junior levels.
Every year we always got a fresh team foisted on us and as the youngest and least senior guy it was my job to "entertain" them. I answered their less than penetrating questions for a few hours, showed them the data they wanted to see, then took them for a hangar tour and then had them sat in the pilots seat of a B767 for a minute or Two. After that it was lunch and they departed all smiles until next year....never the wiser to our nefarious schemes
Last edited by Sunfish; 23rd Aug 2011 at 23:14.