Qantas post August 24
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Qantas to make cuts to international services-ceo
SYDNEY, July 10 | Sat Jul 9, 2011 10:32pm EDT
SYDNEY, July 10 (Reuters) - Australia's Qantas Airways will make cuts to its loss-making international operations under a new business strategy to be announced next month, chief executive Alan Joyce said in an interview.
The new strategy, to be announced on Aug. 24, would include "an honest and fairly aggressive view on the performance of the international network and making cuts where we need to make them," Joyce told the Australian Broadcasting Corp (ABC).
Joyce also said he believed the Australian division of competitor Tiger Airways would operate again in Australia's domestic market despite its current grounding by safety regulators.
In an interview broadcast Sunday, Joyce said the current loss-making model of Qantas' international business was not sustainable over the long term. It has been supported, he said, by profitable domestic operations and the creation of the low-cost Qantas subsidiary, Jetstar.
The new business strategy, he said, would focus on "four pillars" of investment, partnerships, restructuring of the international network and exploiting the rapidly growing Asian air market.
Efforts to turn the international business around had been hampered by "some very outrageous demands" from unions, Joyce said. He also said Qantas did not intend to abandon its international operations, just make them profitable.
"The issue has been there for some time," Joyce told the ABC program Inside Business. "The international business has not been performing at the levels it needs to and over the years we've compensated by having a very strong domestic business, having a very strong frequent flying business, by the creation of Jetstar we've created a new business, and all of these businesses have helped subsidise the international operations.
"However, we don't believe that situation is sustainable going forward and we need to make significant changes to our international services as a consequence to the under-performance of the business today."
The Qantas chief said the grounding of Tiger Airways' Australian division had not had a significant impact on either Qantas or Jetstar. Tiger Airways only represented 5 percent of the Australian domestic market and Joyce denied either Qantas or Jetstar had increased prices in response.
However, Joyce said he believed the grounding was a significant blow to the Tiger Airways brand. Key stakeholder Singapore Airlines could not afford to take it out of the Australian domestic market altogether and would seek a way to get Tiger Airways operating there again, he said.
"I can't see an alternative for Tiger redeploying a lot of the aircraft into Asia at this stage and I think there's a big issue in Tiger's business model being successful if it only has Singapore as a base. They need to show that it can work in multiple areas," Joyce said.
"I think their success in Australia has been non-existent to date and I think they need to get the business back into operation here and for them to be perceived as a pan-Asian brand."
Tiger Airways Australia Pty Ltd was grounded by Australia's Civil Aviation Safety Authority on July 2, which cited concerns about safety. The company is a wholly-owned subsidiary of Singapore-based Tiger Airways Holdings Ltd , which is about one-third owned by Singapore Airlines.
SYDNEY, July 10 (Reuters) - Australia's Qantas Airways will make cuts to its loss-making international operations under a new business strategy to be announced next month, chief executive Alan Joyce said in an interview.
The new strategy, to be announced on Aug. 24, would include "an honest and fairly aggressive view on the performance of the international network and making cuts where we need to make them," Joyce told the Australian Broadcasting Corp (ABC).
Joyce also said he believed the Australian division of competitor Tiger Airways would operate again in Australia's domestic market despite its current grounding by safety regulators.
In an interview broadcast Sunday, Joyce said the current loss-making model of Qantas' international business was not sustainable over the long term. It has been supported, he said, by profitable domestic operations and the creation of the low-cost Qantas subsidiary, Jetstar.
The new business strategy, he said, would focus on "four pillars" of investment, partnerships, restructuring of the international network and exploiting the rapidly growing Asian air market.
Efforts to turn the international business around had been hampered by "some very outrageous demands" from unions, Joyce said. He also said Qantas did not intend to abandon its international operations, just make them profitable.
"The issue has been there for some time," Joyce told the ABC program Inside Business. "The international business has not been performing at the levels it needs to and over the years we've compensated by having a very strong domestic business, having a very strong frequent flying business, by the creation of Jetstar we've created a new business, and all of these businesses have helped subsidise the international operations.
"However, we don't believe that situation is sustainable going forward and we need to make significant changes to our international services as a consequence to the under-performance of the business today."
The Qantas chief said the grounding of Tiger Airways' Australian division had not had a significant impact on either Qantas or Jetstar. Tiger Airways only represented 5 percent of the Australian domestic market and Joyce denied either Qantas or Jetstar had increased prices in response.
However, Joyce said he believed the grounding was a significant blow to the Tiger Airways brand. Key stakeholder Singapore Airlines could not afford to take it out of the Australian domestic market altogether and would seek a way to get Tiger Airways operating there again, he said.
"I can't see an alternative for Tiger redeploying a lot of the aircraft into Asia at this stage and I think there's a big issue in Tiger's business model being successful if it only has Singapore as a base. They need to show that it can work in multiple areas," Joyce said.
"I think their success in Australia has been non-existent to date and I think they need to get the business back into operation here and for them to be perceived as a pan-Asian brand."
Tiger Airways Australia Pty Ltd was grounded by Australia's Civil Aviation Safety Authority on July 2, which cited concerns about safety. The company is a wholly-owned subsidiary of Singapore-based Tiger Airways Holdings Ltd , which is about one-third owned by Singapore Airlines.
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At last the big picture is clear.
Well not quite. The workforce now knows what is proposed, but not yet what it all means, or how they can ensure they are apart of it.
Ideas anyone.
A new business strategy that will focus on:
- investment,
- partnerships,
- restructuring of the international network, and
- exploiting the rapidly growing Asian air market.
Ideas anyone.
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Relax boys & girls. Sure, qf might be 150 pilots in surplus, but there will not be 1000 pilots axed come aug 24. The surplus after the ek lwop will need to consider accepting a new employment contract for mainline sustainability. Now that might be 1000. What ever happens I hope the captains club called aipa drag the senior filth with it. But like recent form, aipa will say its the junior crews problem, not the top 1000 senior scum.
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Qantas as we know it is done, history, stuffed!!!
I think most here on PPRuNe would agree that the QF brand and experience is not what it used to be. That is because of mismanagement, poor fleet choices, a lack of re-investment in the brand etc. It could be fixed if the right management team were in place! Sadly though, the changes that are comming are going to cut to the bone and will do irrepairable damage.
When this current management team have had their fun, wrecked the QF brand and image, collected their bonuses for once again screwing over the staff and shareholders and gone, the next board and CEO will inheret a company which, if it's not on it's knees, will be a shadow of it's former self. Good luck building it back up!!!
As far as getting their claws into the "rapidly growing Asian air market"... I guess we'll have to wait for the details but I fail to see why other Asian nationals would choose to fly Qantasia (which according to reports ISN'T going to be a LCC model) when at the premium end of the market passengers have CX, SQ, TG, MH etc to choose from. All home grown airlines in their respective countries. And if passengers want to go cheap, Air Asia, Tiger, Jetstar Asia, Lion etc. It seems like AJ is being taken in by the old "grass is always greener" phenomena.
Fix QF AJ. Make it the best it can possibly be here in Australia, then if you still have cash, time on your hands and a desire for adventure tackle the Asian market. To crush the QF brand in favour of chasing a pipe dream is abhorrent!
I think most here on PPRuNe would agree that the QF brand and experience is not what it used to be. That is because of mismanagement, poor fleet choices, a lack of re-investment in the brand etc. It could be fixed if the right management team were in place! Sadly though, the changes that are comming are going to cut to the bone and will do irrepairable damage.
When this current management team have had their fun, wrecked the QF brand and image, collected their bonuses for once again screwing over the staff and shareholders and gone, the next board and CEO will inheret a company which, if it's not on it's knees, will be a shadow of it's former self. Good luck building it back up!!!
As far as getting their claws into the "rapidly growing Asian air market"... I guess we'll have to wait for the details but I fail to see why other Asian nationals would choose to fly Qantasia (which according to reports ISN'T going to be a LCC model) when at the premium end of the market passengers have CX, SQ, TG, MH etc to choose from. All home grown airlines in their respective countries. And if passengers want to go cheap, Air Asia, Tiger, Jetstar Asia, Lion etc. It seems like AJ is being taken in by the old "grass is always greener" phenomena.
Fix QF AJ. Make it the best it can possibly be here in Australia, then if you still have cash, time on your hands and a desire for adventure tackle the Asian market. To crush the QF brand in favour of chasing a pipe dream is abhorrent!
short flights long nights
What I dont understand is this..Qantas was ALWAYS an International airline, until relativly recently it did not have a domestic arm..International was what id did and did well. So why all of a sudden is "International" no good? I makes no sense at all....there is a big hidden agenda dying to pop out somewhere. I am very worried
Well, that's easy to answer. The Qantas 'takeover' of Australian turned out to be a reverse takeover. First there was Strong and then a whole lot of management 'mates' moved in from both the old domestic airlines. The most damaging of these have infiltrated from Ansett. 'A great airline but a poor business'. Sound familiar?
Wrong mindset, in a nutshell.
Oh, easy answer for that also. Take redundancy, start your own Asian or Sandpit initiative.
Wrong mindset, in a nutshell.
"The workforce now knows what is proposed, but not yet what it all means, or how they can ensure they are apart of it."
"What I don’t understand is this..Qantas was ALWAYS an International airline, until relativly recently it did not have a domestic arm."
"So why all of a sudden is "International" no good? I makes no sense at all...."
It’s not "all of a sudden". QF International has been slipping for years. The good old days when QF was purely an International airline were prior to the arrival of serious competitors from Asia offering better service standards on a lower cost base and prior to privatization, which has increased QF’s exposure to a changing market place.
"So why all of a sudden is "International" no good? I makes no sense at all...."
It’s not "all of a sudden". QF International has been slipping for years. The good old days when QF was purely an International airline were prior to the arrival of serious competitors from Asia offering better service standards on a lower cost base and prior to privatization, which has increased QF’s exposure to a changing market place.
I will go on record now and say that there is not a snowballs chance in hell that Qantas is going to: "Exploit rapidly growing Asian markets."
That is an Asian market and it is going to be exploited by Asians for Asians and to the benefit of Asian shareholders.
The only "impact" that Qantas is going to make on that market is a small stain on an Asian mattress someplace where Qantas shareholders cried themselves to sleep after losing their entire capital on an unprofitable failed Asian joint venture.
Pardon my French, but FFS, the history of Western investment in "Asian Markets" is a ******* cemetery of failed business ventures where the West has been efficiently skinned by their erstwhile Asian partners. Jetstars adventures in Vietnam should have been an absolute warning to them.
It takes what are called "Old China Hands" at least Thirty years of trading experience to engage profitably with China and the East, and this little Irish bowel movement thinks he can just walk in and make off with some profits?
Here is what is going to happen to you Alan;
1) You are going to be encouraged by your Asian partners to invest every bit of spare cash you have, or you can borrow, in your Asian operations.
2) You are going to be encouraged to invest your management time in your Asian operations to the exclusion of everything else.
3) You will be encouraged to move as much of your operations and employees to Asia as is physically possible.
4) In support of this strategy, you will be wined and dined by everyone from Asian Government and business community from the top down. The continuous mantra being thrown in your direction will be "huge Asian markets."
5) At some point a few years from now, a stock market analyst will sound a warning that Qantas is now balls deep in Asia and that any downturn or disturbance in Asian markets will severely impact not just the Qantas International markets, but the Qantas Domestic market, which by then will have been "rearranged" to have synergies with the new you beaut Qantasia International (read deep discounts for Asian travelers plus Asian maintenance and crews, etc.).
6) The warnings won't be heeded. Remaining institutional investors who were wondering exactly what the Qantas sustainable competitive advantage in Asia really was will quietly exit. Qantas will start borrowing from the banks, who are always too stupid to see where companies are heading.
7) Within a year the cupboard is bare. Qantas is in hock to its eye teeth and still waiting for profits to be generated by the "huge Asian Markets". The revenue will be there, its just that everyone (the Asian partner, airports, lessors, maintenance organisations, manufacturers, finance houses, fuel suppliers, catering, ATC, etc. etc) seems to be making a dollar or two of profit except Qantas. Funny that.
8) Getting desperate for cash, Qantas tries to rearrange its finances and perhaps repatriate some funds to Australia.... and runs smack into a concrete wall of uncompromising Asian Governments, regulators, financial institutions and a less than helpful but"Oh so sorry" Asian "Partner".
Perhaps you like to sell your business? We make you velly good offer?
The Qantas Sale Act is no help because there is nothing left to sell.
Somebody should tell this Irish idiot that he is not doing business with another Belgium or Holland. He knows nothing about the East - where business is played by rather different rules. Just ask Cathay and Swire, they have only been in the game for what? Two hundred years? ..And you are going to encroach on their territory?
To put it another way, if I wanted to take QF into Asia now, I would have started selecting, grooming and training my managers for the task about Thirty years ago.
That is an Asian market and it is going to be exploited by Asians for Asians and to the benefit of Asian shareholders.
The only "impact" that Qantas is going to make on that market is a small stain on an Asian mattress someplace where Qantas shareholders cried themselves to sleep after losing their entire capital on an unprofitable failed Asian joint venture.
Pardon my French, but FFS, the history of Western investment in "Asian Markets" is a ******* cemetery of failed business ventures where the West has been efficiently skinned by their erstwhile Asian partners. Jetstars adventures in Vietnam should have been an absolute warning to them.
It takes what are called "Old China Hands" at least Thirty years of trading experience to engage profitably with China and the East, and this little Irish bowel movement thinks he can just walk in and make off with some profits?
Here is what is going to happen to you Alan;
1) You are going to be encouraged by your Asian partners to invest every bit of spare cash you have, or you can borrow, in your Asian operations.
2) You are going to be encouraged to invest your management time in your Asian operations to the exclusion of everything else.
3) You will be encouraged to move as much of your operations and employees to Asia as is physically possible.
4) In support of this strategy, you will be wined and dined by everyone from Asian Government and business community from the top down. The continuous mantra being thrown in your direction will be "huge Asian markets."
5) At some point a few years from now, a stock market analyst will sound a warning that Qantas is now balls deep in Asia and that any downturn or disturbance in Asian markets will severely impact not just the Qantas International markets, but the Qantas Domestic market, which by then will have been "rearranged" to have synergies with the new you beaut Qantasia International (read deep discounts for Asian travelers plus Asian maintenance and crews, etc.).
6) The warnings won't be heeded. Remaining institutional investors who were wondering exactly what the Qantas sustainable competitive advantage in Asia really was will quietly exit. Qantas will start borrowing from the banks, who are always too stupid to see where companies are heading.
7) Within a year the cupboard is bare. Qantas is in hock to its eye teeth and still waiting for profits to be generated by the "huge Asian Markets". The revenue will be there, its just that everyone (the Asian partner, airports, lessors, maintenance organisations, manufacturers, finance houses, fuel suppliers, catering, ATC, etc. etc) seems to be making a dollar or two of profit except Qantas. Funny that.
8) Getting desperate for cash, Qantas tries to rearrange its finances and perhaps repatriate some funds to Australia.... and runs smack into a concrete wall of uncompromising Asian Governments, regulators, financial institutions and a less than helpful but"Oh so sorry" Asian "Partner".
Perhaps you like to sell your business? We make you velly good offer?
The Qantas Sale Act is no help because there is nothing left to sell.
Somebody should tell this Irish idiot that he is not doing business with another Belgium or Holland. He knows nothing about the East - where business is played by rather different rules. Just ask Cathay and Swire, they have only been in the game for what? Two hundred years? ..And you are going to encroach on their territory?
To put it another way, if I wanted to take QF into Asia now, I would have started selecting, grooming and training my managers for the task about Thirty years ago.
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Here’s an idea for you Worthy. Would appreciate Your/Sunfish’s views on the viability on the following in principle rescue package.
1. Qantas Unions run a Keep Qantas Australian campaign aimed at forcing Qantas Management to seek prior Government/Shareholder approval to establish Qantasia,
2. A Qantas Employee Taskforce seeks to agree to a Union/Shareholder/Investment Bank backed Business Model which integrates Qantas with other western owned carriers,
3. The Qantas Workforce is asked to demonstrate its support for what is proposed by agreeing a four year wage freeze in return for equivalent equity in Qantas and all that that entails,
4. Qantas Employee Shareholders use their equity to gander support for a Shareholder Vote directing the selloff of Jetstar International.
Now, before any Naysayers howl me down, let me say, I know the above is Sketchy,-Risky, Costly, Etc, and all I ask of any Naysayers who think it’s a lousy idea is –
1. Qantas Unions run a Keep Qantas Australian campaign aimed at forcing Qantas Management to seek prior Government/Shareholder approval to establish Qantasia,
2. A Qantas Employee Taskforce seeks to agree to a Union/Shareholder/Investment Bank backed Business Model which integrates Qantas with other western owned carriers,
3. The Qantas Workforce is asked to demonstrate its support for what is proposed by agreeing a four year wage freeze in return for equivalent equity in Qantas and all that that entails,
4. Qantas Employee Shareholders use their equity to gander support for a Shareholder Vote directing the selloff of Jetstar International.
Now, before any Naysayers howl me down, let me say, I know the above is Sketchy,-Risky, Costly, Etc, and all I ask of any Naysayers who think it’s a lousy idea is –
- How else do you think the Qantas Workforce can combat the restructuring of the international network, the exploiting of a rapidly growing Asian air market and keep the jobs in Australia?
Thread Starter
Very good post Sunfish. The Asians will shop off Qantasia's head tuck it under Joyce's arm and march him out of town with a loss of hundreds of millions of dollars that should have been spent on the Austrailan operation.He and the board will not pay the price for their stupidity, that will fall on the head of the staff and shareholders.
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Woodeye.
I like your ideas of employee ownership, but the reality is that Joyce & Clifford think their workforce is scum and would never allow them to have any real ownership of the business. Even if it was the best thing to do. They would rather see the airline fail.
No question QANTAsia will bleed the group dry. It will make the JQA and JQP losses look like a picnic. Joyce must be suffering cognitive dissonance on this issue.
I like your ideas of employee ownership, but the reality is that Joyce & Clifford think their workforce is scum and would never allow them to have any real ownership of the business. Even if it was the best thing to do. They would rather see the airline fail.
No question QANTAsia will bleed the group dry. It will make the JQA and JQP losses look like a picnic. Joyce must be suffering cognitive dissonance on this issue.
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Originally Posted by FATGUY
I think this is a winning message. The Board and upper management would have trouble deflecting this.
Qantas being a symbol of Australia to protect Australian jobs is about as powerful a message as Australian vs Turkish dried apricots protecting farmers, i.e. not at all. You need to put yourself in the mind of the general public and find a message that resonates with them, not just with yourself.
This is where professional PR companies come in, they take the messages the public want to hear that support the argument they want supported and get them resonating, they don't waste their efforts flogging what someone thinks is important but doesn't hit the mark. Refer to the miners campaign against the tax, that worked exceptionally well.
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Originally Posted by OFS
Shares are cheap! Lets get every employee to buy a small number of shares! Take the company back and piss these morons off! Wishful thinking? Perhaps. 
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Romulus,
Your posts are often wise, however don't underestimate the general fear of flying that many paying passengers experience covertly or overtly.
To compare the off-shoring of other brands is a fair and wise view, however the QF brand of safety is instilled in many(Rainmain included!).
Whilst many of us have come to terms with a reduction in quality as manufacturing goes OS, many accept the concept of a dodgy pilot/airline is harder to 'suck up' at 30 000 feet.
Your posts are often wise, however don't underestimate the general fear of flying that many paying passengers experience covertly or overtly.
To compare the off-shoring of other brands is a fair and wise view, however the QF brand of safety is instilled in many(Rainmain included!).
Whilst many of us have come to terms with a reduction in quality as manufacturing goes OS, many accept the concept of a dodgy pilot/airline is harder to 'suck up' at 30 000 feet.
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I personally am not superstitios but I read with some amusement plans for QF to make a big announcement on Aug 24 (Asian expansion) and for J* to commence SIN-PEK services on Nov 24. Much better to do things on the 8th of the month.
No Asian in his/her right mind would launch any business venture or make any announcement on any date with a 4 in it, it represents death and failure etc.
Surely Qantas has someone who has some Asian cultural insight??
I also often wonder why QF uses 13 13 13 as its call center number? If I was a nervous flyer and even a little bit superstitious it would probably cause some concern, unless of course I was Chinese then it would be lucky.
No Asian in his/her right mind would launch any business venture or make any announcement on any date with a 4 in it, it represents death and failure etc.
Surely Qantas has someone who has some Asian cultural insight??
I also often wonder why QF uses 13 13 13 as its call center number? If I was a nervous flyer and even a little bit superstitious it would probably cause some concern, unless of course I was Chinese then it would be lucky.
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CAN / ZGGG Q's next offshore address from 24 Aug?
Just got an email pointing out what could be the first clues to the big reveal. Speculative I know but there is some logic to the suggestion.
Email identifies a slightly different approach to the way alternate capacity utilisation is described in the IASC application lodged today by QF on behalf of JQ.
Overlay this into JQ's near miracle of gaining slots into Beijing and the logic of a deal to put traffic (or even a hub for a new entity) into the Chinese govt prefered Guangzhou starts to connect the dots.
The IASC description suggests that we may see a new subsidiary - kind of a reincarnation of Australian airlines but not so Australian?
Email identifies a slightly different approach to the way alternate capacity utilisation is described in the IASC application lodged today by QF on behalf of JQ.
Overlay this into JQ's near miracle of gaining slots into Beijing and the logic of a deal to put traffic (or even a hub for a new entity) into the Chinese govt prefered Guangzhou starts to connect the dots.
The IASC description suggests that we may see a new subsidiary - kind of a reincarnation of Australian airlines but not so Australian?
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I disagree Romulus, the Qantas brand is far different from other brands. For what ever reason Qantas is joined at the hip to this country, not many could imagine one without the other. When Dixon tried to flog it to Macbank, Australians were shaken out of their apathy, and a mate of mine a Liberal MP, said never had he and his colleagues ever received so many emails of protest. Recently he said the same on the live cattle trade came close, but the sale of Qantas blitzed them all. Therefore the call for a union cause of Keeping Qantas Australian definitely has merit. It goes without saying at the moment, that this country is going thru a major upheaval, people are nervous, insecure, and uneasy, thus showing in the retail industry, to wrest away their national carrier towards Asia could be the last straw for many, regardless if they might bag it, it represents this country, and the security of this country, and it would be a brave man not to recognise it.