Jetstar Pacific Losses etc..
If Vietnam Airlines buys into Jetstar Pacific, it may be a bonus for Qantas and Jetstar because Vietnam Airlines would then have a vested interest in seeing Jetstar Pacific succeed. No more Vietnam Airlines trying to close it down
1a sound asleep,
Be clear, it is not a "buy in", it is a Government directed transfer of control, including apparently, management control of Jetstar Pacific to Vietnam Airlines.
Just how does Qantas losing all control of Jetstar Pacific to Vietnam Airlines, which is closely associated with Qantas major competitors (have a close look at Vietnam Airlines code shares, and which alliance they have ambitions of joining --- and it's not OneWorld) and tell me how that is going to benefit QF and its Asia strategy --- and show any return for the long suffering QF shareholders.
It seems to me that the practical reality is that QF have blown the investment.
Tootle pip!!
Be clear, it is not a "buy in", it is a Government directed transfer of control, including apparently, management control of Jetstar Pacific to Vietnam Airlines.
Just how does Qantas losing all control of Jetstar Pacific to Vietnam Airlines, which is closely associated with Qantas major competitors (have a close look at Vietnam Airlines code shares, and which alliance they have ambitions of joining --- and it's not OneWorld) and tell me how that is going to benefit QF and its Asia strategy --- and show any return for the long suffering QF shareholders.
It seems to me that the practical reality is that QF have blown the investment.
Tootle pip!!
Luke,
It's reported in aviation media not given to idle speculation, and although I don't subscribe to the Australian Financial Review, I am told it has been reported in the Fin.
Dreamland,
What's not true?
Tootle pip!!
It's reported in aviation media not given to idle speculation, and although I don't subscribe to the Australian Financial Review, I am told it has been reported in the Fin.
Dreamland,
What's not true?
Tootle pip!!
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Jetstar Vietnam~A Warning
Jetstar Vietnam is to be absorbed into Vietnam Airlines after bleeding cash since its inception.
This is a warning to Joyce and his cohorts at Qantas:a minority holding in any airline venture in Asia will end in tears and a loss of a large amount of capital
This is a warning to Joyce and his cohorts at Qantas:a minority holding in any airline venture in Asia will end in tears and a loss of a large amount of capital
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There is also an issue here re disclosure to the market...when did they know and when did they disclose the outcome?
Don't recall anything being mentioned at AGM and these things do not happen overnight like grounding decisions.
Don't recall anything being mentioned at AGM and these things do not happen overnight like grounding decisions.
Vietnam News is onto it. Unusual that it was the fuel hedging that was hurting them.
As for QF disclosure obviously something was going on last week.
Vietnam Airlines to absorb budget carrier Jetstar - Economy - VietNam News
As for QF disclosure obviously something was going on last week.
Vietnam Airlines to absorb budget carrier Jetstar - Economy - VietNam News
HA NOI — Low-cost airline Jetstar Pacific will merge with national flag carrier Vietnam Airlines in the near future, according to deputy head of the Civil Aviation Administration of Viet Nam (CAAV) Dinh Viet Thang.
The move is considered the most feasible plan to save the carrier from bankruptcy.
The Ministry of Finance and the Ministry of Transport have agreed to the move, which is awaiting approval from the Prime Minister, said Thang during a briefing at the Ministry of Transport late last week.
Thang said that Jetstar Pacific had been operated by the State Corporation for Investment and Capital (SCIC) for several years under a low-cost model but was now facing difficulties due to inefficient operation that had caused heavy losses. SCIC, which uses State capital to invest in business, is now the biggest shareholder in Jetstar Pacific.
Restructuring the company was essential, he said.
The Finance Ministry has kept the Prime Minister informed about the merger and participants at some recent Government meetings have outlined a number of different plans. The most effective plan was for the airline to transfer its capital to Vietnam Airlines, said Thang, adding that the timing of the merger would be decided by the Government.
Vietnam Airlines was the top carrier in the country with an 80 per cent market share, while Jetstar is second with about 17 per cent. Upon finalisation of the merger, Vietnam Airlines market share would increase to nearly 100 per cent, Thang said.
This would be the first merger in the country's history of aviation, he said.
He acknowledged that Vietnam Airlines would gain a monopoly in the local market with the merger but said that even without the merger, the State owned airline already had a lion's share of the market.
However, he affirmed that the merger was not bad for the domestic airline market because the Government and the Ministry of Transport would continue to expand the market by allowing more private airlines to compete. He added that Vietjet Air began operating this month.
According to the Sai Gon Tiep Thi newspaper, Vietnam Airlines will have a 70 per cent stake in Pacific Airlines from the SCIC. Therefore, once taking over the 70 per cent of SCIC, Vietnam Airlines will hold a controlling stake in the budget airline.
Established in 2004, Pacific Airlines was founded by Saigontourist. Vietnam Airlines has an 86 per cent stake in the carrier. In 2007, Australian flag carrier Qantas acquired a 27 per cent stake in the carrier. Pacific Airlines changed its name to Jetstar Pacific and the remaining majority stake in Jestar Pacific was held by Vietnamese partners (SCIC and Saigontourist).
Fierce competition in the domestic aviation market has become a burning issue since 2008. Jetstar Pacific began applying different fare levels, some of which were lower than the ceiling levels charged by Vietnam Airlines. This forced Vietnam Airlines to change its pricing mechanism to compete with Jetstar Pacific.
Due to increased competition, airlines have been forced to lower fares despite rising fuel prices, resulting in their huge losses. Jetstar Pacific was reportedly taking on heavy losses, partly due to fuel hedging.
Losses even led to an investigation after which the former general manager of Jetstar Pacific, Luong Hoai Nam, was arrested while two foreign directors were prohibited to leave the country.
After that, SCIC, the largest shareholder, appointed Le Song Lai, then deputy general director of SCIC, to be the new general manager of Jetstar Pacific. However, Jetstar Pacific still incurred losses over the last year on domestic air routes.— VNS
The move is considered the most feasible plan to save the carrier from bankruptcy.
The Ministry of Finance and the Ministry of Transport have agreed to the move, which is awaiting approval from the Prime Minister, said Thang during a briefing at the Ministry of Transport late last week.
Thang said that Jetstar Pacific had been operated by the State Corporation for Investment and Capital (SCIC) for several years under a low-cost model but was now facing difficulties due to inefficient operation that had caused heavy losses. SCIC, which uses State capital to invest in business, is now the biggest shareholder in Jetstar Pacific.
Restructuring the company was essential, he said.
The Finance Ministry has kept the Prime Minister informed about the merger and participants at some recent Government meetings have outlined a number of different plans. The most effective plan was for the airline to transfer its capital to Vietnam Airlines, said Thang, adding that the timing of the merger would be decided by the Government.
Vietnam Airlines was the top carrier in the country with an 80 per cent market share, while Jetstar is second with about 17 per cent. Upon finalisation of the merger, Vietnam Airlines market share would increase to nearly 100 per cent, Thang said.
This would be the first merger in the country's history of aviation, he said.
He acknowledged that Vietnam Airlines would gain a monopoly in the local market with the merger but said that even without the merger, the State owned airline already had a lion's share of the market.
However, he affirmed that the merger was not bad for the domestic airline market because the Government and the Ministry of Transport would continue to expand the market by allowing more private airlines to compete. He added that Vietjet Air began operating this month.
According to the Sai Gon Tiep Thi newspaper, Vietnam Airlines will have a 70 per cent stake in Pacific Airlines from the SCIC. Therefore, once taking over the 70 per cent of SCIC, Vietnam Airlines will hold a controlling stake in the budget airline.
Established in 2004, Pacific Airlines was founded by Saigontourist. Vietnam Airlines has an 86 per cent stake in the carrier. In 2007, Australian flag carrier Qantas acquired a 27 per cent stake in the carrier. Pacific Airlines changed its name to Jetstar Pacific and the remaining majority stake in Jestar Pacific was held by Vietnamese partners (SCIC and Saigontourist).
Fierce competition in the domestic aviation market has become a burning issue since 2008. Jetstar Pacific began applying different fare levels, some of which were lower than the ceiling levels charged by Vietnam Airlines. This forced Vietnam Airlines to change its pricing mechanism to compete with Jetstar Pacific.
Due to increased competition, airlines have been forced to lower fares despite rising fuel prices, resulting in their huge losses. Jetstar Pacific was reportedly taking on heavy losses, partly due to fuel hedging.
Losses even led to an investigation after which the former general manager of Jetstar Pacific, Luong Hoai Nam, was arrested while two foreign directors were prohibited to leave the country.
After that, SCIC, the largest shareholder, appointed Le Song Lai, then deputy general director of SCIC, to be the new general manager of Jetstar Pacific. However, Jetstar Pacific still incurred losses over the last year on domestic air routes.— VNS
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Cloud cuckoo land over and over and over........
Three days before the pair's final meeting with a two-star general from the secret police, Qantas and the SCIC ''reached agreement on a commercial package that would also count as mitigation under Vietnamese law, so allowing the travel restrictions on Tristan Freeman and Daniela Marsilli to be lifted''.
It does not take much to work out why QF has desperately worked so hard to keep this one nice and quiet. Also doesn't take much to work out why the two 'amateur kiddies' they sent over there are still employed down at Mascot - 'Keep ypur friends close, keep your enemies closer'. Keep them nice and close to QF's chest, pay them a lot of money and keep the two under control, that way they won't go racing around spilling the truth. Joyce is not as silly as he looks.
But the two youngsters also held very little cred with any key power players over there during there tenure. They were always regarded as QF footstools, business children with no Asian business dealing skills and arrogant as well. So you are damn right they bolted on the next flight, the Vietnamese don't just slap you on the wrist for naughty, it can be backs to the wall - ready, aim, fire!
I would not want to be an executive over there if they ever put a plane into a hole.
But the alarm bells for investors should be ringing loud and clear about how unsuccessful the Vietnam venture has been and remains. And Joyce wants to repeat this on a larger scale in China, Malaysia, Singapore???? Gold! Dear oh dear, there must be 'standing room only' on cloud cuckoo land?
I can smell that share price sinking. Good work Alan and friends, doing a marvelous job running the airline. Will you ever make an actual financial decision that benefits the company positively? Nah, didn't think so.
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Sunny on the Money
Lurv to see an analysis of individual stock options, buy, sell, put, stop and of course, sell short.
The boys have had their fun, shareholders loose and the beauty part, it's all other peoples money, except the profits.
Sheesh!.
The boys have had their fun, shareholders loose and the beauty part, it's all other peoples money, except the profits.
Sheesh!.
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Who's Cuckoo?
From the AUSTRALIAN
Friday, December 9, 2011.
SHORTHAUL
QANTAS has rejected a claim by the Australian and International
Pilots Association that it's investment in Jetstar Pacific has failed
because of a possible change in majority ownership involving Vietnam Airlines.
The airline has previously supported the ownership change.
Friday, December 9, 2011.
SHORTHAUL
QANTAS has rejected a claim by the Australian and International
Pilots Association that it's investment in Jetstar Pacific has failed
because of a possible change in majority ownership involving Vietnam Airlines.
The airline has previously supported the ownership change.
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Not rumour - fact - I was there.
A few years ago a small group of VN expat pilots were having a beer or two in the Omni bar.... as you do. We were aware that there had been some protracted negotiations over the previous year or two with an outside consortium (I think it was Singapore based) who were looking to take a controlling share in what was then known as Pacific Airlines. We knew this deal had collapsed largely as a result of the disputed value of Pacific - put at approx $5 mill US. At some stage early in the evening we met two very excited, and, oh yes, very knowledgable, QF commercial gents who advised us they were here to set the world on fire with something now called Jetstar Pacific. The upshot of most of what we heard was that the poor old Viets were hopeless at business, had no commercial acumen, couldn't count to ten, and that this was a fantastic 'win win' for the QF group and VN in general. These gents left after a while and those of us remaining were quite taken with their instant grasp of how business was done in VN, and how the locals clearly had no idea whatsoever of how 'real business was done in the real world'. Apparently about $40 mill US should wrap the whole deal up including investment, and the new deal would be making a profit in no time, much to the educational benefit of the local uninformed, who clearly had no idea how to spot a great business opportunity.
I can think of three or four people in VN right now (not expats) laughing their heads off, and toasting the undeniable business acumen of their new partners, as they have been successfully doing for around 10,000 years
Chuc Mung Nam Moi !!! Mot, Hai, Ba, …. Yo !!!
Brilliant !!
A few years ago a small group of VN expat pilots were having a beer or two in the Omni bar.... as you do. We were aware that there had been some protracted negotiations over the previous year or two with an outside consortium (I think it was Singapore based) who were looking to take a controlling share in what was then known as Pacific Airlines. We knew this deal had collapsed largely as a result of the disputed value of Pacific - put at approx $5 mill US. At some stage early in the evening we met two very excited, and, oh yes, very knowledgable, QF commercial gents who advised us they were here to set the world on fire with something now called Jetstar Pacific. The upshot of most of what we heard was that the poor old Viets were hopeless at business, had no commercial acumen, couldn't count to ten, and that this was a fantastic 'win win' for the QF group and VN in general. These gents left after a while and those of us remaining were quite taken with their instant grasp of how business was done in VN, and how the locals clearly had no idea whatsoever of how 'real business was done in the real world'. Apparently about $40 mill US should wrap the whole deal up including investment, and the new deal would be making a profit in no time, much to the educational benefit of the local uninformed, who clearly had no idea how to spot a great business opportunity.
I can think of three or four people in VN right now (not expats) laughing their heads off, and toasting the undeniable business acumen of their new partners, as they have been successfully doing for around 10,000 years
Chuc Mung Nam Moi !!! Mot, Hai, Ba, …. Yo !!!
Brilliant !!
Last edited by Olive61; 1st Jan 2012 at 23:11.
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Olive, you made me snort coffee all over the keyboard! 
The Viets are bloody sharp operators when it comes to business and can play the poker face for as long as it takes. The fact that business, The Party, military, police and judiciary are all part of the samesame crew, it hardly is surprising that QF has done their dough.
The fact that Dumb and Dumber conducted themselves as Australians in Wonderland shows what Million Dong Intellects were at work here
Does Happy "hour" at the Omni still go from 5pm until 8pm?
The Viets are bloody sharp operators when it comes to business and can play the poker face for as long as it takes. The fact that business, The Party, military, police and judiciary are all part of the samesame crew, it hardly is surprising that QF has done their dough.
The fact that Dumb and Dumber conducted themselves as Australians in Wonderland shows what Million Dong Intellects were at work here
Does Happy "hour" at the Omni still go from 5pm until 8pm?
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I agree with Anthill entirely. Anybody who underestimates the Vietnamese and thinks they are two-bit business nuptys has underestimated the 'competition' for better words.
As Anthill said, Dumb and Dumber were no match for the Viets, and of no surprise they were eaten up and spat out in due course. Did QF actually think a pair of Western teenage pratts were going to run the gig in Vietnam and gain the countries business leaders respect and also reap a golden windfall from the airline and bring said profits back to the land down under? A flawed concept from it's birth and another QF fantasy drummed up by accountants and imbeciles who have spent to much time at Bondi Junction sunning themselves while walking the poodles. QF should be grateful that Dumb and Dumber were allowed to leave after just a little bit of 'home detention', very lucky indeed. QF needs to realize this was just the Vietnamese scratching an itch. Next time may be different.
The fact is this is just a taste test for QF, China will be not be as accommodating as our Vietnamese friends. This foolish foray of a western airline waltzing into Asia and apparently expecting to take wads of profits back home to Australia is as likely as AJ turning QF into a model business.
It takes years to develop their trust. It takes years to learn their business model (government, police, business leaders and politicians all rolled into one), it takes years to learn their culture, and it takes decades to earn their trust.
It is almost impossible for QF management to be so inept, therefor my only conclusion can be that the grand plan is to have the business turned into a carcass that has been attacked by Mexican buzzards. Not so much as a bone shall remain.
Fools? To be sure.
As Anthill said, Dumb and Dumber were no match for the Viets, and of no surprise they were eaten up and spat out in due course. Did QF actually think a pair of Western teenage pratts were going to run the gig in Vietnam and gain the countries business leaders respect and also reap a golden windfall from the airline and bring said profits back to the land down under? A flawed concept from it's birth and another QF fantasy drummed up by accountants and imbeciles who have spent to much time at Bondi Junction sunning themselves while walking the poodles. QF should be grateful that Dumb and Dumber were allowed to leave after just a little bit of 'home detention', very lucky indeed. QF needs to realize this was just the Vietnamese scratching an itch. Next time may be different.
The fact is this is just a taste test for QF, China will be not be as accommodating as our Vietnamese friends. This foolish foray of a western airline waltzing into Asia and apparently expecting to take wads of profits back home to Australia is as likely as AJ turning QF into a model business.
It takes years to develop their trust. It takes years to learn their business model (government, police, business leaders and politicians all rolled into one), it takes years to learn their culture, and it takes decades to earn their trust.
It is almost impossible for QF management to be so inept, therefor my only conclusion can be that the grand plan is to have the business turned into a carcass that has been attacked by Mexican buzzards. Not so much as a bone shall remain.
Fools? To be sure.
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It probably is more of there being no demand from DRW to Ho Chi Minh City. 3K flies 4 times a day SIN SGN. As does TR. SQ does a miserable 2. It's a horrendously low yielding market.
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Pepz.
Vietnam being a low yielding market ? Thats not possible because Qantas would not have invested $150 million in Jetstar Pacific unless there were 'massive returns' available...........
Vietnam being a low yielding market ? Thats not possible because Qantas would not have invested $150 million in Jetstar Pacific unless there were 'massive returns' available...........