So who will pay JQ's bills now?
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I would say that I believe that Jetstar is the most profitable part of the Qantas Group because that is what the accounts say that have been released by the Qantas Group (a public company). What you are saying is that I should believe there is a massive fraud going on here and the numbers are being skewed, this is a serious charge.
For example, why does QF lease A320s to JQ? Why were QF crew sent to HKG/LHR to do their A330 courses (with accommodation and allowances) when QF sim time was used for JQ crew? Both of these things would affect mainline profits, but are not required to be disclosed in a financial report.
Also, don't forget that QF International has performed well over the last decade. Even the years when profits were down (GFC, SARS, Iraq war) the commentary at the time was that it was still a good result as QF Int had outperformed the majority of its competitors. This quote is from QF's last half year report
Qantas improved yield by 9 per cent, and increased capacity by 3.3 per cent demonstrating a strong revenue recovery across both international and domestic business.
Dont forget, this is from the people that brought you:
- 200 hr pilots are safer
- Ongoing engine failures aren't a safety issue, 2 out of 1700 engineers using their left hands is
- QF pilots want a $200k payrise
Jetstar is the most profitable part of the the Qantas Group at the moment, they are wholly owned by Qantas Group so are of course going to have 'investment' from the group.
Nunc est bibendum
At a recent meeting a QF executive indicated that QF had 'subsidised' JQ for a number of years from when they started but that it was the right thing to do in order to 'see off' the competition. He indicated that JQ domestic was profitable in their own right now and that QF Long haul wasn't. I asked how J* long haul was going and whether they were returning cost of capital. Nil response. I asked why QF long haul was getting all the press about not returning cost of capital whilst J* long haul received none- and yet more capital was being thrown at it- and it too wasn't turning a profit given the reports. Nil response.
Now we hear from Bruce that if the QF codeshare code was taken OFF J* flights that those flights would be unsustainable. Does that not indicate that QF is assisting in the subsidisation of J*? People are booking what they think are QF flights and flying on J*. How much are J* charging QF for those seats on a codeshare flight? Does anyone know? Are we making money on those seats or losing money on them? I suspect the latter due to being charged a motza for them. How much does QF charge J* for codeshare seats on QF flights? I suspect not enough to cover the costs and thus J* pockets a lot more than the seat costs them.
So you can see that the costs can be hidden quite easily and it's not even illegal.
Now we hear from Bruce that if the QF codeshare code was taken OFF J* flights that those flights would be unsustainable. Does that not indicate that QF is assisting in the subsidisation of J*? People are booking what they think are QF flights and flying on J*. How much are J* charging QF for those seats on a codeshare flight? Does anyone know? Are we making money on those seats or losing money on them? I suspect the latter due to being charged a motza for them. How much does QF charge J* for codeshare seats on QF flights? I suspect not enough to cover the costs and thus J* pockets a lot more than the seat costs them.
So you can see that the costs can be hidden quite easily and it's not even illegal.
AH,
Do a little bit of research on Direct operating Costs of airlines. You will find that pilot DOC's are anywhere from about 5-10% or overall operating costs. (depending on inclusions - simulators, crew transport etc).
An increase in Pilot wages makes 2/5ths of 4/8ths of F-all to the overall operating cost of the airline.
As has been stated on numerous posts on PPRune in the past, you could double pilot wages and it would add about $2 to the ticket price.
I wish I could find the quote from a few years ago, when Tiger were starting up. Apparently when asked how they would get enough pilots to fly their aircraft, the answer was something along the lines of "we could pay them $10 000 P/A more than the competition is paying, and it would only add about a dollar or two to the price of a Melbourne-Sydney ticket. (anyone have the quote handy??)
Please don't just accept the management (or union for that matter) spin. Dig around and find out.
Cool names.
Do a little bit of research on Direct operating Costs of airlines. You will find that pilot DOC's are anywhere from about 5-10% or overall operating costs. (depending on inclusions - simulators, crew transport etc).
An increase in Pilot wages makes 2/5ths of 4/8ths of F-all to the overall operating cost of the airline.
As has been stated on numerous posts on PPRune in the past, you could double pilot wages and it would add about $2 to the ticket price.
I wish I could find the quote from a few years ago, when Tiger were starting up. Apparently when asked how they would get enough pilots to fly their aircraft, the answer was something along the lines of "we could pay them $10 000 P/A more than the competition is paying, and it would only add about a dollar or two to the price of a Melbourne-Sydney ticket. (anyone have the quote handy??)
Please don't just accept the management (or union for that matter) spin. Dig around and find out.
Cool names.
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JQ must be making all the money. They had no qualms at all in paying a full J CHCSYD fare for one of their top executives and his fellow skiers in his party who were recently stuck in ZQN during a weather disruption there.
Funnily enough, JQ don't have star class or whatever they are calling it today, across the Tasman, and none of the other JQ disrupts were lucky enough to travel in J, maybe because there were plenty of seats in Y......
Funnily enough, JQ don't have star class or whatever they are calling it today, across the Tasman, and none of the other JQ disrupts were lucky enough to travel in J, maybe because there were plenty of seats in Y......
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Profit???
Qantas achieved an Underlying EBIT of $165 million for the half-year. The result is 175 per cent above the prior corresponding period, driven by a $411 million, or 8 per cent, increase in total revenue.
Qantas improved yield by 9 per cent, and increased capacity by 3.3 per cent demonstrating a strong revenue recovery across both international and domestic business
Qantas improved yield by 9 per cent, and increased capacity by 3.3 per cent demonstrating a strong revenue recovery across both international and domestic business
It combines both Domestic and International.
We are now told International will lose more than $200 million this financial year.
Either the result as stated in December is wrong or the $200 million loss is wrong or International has had a really terrible second half!
All while the load factor sits above 80%
Accounting standards correct or not, there is something seriously wrong with these numbers.
Maybe somebody can explain.
SeeBee
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SeeBee, I am not known for being very soft in my wording of matters, so I will explain things this way - If the figures you have posted are correct (and I believe they are) then quite simply management are absolutely completely incompetent fu#kheads. Simple.
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Cool names,
It may well only be 5% of operating cost but airlines have fairly thin margins and this could equate to 60% of profit. Now Qantas widebody pilots would be paid what, 40% more than equivalents at Jetstar or Virgin? And these sort of differences in profit can quite easily swing the decision whether or not to invest in new capacity.
Do a little bit of research on Direct operating Costs of airlines. You will find that pilot DOC's are anywhere from about 5-10% or overall operating costs. (depending on inclusions - simulators, crew transport etc).
An increase in Pilot wages makes 2/5ths of 4/8ths of F-all to the overall operating cost of the airline.
As has been stated on numerous posts on PPRune in the past, you could double pilot wages and it would add about $2 to the ticket price.
An increase in Pilot wages makes 2/5ths of 4/8ths of F-all to the overall operating cost of the airline.
As has been stated on numerous posts on PPRune in the past, you could double pilot wages and it would add about $2 to the ticket price.
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If the JQ guys I've spoken to are to be believed, the pay difference is nowhere near 40%. It's probably closer to single digits, and in certain individual cases exceeds average QF pay.
I thought it would have been more important to have a solid business model. As a shareholder, aren't you concerned about a further $500m investment in a part of the group that has failed to make any significant profits. And what about the requirement to return cost of capital? JQ Asia has never come even close to your arbitrary 10%.
Two sets of rules.
I thought it would have been more important to have a solid business model. As a shareholder, aren't you concerned about a further $500m investment in a part of the group that has failed to make any significant profits. And what about the requirement to return cost of capital? JQ Asia has never come even close to your arbitrary 10%.
Two sets of rules.
QANshareholder:
With respect, like hell would pilots wage claims affect an investment decision! For one very, very simple reason:
Unless your new aircraft is supersonic, the flight times and crew duty hours are virtually identical between old and new aircraft assuming an unchanged route network (you all fly at Mach 0.95 or so?) SO PILOT WAGES ARE IRRELEVANT.
The numbers for investment decisions like these are analysed against direct operating costs per hour and per cycle over the routes network foreshadowed by the airline. Boeing and Airbus will do this for you as many times as you like using the most sophisticated computer models of airline operations on this planet using the assumptions you give them.
The analysis will, among zillions of other things, determine your spares holding and thier locations, maintenance requirements and locations, etc. etc. etc.
AND ALL THIS INFORMATION IS NORMALISED IN CONSTANT DOLLARS FOR THE VERY PURPOSE OF ELIMINATING FLUCTUATIONS DUE TO INFLATION IN DIRECT OPERATING COSTS.
What then happens is that detailed sensitivity analysis is done as part of the due diligence process to ensure that risks are managed.
To put it another way, there was no bean counter saying to the Qantas Board; "Look guys, our entire investment in Twenty A 380 aircraft is uneconomic if pilots wages retain their purchasing power. The only way this investment makes sense is if we screw pilots and engineers."
It may well only be 5% of operating cost but airlines have fairly thin margins and this could equate to 60% of profit. Now Qantas widebody pilots would be paid what, 40% more than equivalents at Jetstar or Virgin? And these sort of differences in profit can quite easily swing the decision whether or not to invest in new capacity.
Unless your new aircraft is supersonic, the flight times and crew duty hours are virtually identical between old and new aircraft assuming an unchanged route network (you all fly at Mach 0.95 or so?) SO PILOT WAGES ARE IRRELEVANT.
The numbers for investment decisions like these are analysed against direct operating costs per hour and per cycle over the routes network foreshadowed by the airline. Boeing and Airbus will do this for you as many times as you like using the most sophisticated computer models of airline operations on this planet using the assumptions you give them.
The analysis will, among zillions of other things, determine your spares holding and thier locations, maintenance requirements and locations, etc. etc. etc.
AND ALL THIS INFORMATION IS NORMALISED IN CONSTANT DOLLARS FOR THE VERY PURPOSE OF ELIMINATING FLUCTUATIONS DUE TO INFLATION IN DIRECT OPERATING COSTS.
What then happens is that detailed sensitivity analysis is done as part of the due diligence process to ensure that risks are managed.
To put it another way, there was no bean counter saying to the Qantas Board; "Look guys, our entire investment in Twenty A 380 aircraft is uneconomic if pilots wages retain their purchasing power. The only way this investment makes sense is if we screw pilots and engineers."
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holic,
Any JQ widebody pilots like to contribute on whether they think their pay is only 'single digits' lower than Qantas widebody pilots! I think the comparison needs to be done in terms of pay per hour flown.
Sunfish,
If your point is that 2.5% of 5% is a small number then I agree. The point I am making however is that the difference between what Qantas long haul pilots are paid and what Virgin and Jetstar long haul pilots are paid could well be significant enough to change an investment decision because it represents a large % of profit.
If the JQ guys I've spoken to are to be believed, the pay difference is nowhere near 40%. It's probably closer to single digits, and in certain individual cases exceeds average QF pay.
Sunfish,
To put it another way, there was no bean counter saying to the Qantas Board; "Look guys, our entire investment in Twenty A 380 aircraft is uneconomic if pilots wages retain their purchasing power. The only way this investment makes sense is if we screw pilots and engineers."
Any JQ widebody pilots like to contribute on whether they think their pay is only 'single digits' lower than Qantas widebody pilots! I think the comparison needs to be done in terms of pay per hour flown.
