Are the Financial Journos finally waking up about Joyce?
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Are the Financial Journos finally waking up about Joyce?
This is a telling article from a respected financial journalist, which highlights many of the concerns QF staff have about the direction QF has taken and the competency of senior management and the Board.
The saga of Red Q is becoming the red flag. Six months after the plan was revealed it appears no closer to fruition and reveals how empty the cupboard is at senior QF levels with regards to acumen.
In times gone by, when QF would announce a major change, you knew that the ducks were lined up and it would proceed as planned.... the fact that Red Q seems to have been a shoot from the hip venture, rushed out in the middle of an industrial dispute for various ill defined purposes is becoming more and more of an indictment on the leadership of Joyce than anything else.
One of the problems that the four or five institutions that control QF have is that with the share price way below what they bought in at, they are all locked in to a potential death spiral. If any one manager decides to bail it will cause the share price to spiral downward taking the rest with them.
What the institutions need is a plan B. A different way of doing things. Some of the frontline QF unions are indeed developing such an alternative strategy to turn around the business to present to the institutions. You'll will know it has traction when they sack the incompetents leading us at the moment.
Joyce adjusts flight path
The saga of Red Q is becoming the red flag. Six months after the plan was revealed it appears no closer to fruition and reveals how empty the cupboard is at senior QF levels with regards to acumen.
In times gone by, when QF would announce a major change, you knew that the ducks were lined up and it would proceed as planned.... the fact that Red Q seems to have been a shoot from the hip venture, rushed out in the middle of an industrial dispute for various ill defined purposes is becoming more and more of an indictment on the leadership of Joyce than anything else.
One of the problems that the four or five institutions that control QF have is that with the share price way below what they bought in at, they are all locked in to a potential death spiral. If any one manager decides to bail it will cause the share price to spiral downward taking the rest with them.
What the institutions need is a plan B. A different way of doing things. Some of the frontline QF unions are indeed developing such an alternative strategy to turn around the business to present to the institutions. You'll will know it has traction when they sack the incompetents leading us at the moment.
Joyce adjusts flight path
QANTAS chief executive Alan Joyce has taken to the new financial vernacular - describing the airline's recently announced strategy to start up an intra-Asian airline as one which will be be ''capital lite''.
It is music to the ears of aviation analysts and investors that would prefer this venture to be ''capital nought''. At last, the investors say, Joyce is starting to listen to their concerns that Qantas should not sacrifice precious money on a risky attempt to fund a start-up airline in Asia. They would rather the Qantas board ditch the strategy of ''dividend nought''.
As far as investors are concerned, Joyce was not given a mandate to spend money on new start-up airlines. As one investor said yesterday, when it comes to making Jetstar the aviation McDonald's of Asia it would be better to let someone else put up the capital and let Jetstar contribute the recipe.
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Thanks to yesterday's announcement it appears that Joyce has dodged a bullet. He won't say that the premium Asian airline he proposed six months ago - as part of a plan to make money out of the growing middle class in the region - is dead. That is a public relations no-go zone. Instead, he maintains he won't allocate much by way of funding to the venture. Whether it gets off the ground is anyone's guess. The more likely outcome is that it will be downgraded to a dressed-up code share between Qantas and one of the local Asian carriers - probably one based in Malaysia. Investors are now just hoping it will die a quiet death.
Make no mistake, the Asian strategy is not the sideshow where the main event is yesterday's half-year profit announcement. The strategy in Asia is key to Joyce's future at Qantas. Not spending excessive capital buys Qantas time to attempt to get the existing mainline international business on a firmer financial footing. In the first instance this involves stemming the losses it is sustaining. Thereafter, it will require Joyce achieve a decent return on capital. In only two of the past 15 years has this business returned more than its cost of capital. And since the GFC it has returned straight-out losses.
Qantas cannot afford to be given its head to pursue grand strategies until it returns its existing businesses to healthy profits. It needs to concentrate on numerous issues. Among these are to maintain its (barely) investment-grade rating and fight off the competition Virgin poses in the domestic market, and find a solution to be international operations that bleed red ink. Joyce's answer to the international business is to undertake a cost-cutting exercise - ditch unprofitable routes, undertake network changes, deal with maintenance excess and overlaps and cull capacity, and, of course, staff cuts.
Qantas management is talking staff cuts of 500 and this will grow. The good news is all these elements were contained in the message he delivered yesterday and investors gave it a tick. He also delivered a profit number ahead of expectations. But expectations were not high and neither are the shares - which are priced for disaster scenarios.
The domestic mainline business has recovered somewhat from the industrial relations-led disaster last year and yields are improving, aided by fare rises. There is no doubt Virgin Australia has pinched some high-yielding business customers.
But there are plenty of challenges remaining, not the least of which is getting the overseas Qantas mainline operations back into profit. Joyce has promised a break-even result in three years. This will need to involve more than just cost and route cuts. It assumes that service enhancements and reconfigured aircraft will improve profit performance. Joyce's job security and that of the Qantas board will depend on getting this right.
To be fair, the airline's financial woes have much to do with Australian governments opening the doors to competition from foreign airlines such as Emirates and Etihad - wonderful for consumers but a major challenge for an incumbent like Qantas. And it has also had to confront rising fuel costs and ongoing industrial action.
There is a good reason many professional punters avoid investing in airlines - they are hostage to governments, fuel price movements and other shocks. Qantas has proudly claimed its position as one of only a couple of investment-grade airlines left in the world, but this boast is tenuous and its potential loss would be financially costly.
Joyce doesn't want to retain this position by undertaking some kind of equity issue. The decision to get the ship in shape demonstrates a better understanding that the company does not have a mandate to indulge its strategy dreams. It simply needs to run its core business better
Read more: Joyce adjusts flight path
It is music to the ears of aviation analysts and investors that would prefer this venture to be ''capital nought''. At last, the investors say, Joyce is starting to listen to their concerns that Qantas should not sacrifice precious money on a risky attempt to fund a start-up airline in Asia. They would rather the Qantas board ditch the strategy of ''dividend nought''.
As far as investors are concerned, Joyce was not given a mandate to spend money on new start-up airlines. As one investor said yesterday, when it comes to making Jetstar the aviation McDonald's of Asia it would be better to let someone else put up the capital and let Jetstar contribute the recipe.
Advertisement: Story continues below
Thanks to yesterday's announcement it appears that Joyce has dodged a bullet. He won't say that the premium Asian airline he proposed six months ago - as part of a plan to make money out of the growing middle class in the region - is dead. That is a public relations no-go zone. Instead, he maintains he won't allocate much by way of funding to the venture. Whether it gets off the ground is anyone's guess. The more likely outcome is that it will be downgraded to a dressed-up code share between Qantas and one of the local Asian carriers - probably one based in Malaysia. Investors are now just hoping it will die a quiet death.
Make no mistake, the Asian strategy is not the sideshow where the main event is yesterday's half-year profit announcement. The strategy in Asia is key to Joyce's future at Qantas. Not spending excessive capital buys Qantas time to attempt to get the existing mainline international business on a firmer financial footing. In the first instance this involves stemming the losses it is sustaining. Thereafter, it will require Joyce achieve a decent return on capital. In only two of the past 15 years has this business returned more than its cost of capital. And since the GFC it has returned straight-out losses.
Qantas cannot afford to be given its head to pursue grand strategies until it returns its existing businesses to healthy profits. It needs to concentrate on numerous issues. Among these are to maintain its (barely) investment-grade rating and fight off the competition Virgin poses in the domestic market, and find a solution to be international operations that bleed red ink. Joyce's answer to the international business is to undertake a cost-cutting exercise - ditch unprofitable routes, undertake network changes, deal with maintenance excess and overlaps and cull capacity, and, of course, staff cuts.
Qantas management is talking staff cuts of 500 and this will grow. The good news is all these elements were contained in the message he delivered yesterday and investors gave it a tick. He also delivered a profit number ahead of expectations. But expectations were not high and neither are the shares - which are priced for disaster scenarios.
The domestic mainline business has recovered somewhat from the industrial relations-led disaster last year and yields are improving, aided by fare rises. There is no doubt Virgin Australia has pinched some high-yielding business customers.
But there are plenty of challenges remaining, not the least of which is getting the overseas Qantas mainline operations back into profit. Joyce has promised a break-even result in three years. This will need to involve more than just cost and route cuts. It assumes that service enhancements and reconfigured aircraft will improve profit performance. Joyce's job security and that of the Qantas board will depend on getting this right.
To be fair, the airline's financial woes have much to do with Australian governments opening the doors to competition from foreign airlines such as Emirates and Etihad - wonderful for consumers but a major challenge for an incumbent like Qantas. And it has also had to confront rising fuel costs and ongoing industrial action.
There is a good reason many professional punters avoid investing in airlines - they are hostage to governments, fuel price movements and other shocks. Qantas has proudly claimed its position as one of only a couple of investment-grade airlines left in the world, but this boast is tenuous and its potential loss would be financially costly.
Joyce doesn't want to retain this position by undertaking some kind of equity issue. The decision to get the ship in shape demonstrates a better understanding that the company does not have a mandate to indulge its strategy dreams. It simply needs to run its core business better
Read more: Joyce adjusts flight path
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I think they might be reading Plane Talking on this topic given the hammering it has been given there.
In Sandiland's latest on this he describes the Qantas strategy as relying on the 'feeding enclosures in the Chairman's Lounge' and rips into something that my travel agent friend says will prove deadly to customers, which is flying refurbished 747s when the competing airlines have sent them to scrap heaps
Maybe fewer business journos are getting allowed into the feeding enclosures, or maybe they are twigging to unhappy shareholders getting in their ears.
This is the link to the full story.
Singapore Airlines call last 747 flights as Qantas refits | Plane Talking
I also read his Air Australia story caning Korda Methanol. Seems likely to me the rest of the media will soon also start asking how come this crowd was advising Air Australia yet it still come down to running dry? Isn't there something more going on, and is the story about suddenly being unable to buy fuel far from the whole truth.
AirAustralia and its administrator met before 1.30 am today | Plane Talking
In Sandiland's latest on this he describes the Qantas strategy as relying on the 'feeding enclosures in the Chairman's Lounge' and rips into something that my travel agent friend says will prove deadly to customers, which is flying refurbished 747s when the competing airlines have sent them to scrap heaps
Maybe fewer business journos are getting allowed into the feeding enclosures, or maybe they are twigging to unhappy shareholders getting in their ears.
This is the link to the full story.
Singapore Airlines call last 747 flights as Qantas refits | Plane Talking
I also read his Air Australia story caning Korda Methanol. Seems likely to me the rest of the media will soon also start asking how come this crowd was advising Air Australia yet it still come down to running dry? Isn't there something more going on, and is the story about suddenly being unable to buy fuel far from the whole truth.
AirAustralia and its administrator met before 1.30 am today | Plane Talking
“In the longer-term, we are investing HK$190 billion at list prices in new aircraft to progressively replace our 21 Boeing 747 passenger aircraft with B777-300ERs and Airbus A350s, with all the older aircraft leaving the fleet by 2017. We will take delivery of 11 new passenger aircraft this year alone,” he said.
Don't worry nitpicker you will be free of them soon enough.
The Don
Don't worry nitpicker you will be free of them soon enough.
The Don
About time
Perhaps the finacial journos are, but the majority of people rarely get past the front page headlines on the tabloids and then onto the important stuff, the sports pages. They leave the investigative stuff to ACA and Today Tonight. The other amazing thing is the lack of serious scrutiny and comment about the lack of dividends seeing the shareholders are the most important people in the scheme of things apparently.
I am going to try to elevate this discussion and try to give some insight here.....
The issue is not Red Q or Jetstar Asia or a hundred other issues.
The issue is how the Board and Senior Management spend their precious time.
The prime question for the Chairman and the CEO is "what are the critical issues that must be decided by the Board on behalf of the shareholders?"
By any measure, Jetstar Asia, RedQ and god knows what else are immaterial to the Qantas result. They are in my opinion time sinks - you can debate them till the cows come home and they will have not a jot of effect on the annual result.
Meanwhile Virgin Australia is taking on Qantas domestic................
I would argue that there is no effing way in the world that Qantas is going to be allowed to make money out of Asia. Leigh Clifford might think so, but I would disagree and so I suspect would some of Leighs friends. There is no way Qantas can put China over a barrel.
FFS concentrate the Boards attention on what is making contribution, not effing castles in the air.
The issue is not Red Q or Jetstar Asia or a hundred other issues.
The issue is how the Board and Senior Management spend their precious time.
The prime question for the Chairman and the CEO is "what are the critical issues that must be decided by the Board on behalf of the shareholders?"
By any measure, Jetstar Asia, RedQ and god knows what else are immaterial to the Qantas result. They are in my opinion time sinks - you can debate them till the cows come home and they will have not a jot of effect on the annual result.
Meanwhile Virgin Australia is taking on Qantas domestic................
I would argue that there is no effing way in the world that Qantas is going to be allowed to make money out of Asia. Leigh Clifford might think so, but I would disagree and so I suspect would some of Leighs friends. There is no way Qantas can put China over a barrel.
FFS concentrate the Boards attention on what is making contribution, not effing castles in the air.
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Of course you are conveniently forgetting one of QF's most profitable competitors still flies 21 744's. Yep CX
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Simple proven logic
Three things in life are guaranteed:
1. Death
2. Taxes
3. Joyce's inability to run or maintain a profitable Qantas.
1. Death
2. Taxes
3. Joyce's inability to run or maintain a profitable Qantas.
Hmm Sunfish,
Your last sentence could not be closer to the truth.
We, Qantas, have been rudderless for the last decade or so, with little direction or interest shown by the board we're sent to crash upon the rocks as an outdated legacy end of the line carrier.
The alternative view is that we have a huge advantage to other international airlines in that we are not an end of the line carrier but a funnel into our own vast domestic network. We should be offering an experienced, reliable and strong product to mainland China as it grows, just as we successfully did many years ago in the Japanese market.
Your last sentence could not be closer to the truth.
We, Qantas, have been rudderless for the last decade or so, with little direction or interest shown by the board we're sent to crash upon the rocks as an outdated legacy end of the line carrier.
The alternative view is that we have a huge advantage to other international airlines in that we are not an end of the line carrier but a funnel into our own vast domestic network. We should be offering an experienced, reliable and strong product to mainland China as it grows, just as we successfully did many years ago in the Japanese market.
Are the Financial Journos finally waking up about Joyce?
http://mpegmedia.abc.net.au/insidebu...11_9064015.m4v
This drivel from journos in the mainstream media is largely why Joyce and his band of merry truth economists get away with destroying decades of proud Australian airline business with absolute impunity!
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Well... I’m no expert, but my opinion of economists continues to drop. Why even get out of bed when all you need to do your job is a print out of the latest PR spin, and a spreadsheet reducing people, jobs, and livelihoods into numbers. Then when you’re wrong you can blame the fickle nature of ‘the market’.
Last edited by Aerozepplin; 23rd Feb 2012 at 19:31. Reason: spellings
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Well... I’m not an expert, but my opinion of economists continues to drop.
I bet the financial media won't pick up on it now all eyes are on Gillard & Rudd. Ben Sandilands has done an outstanding job with this article.... it really does show how AJ and Co have completely lost the plot.Virgin Australia piles leadership pressure on Qantas | Plane Talking
[quote]Virgin Australia, Qantas, and its leadership crisis
February 23, 2012 – 4:55 pm, by Ben Sandilands
Virgin Australia did its bit today to make news by adding to leadership tensions at Qantas.
Virgin Australia’s CEO and ex Qantas senior executive John Borghetti delivered astonishing first half year results, in which the smaller airline made more by way of statutory net profits after tax of $51.8 million than the entire Qantas group, which made only $42 million by the same measure in its results to 31 December as announced a week ago today.
Its tiny international operation made $35 million EBIT, compared to claims by Qantas CEO Alan Joyce that his group’s far larger Qantas long haul operation continues to lose more than $200 million a year, and unlike Qantas, Virgin Australia’s loyalty scheme earnings contributed comparatively little to the overall result, which was based overwhelmingly on profitably flying people rather than selling halo points to third parties like grocery chains or hotels.
If that wasn’t bad enough for Qantas, Borghetti also announced a plan to split the company into a domestic Virgin Australia Holdings company and a new unlisted Virgin Australian International Holdings unit with a view to greatly increasing investment in the domestic operations where both Qantas/Jetstar and its major competitor make most of their money.
The complex split plan, in which existing shareholders are given shares in the new unlisted international company by way of an in specie dividend, has a rather simple but unstated objective, which is to facilitate any desire by Etihad Airways or other interested foreign airline or institutional investor to buy their way into the share register as significant and rich equity partners who will help fund a major assault on the Qantas Cityflyer domestic trunk routes as well as grow the connecting traffic Virgin Australia is bringing to Etihad’s hub at Abu Dhabi.
This will require FIRB approval, and it might well be fought tooth and nail by Qantas, but it potentially allows an already profitable challenger airline group to fund ambitious expansion plans.
For Qantas, the pressure points are obvious. Joyce is being outflanked where it hurts, and has a poorly articulated Asia savior plan for a part owned premium carrier that is somehow going to fund the recapitalization of a shrinking and loss making long haul Qantas operation with profits from a venture that will be substantially owned by Jetstar’s most potent Asian competitor, Air Asia and based in Kuala Lumpur, a centre from which it will compete with the existing Qantas investment in Singapore as a combined Qantas/Jetstar hub.
Investor doubts about the rationality and practicability of the Joyce plan, in its various iterations, and their inherent absurdities and conflicts are growing by the day, including the Qantas CEO’s guidance a week ago today that he now wanted it to be ‘capital light ’ with a fleet that Qantas paid for in the smallest possible measure.
The ‘hello Asia, we want a free ride to take your business away’ message is not going down well, either in Asia, or in Australia.
Borghetti said Virgin Australia was committed to keeping up the competitive pressure on Qantas domestic business class and full fare services with a growing investment in Australian based jobs, including lifting its heavy maintenance work to more than 50% based in Australia rather than offshore.
He said there would be more and better lounges, more pride in its Australian identity, more involvement with its Australian employees, and better, newer, more efficient jets than Qantas could afford.
“We have forced business friendly fares down to the levels of 1996 on many routes in as little as a few months,” he said, which of course coincided with the period in which the Qantas industrial disputes and its locking out of its own customers caused major inconvenience and brand damage to the flying kangaroo.
Borghetti said the ‘Game Change’ program that had been expected to kick in during the second half of the financial year had produced results ahead of schedule.
He emphasised that Virgin Australia had not been in any discussions with Etihad Airways concerning its plans to split the group into domestic and international components that would have different shareholders, but that it had for some months been working with financial advisers on ways in which it could increase institutional investment in its major domestic business without breaching the foreign shareholder cap of 49% which was a condition for retaining its status as an Australian flag carrier in terms of securing and retaining overseas traffic rights.
In the wider perspective the differences in leadership at Qantas and Virgin Australia are becoming increasingly obvious. Virgin Australia has a work force in which many would be prepared to die in a ditch for the company, while Qantas appears to want many of its legacy work force to, if not die in a ditch, go away and allow it to replace them with younger, cheaper and less skilled pilots, several of which clearly should never, ever have been employed to sit in the right hand seat of Jetstar A320s given recent safety scares.
This is not to agree with some of the views pushed by protectionist or change resistant Qantas employees, but a criticism of the hostile attitude of management to labor in the Qantas group, and the lack of staff engagement that this causes, compared to the much stronger sense of joint purpose that has characterised Virgin Australia and its Virgin Blue predecessor from day one.
The Virgin story in Australia isn’t one of unalloyed management-labor harmony and bliss, but its has been, comparatively speaking, far more constructive and effective, and it shows very favorably in its service delivery and commitment to being Australian, or if you wish, true blue.
It’s a difference which is a potent factor, as acknowledged by Borghetti today, in a profit result which hasn’t slayed a giant, but has kicked it hard in the … shins.
An earlier similar report appeared in the Crikey Daily Mail.
says it all...
ps sorry for the re-post, but very valid for this thread...
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Operation 'Boo'!
What would be amusing is to see someone launch a different type of campaign against the Irish nancy boy, and call the campaign 'The Flying Boo'. Every time the pint sized parasite is spotted, and I mean anywhere at any time - in public, on a flight, in a restaurant, in a sauna, walking the poodles, ANYWHERE - he should receive a hearty well bellowed deep guttural traditional Aussie 'boo', just as you would expect at the Footy or Cricket! Even better would be to see footage of the happy occasions (would be great to see it happen very very regularly) uploaded onto PooTube!!
It would be a heck of a lot of fun and everybody can get involved including employees, employees families, the public, everyone! Show him what we really think of him, his mining buddy and the bloated board including the fat general.
It would be a heck of a lot of fun and everybody can get involved including employees, employees families, the public, everyone! Show him what we really think of him, his mining buddy and the bloated board including the fat general.
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The twerp would no doubt interpret a hearty Boo as a 'Death Threat', and immediately get his fan club in the media to publish more Union Thug fantasies.
Poor little rich fella. Boo Hoo.
Poor little rich fella. Boo Hoo.
Its tiny international operation made $35 million EBIT, compared to claims by Qantas CEO Alan Joyce that his group’s far larger Qantas long haul operation continues to lose more than $200 million a year, and unlike Qantas,