Qantas Group - New Airline Structure

[balance]

I can clearly recall stating in 2003 what a pestilence Jetstar is.

Seems to me you blokes have already accepted that your company is buggered, how about you grow a pair, and start fighting for it? You saw the result when we walked off, not proud of it but the country really suffered, imagine if all of you did the same thing to save the company, actually the ball is right in your court. Use it.

Whilst I agree with you Teresa, I somehow can't picture Jetstar pilots sharing your passion for doing the right thing.

They have been rubbing their hands together waiting for Qantas to be wound up in their favour for 9 odd years now, and it gets closer every day.

Unfortunately for them, they are largely unaware that they will cop the same reaming in the not too distant future. And it couldn't happen to a nicer bunch of blokes. Enjoy!

[2Plus]

T.G...If only it was that simple. Problem is, there's a worringly large number amongst the ranks that have spent too long riding the gravy train and are so out of touch with the reality of the industry, that they simply couldn't care less if QF folded tomorrow. All too often when we discuss all this over an ale, I'm dismayed to meet guys who have no idea what's going on outside their own little worlds. Many others simply don't care. I'm all for an uprising, but it aint gonna happen with this mob.


VIVA LA REVOLUCION!!!

[teresa green]

Balance, I have a son who flies for JQ, that is not his attitude, nor that of his fellow pilots, who are his mates. They have a healthy respect for QF, they often have a drink up the track with QF blokes, they have a respect for the history of the company, and acknowledge its place in history. Of course there are the smart arses who bag QF, there always are, but anyone decent, would not be rubbing their hands with glee waiting for QF pilots kicked out of a job. I acknowledge there is and has been friction since JQ started, and SOME QF pilots have added to the friction, treating JQ blokes like SOME treat CC, like low life. These people have a problem, they have issues, they need help, (or in my day, a kick up the arse), but like QF, JQ is made up with fairly decent people, who, by the way, seem to share the same opinion of Joyce and Clifford as you do. If QF fails, it is pointless blaming JQ people, they like you, want a good wage for a fair days work, to pay your mortgage, raise your kids, and sustain a decent lifestyle. Management is your enemy, Balance, not JQ.

[Captain Gidday]

I still don't get it. The value is in domestic, not international. Buyers would be clamboring for domestic and the route structures. International doesn't seem to have any value to me.

Lodown, you do get it, you just don't know you've got it. Domestic airlines can be 100% foreign owned in Australia, an unusual 'accident of history' but well established by precedent. Tiger is 100% foreign owned, for example. It is indeed the domestic business that is 'in play'. Just look at where all the key assets, such as engineering, are ending up. As for International? Probably a goner.

Why are the institutional investors not barking mad. They know what the plan is and they will reap gazillions from it.

If that statement turns out to be true, and I have no idea whether it is or not, then those telling the plan, without also telling the Mum and Dad investors, are guilty of serious insider trading. Go to gaol, do not pass go, do not collect $200.
That question, about who knows what and how they came to know it, is the point of inflexion, the turning point. All the Fair Work action and calls to arms and manning the barricades is just Kabuki theatre.

[Sunfish]

Lodown:

I still don't get it. The value is in domestic, not international. Buyers would be clamboring for domestic and the route structures. International doesn't seem to have any value to me. Can Qantas get around the sale act if they execs sell domestic and keep international only to fold it at a later date when it is "no longer profitable" into Jetstar?

How do you know the value is in domestic and all the losses are in International? You cannot know that unless you perform a complete contribution analysis and you need the management accounts for that - not the statutory accounts.

By way of example, there could be plenty of value in International. Give Qantas domestic the engineering and turnaround contracts for Qantas International, give them the terminal leases, then watch them suck value out of Qantas international - it's easy for any accountant!

Now watch Macquarie Bank get hired (more $$$$ for the "APA Mates") and they split the company - giving shareholders a share in each. Then do a share placement in the domestic entity to Emirates and voila!

McGrath50:

I don't follow your train of thought here Sunny, because we now elect women, non-Caucasians and non-Christians we can't judge their character?

Perhaps I'm being a bit obtuse, so I'll explain:

We don't want psychopaths in management, but it is very attractive to them because of the power over others they can wield and because they have no empathy. High office is now the perfect "bait" to attract them. We don't want them because they can be unspeakably cruel to satisfy their own egos. We particularly don't want narcissists because they ultimately destroy long term corporate value in the search for a short term star performance and the riches that go with it. It has been suggested that 10% of business leaders are psychopaths.

The problem is compounded because psychopaths hire other psychopaths - they drive out good people who can't stand their behaviour, they either leave voluntarily or get back stabbed. They destroy the pool of corporate talent where the value of any organisation ultimatley lies.

The trouble is that the only reliable way of detecting these people is careful observation over time because they are excellent at camouflaging themselves. The best way to spot them is at the yacht club, the golf club, at school, University, Church, defence forces, the city club etc. etc. where their often strange and cruel behaviour over a few years gives them away and makes them easily detectable.

However McGrath we can't appoint our friends and members of the old boys club to Directorships and senior management anymore, can we? Even if I know, say, that a highly qualified and regarded Female business leader is a lying cheating creep who has destroyed dozens of her competitors and the lives of her subordinates, who should not even be allowed to own a pet dog, I cannot stop her promotion these days. Gender balance, experience and Qualifications are now all that can legally be assessed and taken into consideration.

To put that another way, I know one female who has left a trail of human wreckage and corporate destruction behind her - but no one could stop her rise - she is one of the original Margaret Whitlam "Old Girl" coterie. Same with some men I know. You cannot know what they are like unless you either work for them or have another opportunity to study them in detail.

To put that yet another way, when you find yourself asking "Why would such and such a celebrity/politician/business leader do something so obviously criminally stupid or hateful?" or "why are such good and hard working people suddenly leaving a department?" the answer is you are looking at a psychopath.

...And we have a few strutting the political stage as I speak. Also ask yourself what sort of airline managment strings out a decision over closing Two engineering bases for months - maximising the pain and distress of its employees? The answer is obvious.

There are some indications that HR practicioners are starting to react, for example the final interview my son had for an official appointment was what he termed "strange" - when he explained the questioning and conduct, it was obvious the interviewer was setting psychopath traps to see if he would fall in.

The questions and observations were "strange" and difficult to an ordinary person, but wouldn't be to a Psychopath. For example the question: "How would you go about telling a mother and Father that their son had just died in a car accident?" A psychopath would just jump in and answer that straight away - to him it would not be a problem. Do you now understand why the decision to ground Qantas, and the way it was allegedly made, was so revealing? Do you now understand who Gina Rhinehart really is - from her behavior towards her own children?

[Lodown]

How do you know the value is in domestic and all the losses are in International?

Sunny: I don't know. I mean value as a business target for potential acquisition in the international marketplace.

I'm speculating like most others here. Almost everyone posting to this thread is thinking that Qantas intends selling international. I can't see it. I'm sure there is value there as a potential purchase target, but with the A380's trying to be competitive against 777's, old, tired aircraft, ongoing labour issues, and a management that has been trying to find new routes/business opportunities over the last XX years only to get run out of town with their tails between their legs on many endeavours, it just seems to me that there is very little there that would interest a would-be purchaser at a price that would be acceptable to the Qantas board and shareholders. International would be lucky to get one interested and motivated buyer.

On the other hand, I would think the attraction with competitive advantage, growth and value lies in the domestic market and this would be very attractive in the acquisition marketplace. There only needs to be two interested and motivated buyers to push the price up. I can think of at least 4 interested buyers off the top of my head. If the choice were mine (fantasising here), I'd be looking to garnish the bottom line on the domestic product to make it as attractive as possible for the highest price and then let Jetstar absorb the International product with whatever brand name is chosen.

(Then apart from the New Zealand and South Pacific market, I'd be vacating Sydney as an international hub and business head office.)

Thanks Capt. G for the explanation.

[extralite]

Seems to be obvious that Qantas International is the one that will be eventually handed back to the taxpayer to bail out. Domestic and Jetstar getting tuned up for a sale to private equity. New aircraft, more flexible wage agreements, lots of benefits. If those behind the private equity offering are the usual suspects, that would conform some of the theories here.

For Qantas aircrew, it would seem to be only a matter of time until the fun stops. Public policy is driven largely by what gets up in the media and the 24 hours news cycle. So a better course of action then any strike in my opinion would be to have some of these theories tested in the media. A strike would probably just put the nail in the coffin sooner. Maybe presenting some of these theories to Four Corners or Insight would be more constructive, especially if they were able to interview those that might benefit from such a sale in the future.

[Oldmate]

I have read the rumours of 2 x 787s in Qantas colours on the production line, and 1 in jetstar's, but have yet to find a photo of either. Can anyone post a link that shows any of these aircraft please?

[Nepotisim]

If there were two on the production line there should be a QF production inspector at Boeing. I am unaware of anyone in Seattle?

[Keg]

I don't think they're that far along as to be in 'Qantas colours'- particularly given that the paint job is essentially the last step. More like that there are supposed to be two on the production line with the first signs of Qantas colours on them. I don't know about the 787 but I know for the A380, the rudder is in Qantas red whilst the rest of the aircraft is still in it's primer green. I suspect this is what is possibly occurring on the Boeing line. The rumour suggests that there are a couple of 787s there with the foundations set for a Qantas colour scheme. This isn't to say that they can't still re-paint it in J* colours at the final step.

[QF94]

@Lowdown

but with the A380's trying to be competitive against 777's, old, tired aircraft, ongoing labour issues, and a management that has been trying to find new routes/business opportunities over the last XX years only to get run out of town with their tails between their legs on many endeavours,

Not to be too blunt Lowdown, but you're wrong on all accounts. Bean counters made the decisions to buy the A380 over the more efficient 777's. Normally two engines would be more efficient than four. The A380 in its configuration does not carry double the 777, 330 or even the 767. no rocket science required for this one.

The only routes management have managed to get recently are Dallas and Santiago. They have shed routes far quicker than look for new routes for QANTAS International. They have less than half the routes now than they did 15-20 years ago.

it just seems to me that there is very little there that would interest a would-be purchaser at a price that would be acceptable to the Qantas board and shareholders. International would be lucky to get one interested and motivated buyer.

I think the shares at sub $1.50 would be of great interest to a purchaser and that of management. Shareholders don't have much say. The board runs the show, as they believe it's "their" company. If the shareholders carried any weight over management decisions, the airline would not have been shut down for two days, they would have been consulted about the break-up of the company, and I feel they would have wanted the low down (no pun intended) of how the shareholders would benefit.

[StallBoy]

That would be smart selling 30% of the only part of your organisation that is making a profit!!! I don't think even the silliest australian/Irishman would be that stupid.
Who would want to buy Qantas International?? It has a few 747's with high hour airframes and 12 A380's losing money, definately an airline that will have people lining up at the door to purchase.

[booglaboy]

It's been suggested that by moving engineering etc to the domestic along with other departments, international will suddenly look amazing on the accounting side compared to the 200million loss that has never been proved. This results in a miracle turn-around in fortunes for international yet realistically nothing has altered. Big bonuses to aj and the hick And justifies in the media only, their management style. The bonus is domestic will start to look a loss maker. Just in time to slash n burn there in favour of Jq and helping short-haul negotiations. They can continue this cost shifting cycle Over n over to suit their needs

[reubee]

With the new structure, if you think there is any unfair apportioning of costs etc, you now have someone to raise it with. I'm sure the new boss of will have some bonus element of his remuneration package tied to the performance of Qantas International and would be keen to know about them.

Given that he was previously in charge of Frequent Flyer, he probably already has a skill set in making the 50/50 accounting calls go his way and is trying to reduce the internal transfer from International to Frequent Flyer.

[The The]

QF International is not for sale nor will it ever be! The money is in breaking the business apart. If they can work around the Sale Act, then they will spin off domestic which is a highly marketable entity.

So, why could they not spin off QF domestic as a separate listed entity? Release the value in that segment but retain the overall ownership caps per the sale act?

Every single analyst knows that QF domestic is the golden goose to the group!

QF domestic listed as a separate entity with someone like EK owning 30 odd percent?

Ask why?
1. Why spilt QF? All the effort for a separate AOC etc etc, not to mention the cost?
2. why are domestic CC being asked to cash in LSL? Ummmm - make the balance sheet more attractive?
3. QF ground services - outsourced. Engineering - cut to the bone. Catering - cut again. All the lean stuff into QF domestic to make it attractive (and profitable)!

I actually think that AJ would have loved to spun-off Jetstar, but the reality is that it does not hold the unrealised value that QF domestic has.

Finally, I'm sure a few top execs will be granted a load of shares in the newly listed QF Dom, and that is purely why they want to do it!!!!

[teresa green]

Perhaps Stall Boy, its not the airline they want, its the rights it has, and the routes it has. They want what QF owns not the airline itself. I just cannot see the Australian people somehow cosy up to some Arab airline, its one thing to have them fly in and out, but to set up shop on Australian soil, nah, it would not be acceptable, there would be a stink of epic proportions.

[QF94]

teresa green,

It may not be acceptable to have a foreign airline set up on Australian soil, but the sad fact is, Australians make a stink, and if it gets too hard, they just accept it. Some examples are C02 tax, foreign "investment" of our farms and land, foreign ownership of our mines and bringing in 1700 foreign workers to fill a "skill shortage" in the mining industry. The government is so deep in stinky stuff, they couldn't smell any new additions.

Hell, I can think of 500 soon to be out of work aircraft engineers from Tulla Heavy that could fill in 500 of those positions. I know it's not practical for all those to take up positions, but I think there would be 1700 out of work people within Australia from all trades that could fill in those positions.

I'm all for keeping the Roo ALL AUSTRALIAN with NO foreign investment in it. I would say to let the government take it back over, but unfortunately, I wouldn't let this mob run the local school tuckshop. For a tuckshop turnover of $400, they'd run up a debt of $4,000,000 and have all sorts of committees and consultants telling them how to run it.

There is no silver bullet for the QANTAS problem. I could suggest what would fix the board, but that would be considered inappropriate for this forum.

[teresa green]

Indeed QF94. I would suggest that if this carbon tax crap goes thru, there will more than enough to go to Roy Hill and do the job. The next twelve months are going to one of the most turbulent in our history, the Eastern States are certainly heading for a recession, if it has not already arrived, and will escalate as the carbon tax hits. Its interesting to see the polls rise slightly with the handouts, unfortunately voters become addicted to cheques arriving in the mail, so you have to keep it up, if you want the votes, not really a great way to run the country or manage votes. As for the Qantas board, I put them right up there with the Gillard Govt. and your mental discription of them is totally justified.

[StallBoy]

Teresa Green,



I remember when Lindsay Fox and Solomon Lew played this game of trying to hold an airlines rights and to sell them to another airline at a profit but as always in business the person with the money will always get what they want in time.
If Qantas cannot make it's routes pay I doubt if any other airline will in these tough finanical times except for SA which also would find it very difficult but would love the Australian USA routes added to it's destinations.

[ALAEA Fed Sec]

Inflation below 5%. Unemployment below 5%. Interest rates below 5%.

What are these tough times? Or have we all been reading too many Murdoch papers?