QF Shares hit $1.00 Discuss
Here's hoping. Cannot understand why CEO and other high level Managers don't fly their own airline but seem to prefer Singapore and lately, Virgin.
Just wondering how much the share price would climb from $1.07 today if there was a major Board clean out? We may have to move back to the $2 thread.
With EK about to commence MEL-DXB nonstop with the A380 the QF position at MEL will be weakened further. Add the SQ press release yesterday they are planning to add a further 10 services per week to the Australian market before the end of the year and we start to see QF has no long term strategy.
BTW. I understand the recent initiative by QF to terminate BKK-LHR and HKG-LHR and use a BA connection has been a dismal failure for both carriers. The punters do not want a change of carrier and long connections in BKK and HKG.
I assume this is the reason for a further frequency by SQ between SIN-LHR from October and the planned increase in services SIN-Aust.
BTW. I understand the recent initiative by QF to terminate BKK-LHR and HKG-LHR and use a BA connection has been a dismal failure for both carriers. The punters do not want a change of carrier and long connections in BKK and HKG.
I assume this is the reason for a further frequency by SQ between SIN-LHR from October and the planned increase in services SIN-Aust.
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Regarding BKK-LHR & HKG-LHR.
I thought that QF & BA were in some type of joint services agreement between Australia & the UK. Effectively revenue sharing between services.
I would have thought replacing QF with BA between Asia & the UK would have increased the labour cost base?
If the justification for the switch was a more economical 777 as opposed to the 744. Assuming Australian labour is cheaper than that of the UK, wouldn't it have been more economical for BA to dry lease 777's to QF.
Net result. Reduced costs & an increase in the "joint revenue".
My opinion is Joyce went for the short term gain of leasing the landing spots in LHR for the financial gain.
I thought that QF & BA were in some type of joint services agreement between Australia & the UK. Effectively revenue sharing between services.
I would have thought replacing QF with BA between Asia & the UK would have increased the labour cost base?
If the justification for the switch was a more economical 777 as opposed to the 744. Assuming Australian labour is cheaper than that of the UK, wouldn't it have been more economical for BA to dry lease 777's to QF.
Net result. Reduced costs & an increase in the "joint revenue".
My opinion is Joyce went for the short term gain of leasing the landing spots in LHR for the financial gain.
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If you haven't had the chance to read the transcripts from FWA.
Have a look at the Rob Gurney's transcripts, it's on par with Paul Daff's performance in the jet connect case.
For a guy who in charge of Qantas commercial. The lack of detail known about the business seemed deficient
MC
Have a look at the Rob Gurney's transcripts, it's on par with Paul Daff's performance in the jet connect case.
For a guy who in charge of Qantas commercial. The lack of detail known about the business seemed deficient
MC
Last edited by Mstr Caution; 27th Jun 2012 at 00:23.
Master Caution.
I remember reading Rob Gurney received his 'marching orders' in a QF press release about a month ago.
BTW. Why would BA dry lease B777's to QF. They do not have any spare B777's.
The B777 is the BA favourite aircraft. Been to LHR recently ?, they are everywhere.
Also, I think you will find that overall UK labour is cheaper than Australian labour.
I remember reading Rob Gurney received his 'marching orders' in a QF press release about a month ago.
BTW. Why would BA dry lease B777's to QF. They do not have any spare B777's.
The B777 is the BA favourite aircraft. Been to LHR recently ?, they are everywhere.
Also, I think you will find that overall UK labour is cheaper than Australian labour.
Well I've been waiting with anticipation for some sort of announcement to explain all of this craziness.
I've come to the conclusion there is none.
Any news is better than no news, and no news just doesn't make sense. However that basically sums up executive management, they don't make any sense. None at all.
The 777 is old technology hey? What about those 737s which keep appearing?
I've come to the conclusion there is none.
Any news is better than no news, and no news just doesn't make sense. However that basically sums up executive management, they don't make any sense. None at all.
The 777 is old technology hey? What about those 737s which keep appearing?
For those interested EK are planning to operate an A380 to Gatwick on 6 July to celebrate 25 years of operation to Gatwick.
BTW. EK now operate 16 services per day between DXB and the 6 airports they serve in the UK. How can QF compete with just their 2 services per day to LHR.
BTW. EK now operate 16 services per day between DXB and the 6 airports they serve in the UK. How can QF compete with just their 2 services per day to LHR.
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B772, Thats eactly the issue QFi has.
EK with a government owned airport that bends over backwards to build new facilities and has built a massive efficient hub operation.
Competing against QF, EK takes traffic from
PER/MEL/SYD/BNE to Dubai then onto those six UK airports plus plenty of other Euro destinations
But it does this by also mixing pax traffic from
AKL/CHC (via Aussie ports)
but more importantly
KUL, SIN, BKK, PEK, ICN, NRT, HKG, MNL, CGK, HCM, CMB and 10+ Indian cities
The hub is the killer, particularly with all the traffic coming from Northern Asian regions... There is just not the demand just out of Australia, so QF has slowly been losing everyone going to other destinations (eg MAN)
RedQ may have helped this situation but DXB is just so well situated for the current range of aircraft.
Even if RedQ had started it still wouldnt get traffic from India, Sri Lanka, Pakistan as they would be flying backwards, but could at least have hubbed traffic from Singapore, Malaysia, Indonesia, Phillipines.
EK with a government owned airport that bends over backwards to build new facilities and has built a massive efficient hub operation.
Competing against QF, EK takes traffic from
PER/MEL/SYD/BNE to Dubai then onto those six UK airports plus plenty of other Euro destinations
But it does this by also mixing pax traffic from
AKL/CHC (via Aussie ports)
but more importantly
KUL, SIN, BKK, PEK, ICN, NRT, HKG, MNL, CGK, HCM, CMB and 10+ Indian cities
The hub is the killer, particularly with all the traffic coming from Northern Asian regions... There is just not the demand just out of Australia, so QF has slowly been losing everyone going to other destinations (eg MAN)
RedQ may have helped this situation but DXB is just so well situated for the current range of aircraft.
Even if RedQ had started it still wouldnt get traffic from India, Sri Lanka, Pakistan as they would be flying backwards, but could at least have hubbed traffic from Singapore, Malaysia, Indonesia, Phillipines.
short flights long nights
QF could hub out of Dubai, anyone can, its has an "open skies policy". Qantas could hub into Dubai and fly 777 to ports in Europe and where ever else they wanted.
But that would not fit into the grand plan of running the airline into the ground.
But that would not fit into the grand plan of running the airline into the ground.
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Point of Difference
There seems to be a readiness to equate the share price of Qantas with a lot of intangible issues such as management, staff, equipment etc, but these are all how the business is done factors and not product and market share factors. Product, market share and sales volume are all that matter in the stock market valuation of the company and the returns on share ownership by way of dividends and share bonus issues. All physical assets are only ever what a written-down market disposal would bring, which is probably about 30% of book value.
A market value of $1 is not an issue for Qantas as a business. From a crude accounting perspective the business is divided up by its share register to arrive at a value per share and there are a lot of those $1 shares out there and still would be at ten times the price, big share book.
Qantas as a group of companies generates healthy sales revenues and hence cash flows and is able overall to generate an operational profit on the price above the cost of its product. It is not a basket case and has well run divisions which all contribute to the company's overall financial health. The business is therefore well differentiated in market terms horizontally. Vertical integration is a limiting factor as the loss of market share on and in international travel markets demonstrates. The company has insufficient capital to become an Emirates or United and given current international economic conditions absolutely no chance of growing this market, which is being shared by more and more competitors on a weekly basis.
As long as the company generates those cash flows and manages its costs it will remain profitable. So the issue of the market valuation of $1 is of concern only to shareholders who are expecting or demanding a capital gain on their holding. The valuation of course makes the business immediately obtainable in terms of a market bid for a controlling interest or even private capital consortium management, that is of course a matter for the Board and the interests or connections they represent to worry about not investors or ordinary shareholders who would see an immediate capital gain were such an offer to arise.
Profitable domestic business with dominant market share, growing leisure class travel arm and with an international side that can still hold over thirty percent market share sounds pretty good to me at a buck a share.
Possible market buyers or current managment are not going to commit corporate suicide by meddling internally much more and so it seems current staffing and management structures will remain which indicates a stable internal business. Everybody inside would have to be fine excepting the inevitable fallout from the rationalisation from older stuff like the 747, continued push for wage containment and the need to manage reduced expectations for those fond of foreign overnights, if you don't mind domestic overnights business will be fine. Question is will A380's or B787's do the trick and hold the line in the international travel market? Who knows need a crystal ball for that one.
A market value of $1 is not an issue for Qantas as a business. From a crude accounting perspective the business is divided up by its share register to arrive at a value per share and there are a lot of those $1 shares out there and still would be at ten times the price, big share book.
Qantas as a group of companies generates healthy sales revenues and hence cash flows and is able overall to generate an operational profit on the price above the cost of its product. It is not a basket case and has well run divisions which all contribute to the company's overall financial health. The business is therefore well differentiated in market terms horizontally. Vertical integration is a limiting factor as the loss of market share on and in international travel markets demonstrates. The company has insufficient capital to become an Emirates or United and given current international economic conditions absolutely no chance of growing this market, which is being shared by more and more competitors on a weekly basis.
As long as the company generates those cash flows and manages its costs it will remain profitable. So the issue of the market valuation of $1 is of concern only to shareholders who are expecting or demanding a capital gain on their holding. The valuation of course makes the business immediately obtainable in terms of a market bid for a controlling interest or even private capital consortium management, that is of course a matter for the Board and the interests or connections they represent to worry about not investors or ordinary shareholders who would see an immediate capital gain were such an offer to arise.
Profitable domestic business with dominant market share, growing leisure class travel arm and with an international side that can still hold over thirty percent market share sounds pretty good to me at a buck a share.
Possible market buyers or current managment are not going to commit corporate suicide by meddling internally much more and so it seems current staffing and management structures will remain which indicates a stable internal business. Everybody inside would have to be fine excepting the inevitable fallout from the rationalisation from older stuff like the 747, continued push for wage containment and the need to manage reduced expectations for those fond of foreign overnights, if you don't mind domestic overnights business will be fine. Question is will A380's or B787's do the trick and hold the line in the international travel market? Who knows need a crystal ball for that one.
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Bleeding
Been looking at Depth into the financials of QF.
I really feel for the people with an "emotional" interest in this situation i.e the pilots. But the writing has been on the wall for sometime....
Profit = Revenue - Costs
The revenue has dropped and I think a return to around the 11.5B mark is probable over the next few years. QF ranks 44 worst out of 50 for the ASX50 for current return on equity. Its somewhere between 2-4%
As far as the shares go, a fairly significant amount of dilution occurred with the offer at $1.40 I think after the GFC. This is affecting EPS
Lets look at a current investment in Westpac Bank. Price is amount 10 times earnings. This means in 10 years you will double your money assuming a dividend payout ratio of 75% i.e. 7 percent annual return. Remember 72/(number of years) = Percent per year required to double your money. This would appear to be a good investment with banks ability to "control" margins with interest rates/fee's and things like mortgage insurance. It is also environmentally friendly.
Now look at QF. With 5c EPS which is now likely over the next few years, times it by 10 and you have 50c. With no dividend, you are Gambling on "growth" creating value. Growth is not coming QF's way anytime soon. At 1.08 its "unattractive" for value investors (takeovers) and Buffet or Graham would not take such a gamble until it prob dropped to something like 40c (5 times 12 less one third).
Now look at something really simple like QF wanting to shed Second Officers. Last one first off means A380 officers need to go. They actually need them to stay because flying to the USA in that thing is about all its good for. This means 747 S/O would need to be trained up costly money they already don't have. Or they can sit around on Blank line rosters.
Domestic is sound. Jetstar is sound. International has major geographic problems that have been caused by the rise of nations with geographic advantage.
The best it can hope for is USA, Hong Kong, Singapore, Bangkok, Shanghai, Tokyo. Maybe Joberg/Manilla etc depending on the global economy which is demographically dismal. The 29 crash causing the great depression was caused by a growth period much like 2003-2007. The market has "stop bars" now for large one day crashes - but expect the market to deflate over the next 5 years.
One more thing. We are victims of expecting growth because we have had growth in this country for 20 years. Its not always possible to grow a business.... Investors have become "traders".... They will pull their money out of businesses that are not growing for a better deal elsewhere. QF "encouraged" this behaviour when it stopped paying a dividend. A better dividend policy would have been prudent for at least the last 8 years. Looking at the dividend yields paid previously, I don't think they were appropriate...
The opposite of Berkshire Hathoway is to have investors pulling out their money during business cycles.
I think broader economic conditions in the next few years will create the opportunity for Jetstar to become QF international without to much fuss. The idea of this being outrageous or sensible will depend entirely on YOUR PERCEPTION based on your individual circumstances as an employee, manager, shareholder, bystander.
The next management team at QF could be far more ruthless than the current one, intact I would suggest at my peril that it is actually doing a few things right in some area's, and certainly not in others....
I would not expect the Govt to intervene - the masses want to fly around for 69 bucks that is just fact. Its going to cost more to park your car soon then fly if it doesn't already.
Such is life. Don't hate the player - hate the game.
Been looking at Depth into the financials of QF.
I really feel for the people with an "emotional" interest in this situation i.e the pilots. But the writing has been on the wall for sometime....
Profit = Revenue - Costs
The revenue has dropped and I think a return to around the 11.5B mark is probable over the next few years. QF ranks 44 worst out of 50 for the ASX50 for current return on equity. Its somewhere between 2-4%
As far as the shares go, a fairly significant amount of dilution occurred with the offer at $1.40 I think after the GFC. This is affecting EPS
Lets look at a current investment in Westpac Bank. Price is amount 10 times earnings. This means in 10 years you will double your money assuming a dividend payout ratio of 75% i.e. 7 percent annual return. Remember 72/(number of years) = Percent per year required to double your money. This would appear to be a good investment with banks ability to "control" margins with interest rates/fee's and things like mortgage insurance. It is also environmentally friendly.
Now look at QF. With 5c EPS which is now likely over the next few years, times it by 10 and you have 50c. With no dividend, you are Gambling on "growth" creating value. Growth is not coming QF's way anytime soon. At 1.08 its "unattractive" for value investors (takeovers) and Buffet or Graham would not take such a gamble until it prob dropped to something like 40c (5 times 12 less one third).
Now look at something really simple like QF wanting to shed Second Officers. Last one first off means A380 officers need to go. They actually need them to stay because flying to the USA in that thing is about all its good for. This means 747 S/O would need to be trained up costly money they already don't have. Or they can sit around on Blank line rosters.
Domestic is sound. Jetstar is sound. International has major geographic problems that have been caused by the rise of nations with geographic advantage.
The best it can hope for is USA, Hong Kong, Singapore, Bangkok, Shanghai, Tokyo. Maybe Joberg/Manilla etc depending on the global economy which is demographically dismal. The 29 crash causing the great depression was caused by a growth period much like 2003-2007. The market has "stop bars" now for large one day crashes - but expect the market to deflate over the next 5 years.
One more thing. We are victims of expecting growth because we have had growth in this country for 20 years. Its not always possible to grow a business.... Investors have become "traders".... They will pull their money out of businesses that are not growing for a better deal elsewhere. QF "encouraged" this behaviour when it stopped paying a dividend. A better dividend policy would have been prudent for at least the last 8 years. Looking at the dividend yields paid previously, I don't think they were appropriate...
The opposite of Berkshire Hathoway is to have investors pulling out their money during business cycles.
I think broader economic conditions in the next few years will create the opportunity for Jetstar to become QF international without to much fuss. The idea of this being outrageous or sensible will depend entirely on YOUR PERCEPTION based on your individual circumstances as an employee, manager, shareholder, bystander.
The next management team at QF could be far more ruthless than the current one, intact I would suggest at my peril that it is actually doing a few things right in some area's, and certainly not in others....
I would not expect the Govt to intervene - the masses want to fly around for 69 bucks that is just fact. Its going to cost more to park your car soon then fly if it doesn't already.
Such is life. Don't hate the player - hate the game.
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Jetstar is sound.
The theories you state are only valid if you believe the financials that QF spout. And if you do believe them, then I've got a bridge you might like to buy.
Simple fact of the matter is that QF is currently all about deception. It is smoke and mirrors. There are things happenning in the background, and faceless men with ulterior motives.
Don't believe all you read, crystal.
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Granted.... The group as a whole is sound would have been a better statement although there are about 30 companies comprising the Qantas Group which could be trimmed.
I have no doubts the Qantas Brand and company will survive and prosper as a whole, but there will be some short term "pain".
Faceless men have a lot to juggle at the moment - I wish them well.
I have no doubts the Qantas Brand and company will survive and prosper as a whole, but there will be some short term "pain".
Faceless men have a lot to juggle at the moment - I wish them well.
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And all the employees wish them gone
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Steve, that figure has left me gobsmacked.
7 people really think that they are doing a good job? One might be a stretch, but 7...? Good lord.
I'm going to have to go away and have a bex and a nice lie down now...
7 people really think that they are doing a good job? One might be a stretch, but 7...? Good lord.
I'm going to have to go away and have a bex and a nice lie down now...