The Bitter Truth?
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Other factors beyond the airline’s control have also hurt. Inbound tourism has suffered from a strong Aussie dollar and a sluggish global economy.
High oil prices are relentless
I saw AJ on the 7:30 report blaming the high dollar. Why did Leigh not ask him about the dollar being a benefit in the case of fuel, spare parts and leases?
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The Bitter Truth?
From the FT:
[QUOTE] It is time to admit that Qantas’s long journey has been an awful one. The iconic Australian airline may have famously not crashed (sort of), but shareholders have been left shaken. This week Qantas reported a full-year net loss and cancelled an order for 35 Dreamliners. Its share price at $1.20 is a tree-brushing 80 per cent lower than five years ago and a fraction of the 1995 initial public offer price. Quite impressive considering the dominant, partially protected and oligopolistic position that Qantas has enjoyed in one of the world’s strongest economies.
Who is to blame for this value destruction? Government and unions have played their part. The latter keep costs high so price wars take their toll. The populist obsession with Qantas remaining a true-blue Australian via the 1992 Qantas Sale Act holds attractive foreign capital (and suitors) at bay. Other factors beyond the airline’s control have also hurt. Inbound tourism has suffered from a strong Aussie dollar and a sluggish global economy. High oil prices are relentless. So are those Gulf airlines now flying to Australia with planes made out of money.
Yes, Qantas has done some clever things over the years. Its frequent flyer programme is so profitable it should be illegal (the $575m it made in normalised earnings before tax during the past two years was the same as what Qantas made flying). Launching Jetstar in 2003 as a “holiday” airline to get around the unions, only to dump more and more routes into it, was genius. But the airline is not blameless. Constant complaining despite having a 65 per cent domestic market share rankles. This dominance has led at times to complacency and mad customers. Qantas has also been brutal to new entrants and expensive when rivals are weak. Worst of all, it seems to thinks it has an inalienable right to succeed as part of some Aussie dreamtime legend. If only it did.
[QUOTE]
[QUOTE] It is time to admit that Qantas’s long journey has been an awful one. The iconic Australian airline may have famously not crashed (sort of), but shareholders have been left shaken. This week Qantas reported a full-year net loss and cancelled an order for 35 Dreamliners. Its share price at $1.20 is a tree-brushing 80 per cent lower than five years ago and a fraction of the 1995 initial public offer price. Quite impressive considering the dominant, partially protected and oligopolistic position that Qantas has enjoyed in one of the world’s strongest economies.
Who is to blame for this value destruction? Government and unions have played their part. The latter keep costs high so price wars take their toll. The populist obsession with Qantas remaining a true-blue Australian via the 1992 Qantas Sale Act holds attractive foreign capital (and suitors) at bay. Other factors beyond the airline’s control have also hurt. Inbound tourism has suffered from a strong Aussie dollar and a sluggish global economy. High oil prices are relentless. So are those Gulf airlines now flying to Australia with planes made out of money.
Yes, Qantas has done some clever things over the years. Its frequent flyer programme is so profitable it should be illegal (the $575m it made in normalised earnings before tax during the past two years was the same as what Qantas made flying). Launching Jetstar in 2003 as a “holiday” airline to get around the unions, only to dump more and more routes into it, was genius. But the airline is not blameless. Constant complaining despite having a 65 per cent domestic market share rankles. This dominance has led at times to complacency and mad customers. Qantas has also been brutal to new entrants and expensive when rivals are weak. Worst of all, it seems to thinks it has an inalienable right to succeed as part of some Aussie dreamtime legend. If only it did.
[QUOTE]
