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MERGED: Alan's still not happy......

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MERGED: Alan's still not happy......

Old 23rd May 2014, 03:27
  #4261 (permalink)  
 
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Just doing the maths, 2,800 / 101 flights = Average Load of ~28 per flight with only a week to go. What an amazing business.
Yes, but think of massive revenue each of those 28 seats could have generated for the group at their hugely inflated cost to the amazingly loyal travellers........

Pity the 'Operational Spares' weren't operative when the fuselage maintenance was delayed. Coulda made thousands......of yen.
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Old 23rd May 2014, 04:19
  #4262 (permalink)  
 
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The capacity war appears to be in a hiatus now
I actually don't think that is the case. Don't forget that Borghetti started this by openly stating he wanted to take market share off Joyce and proceeded to do so.

I think that all that has happened is that Joyce (or the board) have capitulated and given up the line in the sand. Borghetti, on the other hand, is most likely pressing full steam ahead in his plan to continue to take market share off Joyce.

Note also that the two had different objectives. Joyce was targeting capacity, seemingly at the expense of market share if necessary. Borghetti doesn't care about capacity, he is only interested in market share, and I think that is the critical point and one that was lost on Joyce.

So the war is still on, just that it was only a capacity war in Joyce's mind, not JB's
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Old 23rd May 2014, 04:55
  #4263 (permalink)  
 
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Quote: "Joyce was targeting capacity, seemingly at the expense of market share if necessary. Borghetti doesn't care about capacity, he is only interested in market share, ....."

Vorsicht,

I think you are a bit confused, it was Dixon and subsequently Joyce who were adamant about their 65% market share "line in the sand" and it was Strambi who openly stated last year "for every Virgin aircraft added we (Qantas) will add two"
QF have been market share driven and attempted to achieve that by increasing capacity. Borghetti's focus was primarily on yield.
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Old 23rd May 2014, 05:01
  #4264 (permalink)  
 
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QF have been market share driven and attempted to achieve that by increasing capacity. Borghetti's focus was primarily on yield.
The most basic rule of business that there is:

You will go broke selling dollar bills for 50c.

Joyce is an idiot. Possibly intelligent, but in a business sense an idiot. With a massive ego. He did not 'pause' the 65% battle for no reason. Sure as eggs are eggs there is not much left to play with.
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Old 23rd May 2014, 05:07
  #4265 (permalink)  
 
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He did not pause the 65% market share strategy because it was one of his KPI's to continue it. Blame the Board first for their stupidity, then blame the management for not having the sense or decency to say to the board that the strategy was hurting the business.

The selfish focus on KPI driven strategies in the interest of individual bonuses, not the collective good of the business is what has killed QANTAS. Reread the post by ALAEA Fed Sec about the Head of International Sales to see what possibly pervades the halls of management to this day. It is no wonder the company is in strife if what is claimed is true.

Last edited by What The; 23rd May 2014 at 05:54.
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Old 23rd May 2014, 05:49
  #4266 (permalink)  
 
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Jetstar’s chief sees blue skies ahead




JETSTAR may have put a hold on expansion into new markets but chief executive Jayne Hrdlicka believes there are significant opportunities within its existing footprint as it enters its second decade.

Dismissing gloomy prognoses from some industry experts about the airline’s Asian businesses, Hrdlicka predicted Jetstar would succeed and continue to grow in its chosen markets.


“The next decade is really exciting for Jetstar because all of the things we’ve done to set ourselves up for success are going to start paying off dividends over the next 10 years as the foundations we set start to really come to life,’’ she said.


“And it all comes down to really being clear about each market we’re working in and what it takes to be successful in that market, thinking about that market through the eyes of our customers in that marketplace and our *people in that marketplace because that’s what drives great outcomes.’’


Jetstar’s strategy came in for criticism earlier this year when the group reported a first-half loss of $16 million, down from a profit of $128m in the previous corresponding period, and parent company Qantas put the brakes on expansion into additional markets until conditions improved.


The losses were blamed on pressure on yields, particularly in Southeast Asia, as well as a $29m share of associate losses, fuel costs and foreign exchange impacts. They came as the airline faced overheated markets in Singapore and Australia, although its domestic arm remained profitable, as well as problems getting its Jetstar Hong Kong start-up going and establishing a second base for Jetstar Japan in Osaka.


Media reports over the weekend suggested its New Zealand unit was failing to gain traction with customers against Air New Zealand.


The reports have been a fillip for unions, which partly blame Jetstar for the woes at Qantas, believing it has been cross-subsidised by the full-service carrier and used to replace high-paying jobs with cheaper equivalents.


But as Jetstar celebrates the 10th anniversary of its operations, Hrdlicka argues the airline’s first decade has been a success and its decade has been a success and its achievements can only be seen as impressive. She says they are far beyond what was imagined when it started flying with 14 ex-Impulse Airlines Boeing 717s in May 2004.


Led at the time by current Qantas boss Alan Joyce — Geoff Dixon was Qantas chief then — the airline began life amid predictions it would fail because no full-service airline at that stage had managed to successfully run a low-cost offshoot. It now has more than 120 aircraft operating to 64 destinations in 16 countries and passenger numbers have grown from 315,000 in its first year of operation to more than 27 million this year.


“In the course of 10 years we’ve touched the lives of over 140 million people and helped them do things they couldn’t otherwise have done with their lives, either visiting family and friends or having great life adventures or starting small businesses, growing small businesses,’’ Hrdlicka says.


“It’s pretty extraordinary the impact that we’ve had as a business and we’ve employed a lot of people in the journey. We started out with roughly 700; today we’re over 7000, and 400 of the original 700 are still with the company.’’


And despite this year’s first-half loss, Hrdlicka says the group has generated more than $1 billion in profit for its shareholders over the past decade while exporting its dual brand low-cost carrier model throughout Asia. In the process, she says, it has built “one of Australia’s few homegrown multinationals with nearly $4bn in revenue’’.


“We’ve changed the face of aviation in Australia, we’ve changed the face of aviation in every market we’re currently operating in,’’ she says, noting the change is not always comfortable for established industry participants.


The US-born former Bain consultant does not dismiss increased domestic competition from Tigerair Australia under the umbrella of Virgin Australia, but says Jetstar’s main focus remains its own business.


“For us, competition’s great,’’ she says. “It does sharpen the mind, it keeps everybody focused. We all understand that low fares are part of the story. We’ve got to earn the right to our customers’ loyalty every day we fly.’’


She agrees the Singapore market, where the group is a 49 per cent partner in locally based Jetstar Asia, is flooded with too much capacity that will take “a couple of years” to absorb even if the various players take a measured approach.


“We announced February that we were suspending growth in Singapore and very shortly after AirAsia announced they were pulling back and Tiger announced they were pulling back,’’ she says. “So I think there’s recognition across all players that there’s too much capacity in the marketplace and that needs to be soaked up.”


On the delays in Hong Kong, where the Jetstar Hong Kong joint venture faces stiff opposition from incumbent airlines as it tries to get regulatory approval, she is “quietly optimistic but not taking anything for granted’’.


Jetstar HK, a joint venture with China Eastern and local conglomerate Shun Tak, had hoped to start flying last year and had approved the purchase of nine Airbus A320s. It recently sold three of the aircraft but still has six sitting on the ground. Hrdlicka says the aircraft sale is aimed to give the company “greater flexibility in navigating what could take quite a long time’’ as it seeks its air operator’s certificate.


Nonetheless, she remains positive about the market and believes Hong Kong remains a significant opportunity.


She is more upbeat about the airline’s joint ventures in Vietnam and Japan.


Jetstar Pacific is majority owned by Vietnam Airlines and caused considerable heartache in its early days when it became embroiled in a Vietnamese government investigation that saw Australian executives prevented from leaving the country.


It has undergone a restructuring in the past two years and Hrdlicka says it is now in a good position, with a fleet of six Airbus A320s providing lower operate costs and good revenue growth. The offshoot has more aircraft on the way and in recent months started international services to Macau


“I think it’s in a really good position for the future,’’ she says. “It’s growing and I think it will be a nice little business.’’


Jetstar Japan, whose partners include Japan Airlines, is going well and is a business “that’s gone from strength to strength’’ as it helped stimulate the Japanese travel market.


Hrdlicka believes it will be “a phenomenal business’’ and that the delays in getting a second base established in Osaka base will work their way through the system.


“When you look at the underlying operational metrics of the business, you see a great success story and I think that’s why people get very excited about it,’’ she says. “We’re delivering very respectable on-time performance — we’re top of the market from an on-time performance standpoint — our load factor is very high, our RASK (revenue per available seat kilometre) and the customer scores from an NPS (Net Promoter Score) standpoint are the highest in the Jetstar Group. They’re on the same level that Qantas would get domestically in Australia.’’


Japan also embodies something Hrdlicka sees as an essential ingredient in Jetstar’s future: the ability listen to and learn from the local culture.


She says the airline has evolved in terms of customer experience, the way it uses its staff and what it sees as its horizons. This has included the use of new technology to improve service for passengers, introducing new planes, such as the fuel-efficient Boeing 787, and in ancillary offerings.


“We’re now one of the most multicultural businesses operating out of Australia and we’ve learned a lot through that experience,’’ she says.


“So one of the great lessons we’ve learned is the need to listen and learn and evolve and to change quickly and to see the opportunities and do whatever we need to do to adjust operational settings and commercial settings to deliver on that opportunity.’’


Despite Hrdlicka’s optimism, there are still many who believe Jetstar has bitten off more than it can chew in the competitive Asian market. The Jetstar boss argues the Asian strategy is not as well understood as it should be because of the way it’s structured. The common branding leads many to assume that Jetstar owns the airlines.


“Effectively we have investments in each of our foreign operations,’’ she says


“The businesses are run by local boards, they all have a local chair. We participate on the board, we provide services to those businesses but they’re locally run businesses and we make fixed investments in those businesses depending on the business.
Jetstar’s chief sees blue skies ahead


Wow, not a single hard, actionable quote or factoid there Jayne, plenty of blue sky ahead motherhood statements though.
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Old 23rd May 2014, 05:58
  #4267 (permalink)  
 
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It's called "whistling past the graveyard".
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Old 23rd May 2014, 06:38
  #4268 (permalink)  
 
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.... The Jetstar boss argues the Asian strategy is not as well understood as it should be because of the way it’s structured. The common branding leads many to assume that Jetstar owns the airlines.


“Effectively we have investments in each of our foreign operations,’’ she says
I am not an aficionado of all things Jetstar, but is that a massive backpedal on previous lines? 'Our Businesses' etc etc. If it is a backpedal, methinks Jet* HKG might finally be being recognised as on shaky ground.... That line (if Im correct) seems tailor made for the HKG regulators and little more. Going further, maybe the reason the interview was organised??

More upbeat about Vietnam??? It was nationalised!!! Funny Define 'upbeat' and 'success' Maam
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Old 23rd May 2014, 07:46
  #4269 (permalink)  
 
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Despite Hrdlicka’s optimism, there are still many who believe Jetstar has bitten off more than it can chew in the competitive Asian market. The Jetstar boss argues the Asian strategy is not as well understood as it should be because of the way it’s structured. The common branding leads many to assume that Jetstar owns the airlines.

“Effectively we have investments in each of our foreign operations,’’ she says
Um, we don't own the airlines, we have 'investment' in their operations.

So we part-own them, then?

Isn't that like we've stopped beating our wives, only just a little bit?

And when someone argues that it's not well understood because of the way it's structured, that begs the question "then why did you structure it that way?"
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Old 23rd May 2014, 08:33
  #4270 (permalink)  
 
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Also don't forget who picks up the bill if the wonderful businesses do not produce profits or fold. Vietnam proved it is a sham arrangement.
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Old 23rd May 2014, 08:41
  #4271 (permalink)  
 
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V-Jet,

How was Jetstar Pacific nationalised ????

A ~70% stake was transferred from a 100% Govt owned Investment authority to a 100% Government owned Airline.
Qantas still has ~30%

Nationalising an airline would be taking Qantas's stake away and paying nothing for it.
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Old 23rd May 2014, 08:59
  #4272 (permalink)  
 
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On edit: yes, QF apparently retain 30% of the shares of JPA. I just read the wiki article on Jetstar Pacific, which has good links to the many articles published in the relevant period. Including the various denials later proven true. Just glancing through the article makes me think $100 million plus has gone down that rabbit hole. So far.

I wonder exactly how the non-transparent structure of Jetstar HK works? Did Qantas gift non-recourse loans to the other partners? I can't imagine Stanley Ho investing $60 million without a $70 million gift first.

I am happy that QF has found a worthy fleet to invest in-one sure to return the cost of capital.

Last edited by Australopithecus; 23rd May 2014 at 09:11.
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Old 23rd May 2014, 09:11
  #4273 (permalink)  
 
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Jetstar HK, a joint venture with China Eastern and local conglomerate Shun Tak, had hoped to start flying last year and had approved the purchase of nine Airbus A320s. It recently sold three of the aircraft but still has six sitting on the ground. Hrdlicka says the aircraft sale is aimed to give the company “greater flexibility in navigating what could take quite a long time’’ as it seeks its air operator’s certificate.
Just wonderful Jane.

When is the next sale of aircraft to take place?
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Old 23rd May 2014, 09:15
  #4274 (permalink)  
 
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I wonder how much they lost on the sale? I imagine everyone in the business can smell the blood in the water.
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Old 23rd May 2014, 10:02
  #4275 (permalink)  
 
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In the half yearly Qantas accounts to 31 Dec 2013, investing cash flows were negative $939m.

In the notes below; it says 7 unencumbered A320 aircraft were added to the fleet.

At that time, 7 brand new A320 were sitting outside the Airbus factory.

Coincidence? Who owns these aircraft? If they are not the actual 7 added, could it be a quid pro quo arrangement with Qantas still ultimately paying the full cost for these idle aircraft, despite the "shared" HK investment rhetoric?

For Qantas, the end result was a negative free cash flow of $358m. Since then, Qantas has issued bonds at a rate of 7.75% to raise some $300m.

Yes Jane, Jetstar has been hugely successful! - at draining Qantas' cash!
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Old 23rd May 2014, 10:05
  #4276 (permalink)  
 
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Moa and the Jetstar/QF media arm:

Vietnam Airlines has announced its intention to take over low cost carrier, Jetstar Pacifiic. The National Carrier, Vietnam Airlines is expanding internationally and the take over of Jetstar will increase its share of the Vietnamese domestic market to over 90%. Jetstar has been operating domestic scheduled services for 7 years and the competition with government owned Vietnam Airlines has forced changes in the way that domestic flights have been priced. The new company will see the exit of Australian carrier as a significant shareholder. Jetstar currently operates a mixed fleet of Airbus A320 and Boeing 737-400 aircraft, it is not yet clear what aircraft will be used post the tale-over.
Yep, sound investment BGA... Kudos and apologies for suggesting otherwise.

PS: Vietnam Airlines IS the Vietnam Govt. Just in case you didn't know....

And .....

TWO Qantas executives at the centre of an investigation into multimillion-dollar fuel-hedging losses in Vietnam have been allowed to return to Australia.
Jetstar Pacific's former chief operating officer, Daniela Marsilli, and its former chief financial officer, Tristan Freeman, flew back to Sydney yesterday, more than six months after Vietnamese authorities detained them shortly before they were to travel with their families to Australia for Christmas.
The pair were barred from leaving Vietnam while authorities investigated $US31 million ($36.5 million) in fuel-hedging losses in 2008 at the Vietnamese arm of Qantas's no-frills brand, Jetstar Pacific.
Qantas said yesterday that the executives were allowed to leave after the investigation was ''terminated''.
More great work in evidence with that...

'Have been allowed to leave' Love that bit!!!

How much did BGA pay to 'allow them to leave'???

Last edited by V-Jet; 23rd May 2014 at 10:50.
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Old 23rd May 2014, 10:49
  #4277 (permalink)  
 
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JETSTAR may have put a hold on expansion into new markets but chief executive Jayne Hrdlicka believes there are significant opportunities within its existing footprint as it enters its second decade.
I would have thought JQ have just completed its first decade of operations. The second decade of operations is still 10 years away.

“The next decade is really exciting for Jetstar because all of the things we’ve done to set ourselves up for success are going to start paying off dividends over the next 10 years as the foundations we set start to really come to life,’’ she said.
Yes, i'd have to agree with you Ms Hrdlicka, youve set the JQ operations "up for success" and you plan to start paying off. But to date your success and paying off the set up costs are a point of contention.

Qantas put the brakes on expansion into additional markets until conditions improved.
oh, I thought JQ and its operating markets are successful. Why the need to put the brakes on such a successful and amazing business.

Media reports over the weekend suggested its New Zealand unit was failing to gain traction with customers against Air New Zealand.
yet another division of the amazing JQ franchise.

We’ve got to earn the right to our customers’ loyalty every day we fly.’
Im afraid Md Hrdlicka is overestimating the loyalty of her customer base. If you have the cheapest fare on the day you'll sell the ticket. Thats hardly related to customer loyalty.

She agrees the Singapore market, where the group is a 49 per cent partner in locally based Jetstar Asia, is flooded with too much capacity that will take “a couple of years” to absorb even if the various players take a measured approach.
ok, so the Singapore business is stuffed for the next few years.

Jetstar HK, a joint venture with China Eastern and local conglomerate Shun Tak, had hoped to start flying last year and had approved the purchase of nine Airbus A320s. It recently sold three of the aircraft but still has six sitting on the ground. Hrdlicka says the aircraft sale is aimed to give the company “greater flexibility in navigating what could take quite a long time’’ as it seeks its air operator’s certificate.
wow, what a reversal. I thought the aircraft were declared operational spares. why the need to sell of required operational spares? Might i say this will probably be the first of many of the operational spares to be sold.

“I think it’s in a really good position for the future,’’ she says. “It’s growing and I think it will be a nice little business.’’
A typical response to the JQ franchises, they WILL be good businesses in the future. What about now?

“We’re delivering very respectable on-time performance — we’re top of the market from an on-time performance standpoint — our load factor is very high, our RASK (revenue per available seat kilometre) and the customer scores from an NPS (Net Promoter Score) standpoint are the highest in the Jetstar Group. They’re on the same level that Qantas would get domestically in Australia.’’
and the profit figures Ms Hrdlicka?

She says the airline has evolved in terms of customer experience, the way it uses its staff and what it sees as its horizons. This has included the use of new technology to improve service for passengers, introducing new planes, such as the fuel-efficient Boeing 787, and in ancillary offerings.
Sounds like the LCC model has failed, each of the above changes are a step closer to the offerings of established full service carriers.

MC
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Old 23rd May 2014, 19:47
  #4278 (permalink)  
 
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Qantas is "in play" in the share market. My own view is that the share price would double or triple if there was a change of strategic direction and the departure of Alan.

The competing view has to be that the Board is so enamoured of Asian markets that they believe it is worth almost any price to get a tiny chunk of it.

My view, which is based on history, suggests that only Asians are allowed to make money from other Asians and that Qantas will fail to make inroads.
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Old 23rd May 2014, 21:42
  #4279 (permalink)  
 
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Will fail?

Is there any measure by which the Asian billions have actually been in any way successful?

How long has it been now?

Alan is the zomie gambler who's been awake for 24 hours trying to win back his losses. It is scary.
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Old 23rd May 2014, 23:30
  #4280 (permalink)  
 
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Are we looking at the next CEO of Qf here?
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