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

[Sunfish]

Could I be forgiven for thinking that the share price is going up because the hedge funds are buying?

To put that another way,Perhaps Qantas is a stock market scam. The hedgies might know the underlying value of the brand. Joyces and Cliffords inept management style will deliver the brand to the hedgies very cheaply.

We then spend money to repaint Jetstar red and white, relaunch the brand with competent management and refloat the company on the back of a 60% share of the Australian domestic market and an "impressive" international record.

[FYSTI]

One mechanism of suppression? Use the excessive depreciation on the International fleet due to its artificially high book value kept the international business in terminal decline (see my previous post #60).

Joyce and Evans lay out in it out in the March 14 2014 Senate hearing (Hansard Transcript). Routes were cash flow positive, yet these routes lost money once depreciation was taken into account. However, we now find out this depreciation figure was artificially inflated because the aircraft had an artificially high book value compared to actual value.

This book value could have been adjusted at any time, yet they chose not to. Why? because then the international operation would have been profitable once they did. Now, when the timing suits them for whatever reason, they adjust the book value with the stroke of a pen and QFI can now return to profitability.

The 14 March 2014 Transcript is worth going over with a fine tooth comb now more information has come to hand. More pieces of the puzzle are revealed.

[MarkZ]

As previous posts have said, the QAN share price may only go up after the announcement - with the view that the worst is behind them, people are thinking that the company is indeed undervalued and may be a good BUY & HOLD contender. Looking at the sheer volume of shares traded from 28/8, it may well be hedge funds jumping in for a taste.


Again not all investors interested in QAN would jump onto PPRUNE to have a search. We follow trends, if a technical trader, and balance sheets if fundamental. Both of these suggest a severely undervalued company to investors. If the share price hits its 52 week high of $1.52 and stays for a period, we will see a lot more buyers from the technical side jump in (search Darvas Trading).


My hope is that AJ doesn't get support from the punters after seeing this. And a bonus on top of his already mind blowing $5m salary. Cant he just be like Warren Buffet: manages the best of the best - Berkshire Hathaway, but pays himself only $100 000 salary a year. Imagine AJs face

[SOPS]

So the share price goes up and it's back slaps and bonuses all round...great

[MarkZ]

Originally Posted by SOPS

So the share price goes up and it's back slaps and bonuses all round...great

Yep, unfortunately if they are focused on that, people who actually care about the company (i.e just about everyone on PPRuNe AUS) will be smacking their heads against brick walls


I personally didn't think it would be an uptrend in share price from the announcement, maybe our emotions are not letting us see what others are.


I see a greedy board and management, who have failed at most of what they have set out to do (while never taking the blame i.e "LETS BLAME FUEL PRICES - AGAIN"), running a great reputation airline into the ground at an alarming rate.

[V-Jet]

Jetstar = Con-Air

[TIMA9X]

Now the weekend has gone by and everyone has has time for this to sink in, good to look back at what was said last Wed/Thurs Live,



other links here
Alan Joyce 7 30 report 28-8-2014 - YouTube


and today, moves on HK "to better demonstrate that control of the business resides in Hong Kong."

Qantas Airways has tweaked the structure of its troubled Jetstar Hong Kong venture with local partner Shun Tak Holdings, in a bid to better demonstrate that control of the business resides in Hong Kong, and speed up the launch of the airline.
In its annual accounts released last week, Qantas said its ownership interest in Jetstar Hong Kong accounted for under the equity method had fallen to 25 per cent from 33 per cent at the time of its last update in February, which listed the interest as of December.

Read more: Qantas moves closer to Hong Kong Jetstar remedy

.

[Deaf]

If the article read

Shun Tak Holdings has tweaked the structure of its Jetstar Hong Kong venture with troubled Qantas Airways

instead of

Qantas Airways has tweaked the structure of its troubled Jetstar Hong Kong venture with local partner Shun Tak Holdings,

The local authorities might be more inclined to believe that it meets the Basic Law.

[GorillaInTheMist]

I have a question the financially more astute may be able to answer. Why is it when Qf declares a loss on one of the Jq Asia ventures it is never expressed as a percentage loss? We are led to believe Qf only owns 51% of Jq Asia in Singapore. So if the loss was 70million, shouldnt it follow that Qf is only exposed to 51% of that loss?
The same issue with all their overseas Jq adventures ?
Am I missing something ?

[SOPS]

Alan won't be happy with this.....people are actually looking now...


Is Qantas too big to fail? - Business - ABC News (Australian Broadcasting Corporation)

[Going Boeing]

Joyce and Evans lay out in it out in the March 14 2014 Senate hearing (Hansard Transcript). Routes were cash flow positive, yet these routes lost money once depreciation was taken into account. However, we now find out this depreciation figure was artificially inflated because the aircraft had an artificially high book value compared to actual value.

This book value could have been adjusted at any time, yet they chose not to. Why? because then the international operation would have been profitable once they did. Now, when the timing suits them for whatever reason, they adjust the book value with the stroke of a pen and QFI can now return to profitability.

FYSTI, I totally agree with you. QF management could have adjusted the book value a lot earlier but they obviously didn't want that and the only reason that a company's CEO would trash talk one of its divisions is because he wanted it to look bad. Joyce needed an excuse to cancel the Mainline A380 and B787 orders so that he would then have the cash to place the massive order of 110 A320's for all the Jetstar entities. If QF International continued to be profitable (it was prior to Joyce taking over) then the institutional investors would have reacted to any cancellation of orders - especially for the very fuel efficient B787's.

Apart from the book values now at a level that will allow routes to be profitable, the company still has to deal with the massive $11 billion debt that Clifford & Joyce have imposed on the airline.

[TIMA9X]

The words out! Alan & Leigh won't be happy!

Alan & Leigh won't be happy!

Qantas woes down to a complete failure of leadership

Ideas man: Alan Joyce isn't a liar, he just doesn't know what he's talking about. Photo: Daniel Munoz

There can really be no doubt why Qantas has entered a tail spin/ can't take off/ hasn't reached the end of the runway/ enter your favourite flying analogy here. It all boils down to a very simple issue – leadership. It almost appears as if the ongoing commercial failure of our national carrier is intended to be the classic, textbook example of how Australia lost its way in the early years of the 21st century. Because the airline offers lessons that have much wider, national applications. Lets examine these in turn.
First up, it's important to note that the airline's problems have nothing to do with the fact that CEO Alan Joyce is Irish.


Now analysts might suggest the fact Joyce looks intently and directly into your eyes without blinking suggests he's lying, but I think not. (Did you see the earnest sincerity with which he engaged the camera in his 7.30 interview with Chris Uhlmann the other day?) This is to misunderstand the man, because it's actually far worse than this. He doesn't actually have a clue what's true and what's not. He may indeed be spinning a different story every day – but he does so with the sort of earnestness that just can't be faked. Joyce believes his own yarns and this is Qantas's biggest problem.

Qantas chief Alan Joyce. Photo: Getty Images



The Blarney stone's perched atop the battlements of a castle in the south of Ireland. Anyone who kisses it supposedly has the ability to weave dubious facts into an eloquent, plausible explanation of reality. I have no idea if Joyce has ever preformed this ritual, nevertheless I shouldn't be at all surprised if he had. He certainly seems to have the ability to convince their listeners of his preferred interpretation of events – no matter how far at odds with reality it happens to be.


Do you remember a couple of years ago, when the great answer was going to be the development of a 'premium airline' to service the Asian market? A non-starter if ever there was one, as any quick analysis of the myriad of problems (landing rights, frequency, cost) would have shown. Yet he wasted enormous time and energy before abandoning his cherished project. Then, suddenly, the key to success was all about retaining 65 percent of the market – even at the cost of $8.75 million each and every day and damn profitability. This from a bloke whose only successful airline management experience comes from running low-cost Jetstar under close and constant supervision almost a decade ago.

Qantas Management "Smoke and Mirrors" - YouTube

Joyce's problem is simple. He gets very excited each time he sees a new big idea, because every time it seems to offer the solution. He becomes convinced he – and only he – can see the way forward. He becomes convinced this new plan will work. It will, he's sure! And what executive who wants to get ahead is ever going to tell their boss otherwise? Or put forward minor complications (like 'it's a stupid idea') when Joyce believes he's finally found a path to the Promised Land? Nobody.


His supine chairman, Leigh Clifford, doesn't have a clue either. Management theory suggests organisational processes are the key to success. Theoretically, Clifford's time as CEO of Rio Tinto should, therefore, have equipped him with the skills to run an airline. Unfortunately, it's rubbish. Each business is different. It's like suggesting a retailer can run a media group. Clifford and Joyce both took up their positions in 2008. Nearly six years on it's obvious they're stumbling blindly in the dark. It's like watching two drunks attempting to open a door. One stands spellbound as the other continues finding new, shiny baubles and continues thrusting them into the lock. It's never going to open, but they're too intent on the task to listen to advice.


The symbolism of their little failure has wider dimensions. Qantas shareholders are effectively disenfranchised. What sort of disaster would be necessary to change the management and board? And what relief would such a change bring, anyway? The problem is the framework.

Joyce and Clifford will continue extorting money from Qantas because they're doing their jobs. The mere fact that they're unable to find a solution doesn't seem to overly concern either man. Instead they bumble forward trying other bizarre schemes in a desperate attempt to turn the problem around.


Yet no matter how imaginative these ideas happen to be, management theory is utterly correct about one thing. Bad leaders won't be able to turn even the best idea into a success. And this is where the column turns from the specific to the general; from Qantas to Australia.


There are, on both sides of politics, a number of really good, imaginative and capable people. I feel far happier, for example, knowing Malcolm Turnbull's in charge of the NBN than I ever could with Stephen Conroy being in charge of anything (let alone Defence). Joe Hockey, however, is a disaster as Treasurer: give me Chris Bowen any day. I'm still out on who I want for PM (although I know the majority of readers have well and truly made up their minds they don't want the incumbent).
Yet the problem isn't that incompetents are running the show. That's always occurred. What's different now is that the rewards at the top are so great that nobody further down the line is prepared to risk inserting a little dose of reality for fear it will stymie their career. Stupidity is allowed to flourish

Read more: Qantas woes down to a complete failure of leadership

my bold

[FYSTI]

Brilliant article TIMA9X. This is the quote I like the best, the general case:

Yet no matter how imaginative these ideas happen to be, management theory is utterly correct about one thing. Bad leaders won't be able to turn even the best idea into a success. And this is where the column turns from the specific to the general; from Qantas to Australia.

There are, on both sides of politics, a number of really good, imaginative and capable people. I feel far happier, for example, knowing Malcolm Turnbull's in charge of the NBN than I ever could with Stephen Conroy being in charge of anything (let alone Defence). Joe Hockey, however, is a disaster as Treasurer: give me Chris Bowen any day. I'm still out on who I want for PM (although I know the majority of readers have well and truly made up their minds they don't want the incumbent).

Yet the problem isn't that incompetents are running the show. That's always occurred. What's different now is that the rewards at the top are so great that nobody further down the line is prepared to risk inserting a little dose of reality for fear it will stymie their career. Stupidity is allowed to flourish.

Which is basically a restatment of Celine's second Law

Accurate communication is possible only in a non-punishing situation.

Wilson rephrases this himself many times as "communication occurs only between equals." Celine calls this law "a simple statement of the obvious" and refers to the fact that everyone who labors under an authority figure tends to lie to and flatter that authority figure in order to protect themselves either from violence or from deprivation of security (such as losing one's job). In essence, it is usually more in the interests of any worker to tell his boss what he wants to hear, not what is true.

In any hierarchy, every level below the highest carries a subtle burden to see the world in the way their superiors expect it to be seen and to provide feedback to their superiors that their superiors want to hear. In the end, any hierarchical organization supports what its leaders already think is true more than it challenges them to think differently. The levels below the leaders are more interested in keeping their jobs than telling the truth.

The problem is, these masters of the universe are going to take the rest of us down with them. In the end though, they will suffer the indignity of failed reputations as they ride of into the sunset with their millions. Folks, they never have to work again. The rest of us will be simply hoping to avoid bankruptcy.

Sitting around and waiting for something to change, from the shareholders, ASIC, ACCC, government or unions is no longer an option. The leadership are going to take this down through sheer incompetence, and everyone else is going to sit back and watch it implode knowing the outcome.

What are we going to do about it? WE ARE THE ONLY ONES THAT CAN CHANGE IT. We are basically at the point of revolution or bust.

[maggot]

Originally Posted by GorillaInTheMist

I have a question the financially more astute may be able to answer. Why is it when Qf declares a loss on one of the Jq Asia ventures it is never expressed as a percentage loss? We are led to believe Qf only owns 51% of Jq Asia in Singapore. So if the loss was 70million, shouldnt it follow that Qf is only exposed to 51% of that loss?
The same issue with all their overseas Jq adventures ?
Am I missing something ?

It's been my thoughts that they only state the loss (never actually a profit?) as per the QF paper holding. ie. the third that is stated - so you can multiply the losses by 3 - then add an additional factoring as the figures given are BS.

They wanted the tax payer to subsidise this sham, and, their long serving employees and shareholders

[Archer2002]

At least Terry likes him.....

http://www.heraldsun.com.au/business...-1227044388847

Joyce cops false rap over Qantas’ massive loss


ALAN Joyce has been getting a bum rap over Qantas’s massive $2.8 billion loss. It’s also quite wrong to see the loss as life-threatening for the airline.
The core reason for both statements is the same. That first, the official loss grossly overstated what might be termed the “real” red ink at the flying roo.
And then secondly, that “real” red ink was almost totally concentrated in the international arms of both the parent Qantas and the discount offshoot Jetstar.
On a deeper level, you need to also understand the exact nature of the two quite separate tsunamis that have been coming at Qantas, and how Joyce has — in my judgment, both boldly and effectively — crafted a sophisticated and integrated operational strategy to respond to them.
Now obviously, no CEO could expect to get a billion frequent flyer points as a bonus after unveiling a loss approaching $3 billion. Indeed, not even after unveiling the more modest “real” loss of $646 million.
But the calls for Joyce to be sacked in consequence, or even just to be “preparing” his departure, say, next year, are not only unfair but show a yawning ignorance of the domestic and international aviation realities, and in truth, Qantas’s actually pretty impressive success in responding to them.
Plus critically and really fundamentally, there was no alternative to what Joyce did — starting with his controversial grounding of the airline to force some reality into industrial relations negotiations. Without which he really would have had no choice but to ground international, permanently.
More broadly what he has done has been to respond aggressively to the equally aggressive efforts of his opposite number at Virgin Australia, John Borghetti, to win market share in the domestic space: Joyce’s famous “we’ll add two planes for every one of yours”.
Then, in the international sphere, Joyce sought to savagely prune Qantas’s operational footprint, but at the same time making the key decision not to walk away entirely — squaring the circle so to speak, through the relationship with Emirates.
Let’s start with the all-important numbers. As has been pretty well explained, most of the $2.8 billion loss came from a drop in the value of Qantas’s international fleet.
It bought the planes when the Aussie dollar was 68c, so each $US10 million spend required $14.7 million. Now that the Aussie’s US93c, each $US10 million worth of those planes is worth now only $10.8 million.
This currency change is completely out of the control of any CEO. He had to take the currency as it was when he (and his predecessor, Geoff Dixon) bought the planes; equally, they have to take the Aussie value dollar into the accounts as it is now.
The “real” — the operational — loss was “just” $646 million. That “just” is actually reasonable when you understand that at least $630 million of it came from the two international operations. Qantas said it lost $497 million on Qantas international. The Jetstar group lost $116 million, but the domestic part was in profit so Jetstar international must have lost at least $135 million.
So the “Qantas problem” was focused on international.
That flows from a combination of the huge legacy cost of the main airline’s operations into the fierce competition from much better placed traditional carriers like Singapore and the new Middle Eastern hub airlines, and the start-up costs of Jetstar’s discount moves.
Looked at narrowly, Qantas had two choices — close international or try to make it at least wash its face. It — sensibly — chose the latter; and that meant doing two things; cut costs and then cut them again.
What I means is, there had to be “two types” of cost-cutting: the conventional one, captured in slashing its staff numbers by 5000; and the unconventional one of replacing perhaps half the former direct Qantas flights with Emirates hubbing out of Doha.
Why did I say “sensible”? Because it is critical to the airline’s overall dynamic — and, hopefully, future growth and profitability — to keep the international arm as one of the three interlocking business elements. International, domestic and frequent flyer. Think of it as the exact reverse of what Virgin and its three international backers have been doing — building domestic capacity (and a FF program) to sit beside its international operations.
If Qantas walked away from international, it would win some short-term relief from red ink, but at the cost of undermining both its domestic arms and the — very lucrative — FF program.
The FF program was the jewel in the crown, generating $286 million of profit. Based on the $330 million Jetstar got for selling a one-third share of its FF program, the Qantas one is worth at least $3 billion.
All this is also why critics of the Joyce strategy of defending the 65 per cent domestic share line in the sand demonstrate only their inability to understand its critical role in the overall integrated necessity.
If Qantas allowed Virgin to get a firm grip over 40 per cent plus of domestic, it would not simply threaten the profitability of both Qantas and Virgin domestics; but destabilise the delicate mix with international and the FF program.
Critically, Qantas flew through the savage domestic price war with both the main airline ($30 million) and Jetstar domestic ($20 million plus) still in the black.
While it is Virgin, which lost around $60 million on domestic, that has been forced to call for peace. But just maybe too late. It will struggle to get back into the black, while Qantas group domestic could very well surge.
In sum and in short, Joyce has actually steered the airline through some pretty tough times. But more than that, he has also been crafting an effective — crucially, integrated — long-term growth strategy.

[SOPS]

If that is a direct cut and paste...the guy does realise that Qantas flies out if Dubai, not Doah, does he?

Edited to say, I have just read that article again. Judging by all the errors in it about things I know about, I would give its entire credibility rating, about a 1.

[Comoman]

"The FF program was the jewel in the crown, generating $286 million of profit. Based on the $330 million Jetstar got for selling a one-third share of its FF program, the Qantas one is worth at least $3 billion."

Yes of course Jetstar sold it's one-third share of it's FF program! Virgin must be hiding. Pretty fundamental errors in that article.

[Stalins ugly Brother]

Maybe the HeraldSun should stick to stories they know best, like Gabi Greko and footballers on Mad mondays

[Fliegenmong]

Ah Mr McCrann!!, writes for the LNP Newsletter that masquerades as the state paper up here, I suspect Mr Andrew Bolt stands in for Terry whilst he is on holiday....

[TIMA9X]

with Emirates hubbing out of Doha.

Well it is the Herald Sun, another Murdoch puff piece generation outlet, and this paper were leaked a lot of stuff in the lead up to last Thursday, remember this gem..

No Cookies | Herald Sun

got everyone going..

and the grand Murdoch puff piece's of them all

http://www.theaustralian.com.au/top5...-1226267966636

Cookies must be enabled. | The Australian

all sounded great back then...

The Murdoch press have always been supportive of the current management in my view.. great mates..

This Terry McCrann story (above) probably was generated from a script from Q PR to counter the criticism ... I guess The Australian will follow with another similar story soon...(Steve Creedy?) other than the Murdoch press, Joyce and Clifford were hammered by most other news outlets since the announcement.. The Q PR machine will be working overtime in the next few weeks to try and recover.. the trouble for them now is, we can all see through it including the public, .. making their job a whole lot harder, they will have to come up with something believable.. something they haven't been very good at the last couple of years.