MERGED: Alan's still not happy......
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Mstr caution
I agree with your sentiments re jetstar and Darwin.
However quantifying salaries on a per passenger quotient is misleading as crew are paid per hour not per pax.
A half empty aircraft not not mean half pay.
Probably not the best justification for salary by a CP ??
I agree with your sentiments re jetstar and Darwin.
However quantifying salaries on a per passenger quotient is misleading as crew are paid per hour not per pax.
A half empty aircraft not not mean half pay.
Probably not the best justification for salary by a CP ??
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Tartare:
In a perfect world Tartare you are absolutely right - the "creative destruction" of uncompetitive industries and businesses frees up resources of labour and capital and makes them cheaper - allowing "green shoots" of new businesses to replace them with an overall net positive return to the economy.
That is the theory - but it doesnt take account of geography or the overall forces of technological change either.
For example there is no direct route available between say a retrenched Holden assembly worker and a shiny new job on a shiny new gas platform on the Kimberly coast because Labour is the least mobile resource and the guy probably can't get the training anyway.
Of course the response to that is well, indirect routes exist, and the new gas plant worker gets his car serviced by the old assembly line worker, or buys his groceries in a place where the retrenched holden worker is now cleaning floors, etc. etc etc. We all know the theory.
However the theory fails if when Holden displaces 10,000 jobs and your gasplant only employs 1000 people on 457 visas who fly in fly out from Singapore. All your metaphorical Holden worker sees, sitting on the beach is the flares from the rigs as HIS gas gets sold to Japan to benefit an American owned oil company with no benefit to himself or his kids. That is the reality the likes of Rhineheart et al - **** Australia, **** paying Australian taxes, **** paying Australian mining royalties, I want it all and I will pay politicians whatever they ask to get it for me.
To anyone else reading this, please spare us any more doses of Ayne Rand, which is all bulshyte anyway. We already know about risk and return. What we also know is that the rentier class of which Rhineheart is a shining example, will, as Adam Smith observed, always try to corrupt free markets for their own benefit.
If you study the case of the Bouganville secession and its copper mine, or Nigeria and the rebels of the Okavango(?) oil province you will see the exact same issue playing out: the extraction of rich natural resources from underneath the local population with no benefit to them.
To put it another way, unless you can demonstrably prove to our hypothetical retrenched Holden assembly worker that the North West shelf gas boom is doing some good for him that outweighs his job loss, then he is going tot try and close you down or get some of your stuff for himself - possibly at gunpoint.
Sunfish's view is unnecessarily apocalyptic.
The facts show that when people in industries like car manufacturing lose their jobs, they find others.
The facts show that when people in industries like car manufacturing lose their jobs, they find others.
That is the theory - but it doesnt take account of geography or the overall forces of technological change either.
For example there is no direct route available between say a retrenched Holden assembly worker and a shiny new job on a shiny new gas platform on the Kimberly coast because Labour is the least mobile resource and the guy probably can't get the training anyway.
Of course the response to that is well, indirect routes exist, and the new gas plant worker gets his car serviced by the old assembly line worker, or buys his groceries in a place where the retrenched holden worker is now cleaning floors, etc. etc etc. We all know the theory.
However the theory fails if when Holden displaces 10,000 jobs and your gasplant only employs 1000 people on 457 visas who fly in fly out from Singapore. All your metaphorical Holden worker sees, sitting on the beach is the flares from the rigs as HIS gas gets sold to Japan to benefit an American owned oil company with no benefit to himself or his kids. That is the reality the likes of Rhineheart et al - **** Australia, **** paying Australian taxes, **** paying Australian mining royalties, I want it all and I will pay politicians whatever they ask to get it for me.
To anyone else reading this, please spare us any more doses of Ayne Rand, which is all bulshyte anyway. We already know about risk and return. What we also know is that the rentier class of which Rhineheart is a shining example, will, as Adam Smith observed, always try to corrupt free markets for their own benefit.
If you study the case of the Bouganville secession and its copper mine, or Nigeria and the rebels of the Okavango(?) oil province you will see the exact same issue playing out: the extraction of rich natural resources from underneath the local population with no benefit to them.
To put it another way, unless you can demonstrably prove to our hypothetical retrenched Holden assembly worker that the North West shelf gas boom is doing some good for him that outweighs his job loss, then he is going tot try and close you down or get some of your stuff for himself - possibly at gunpoint.
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"the big money has been squandered on joint ventures in Asia"
About $100m for Jetstar Japan that is now flying 17 leased jets
Something similar for Jetstar Asia that is flying 22 jets and was profitable for 2011 and 2012 - albeit small
Some amount on Jetstar Hong Kong as setup costs.
But as all the planes are leased and most services outsourced the $ aren't that high.
Compare it to a single A380 has a current list of US$390m (A$430m) and a B777 of US$320m (A$355m) (admittedly you pay a lot less)
or even the A$110m spent on Brisbane hangar and catering facilities in the last 12 months
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Great, so let's do the same thing with leased aircraft, but give them to mainline instead.
If leasing really is the way to go, why does mainline own the majority of aircraft leased to JQ?
And while we're on the subject, who owns the 787s? Who got the late penalty payments?
If leasing really is the way to go, why does mainline own the majority of aircraft leased to JQ?
And while we're on the subject, who owns the 787s? Who got the late penalty payments?
moa999:
I'm sorry Moa, but you just dont get it. There are actually FOUR costs associated with the investment:
1. The actual investment cost which you quoted.
2. The OPPORTUNITY COST - which is the amount you could have earned/saved if you had invested that money in a more profitable activity.
3. The cost of management and Board time spent discussing analyzing and decision making on the Asian JQ ventures. This is not an inconsiderable sum.
4. But the granddaddy of them all is the MANAGEMENT OPPORTUNITY COST which is how much money QF could have made if management were investing ALL their time and investment on other opportunities, like fixing the Qantas brand itself rather than wasting time chasing Asian phantoms.
I see this behaviour all the time in sports - people focussing all their time and attention on trying to get one tiny and inconsequential thing right, while the rest of their game goes to hell.
By these metrics, the Asian ventures have killed Qantas because the Board and management has lost focus on the main game. This is why the current parlous state of Qantas finance seems such a surprise to Alan Joyce - it was a surprise, because the stupid prick wasnt watching the important bits.
What are the figures though. I suspect the total amount spent in Asia over the last five years is less than the projected loss for the half.
1. The actual investment cost which you quoted.
2. The OPPORTUNITY COST - which is the amount you could have earned/saved if you had invested that money in a more profitable activity.
3. The cost of management and Board time spent discussing analyzing and decision making on the Asian JQ ventures. This is not an inconsiderable sum.
4. But the granddaddy of them all is the MANAGEMENT OPPORTUNITY COST which is how much money QF could have made if management were investing ALL their time and investment on other opportunities, like fixing the Qantas brand itself rather than wasting time chasing Asian phantoms.
I see this behaviour all the time in sports - people focussing all their time and attention on trying to get one tiny and inconsequential thing right, while the rest of their game goes to hell.
By these metrics, the Asian ventures have killed Qantas because the Board and management has lost focus on the main game. This is why the current parlous state of Qantas finance seems such a surprise to Alan Joyce - it was a surprise, because the stupid prick wasnt watching the important bits.
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The reality of whether or not the investment in Asia has costed Qantas is moot. The premise of the Pan-Asian Strategy was/is fundamentally the right path. Execution has left it down, however.
Jetstar Asia has failed to make profits (albeit has reported profits in 2011 and 2012) which in the public domain has been credited to wet leasing arrangements and some creative accounting. Tiger's last quarter performance of a loss of SGD$18m has dire implications for Jetstar Asia which operates at a substantially higher cost base but commands the same yields as its lower cost competitors. The shift in focus to a feeder airline only further increases its cost base but alienates it from the point to point market it was designed for. And is tantamount to a resignation that it cannot compete with the likes of Air Asia and Tiger Air.
Jetstar Japan burned through it's original capitalization (circa US$120m) within 12 months and went back to the shareholders to raise another ~$120m. Whilst it is reported here that they have 17 aircraft it is widely understood that 5 are parked and likely to be sub-leased. The business case was wildly aggressive in its ramp up which has contributed to numerous commercial, operational and regulatory issues.
Jetstar Hong Kong; more than likely parked. This demonstrates a lack of understanding of the Hong Kong regulatory environment, local culture and the tenacity of Cathay as a competitor. Aircraft parked as noted in other posts at cost.
These brief examples, in my opinion, sum up the issues of both QF and Jetstar. There is a distinct lack of ability and willingness to adapt to local conditions as they pursue growth markets further away from the comfort of an Australian base. More often than not imposing a higher cost base than necessary. Furthermore, in my opinion, it highlights a level of arrogance assuming that the power of the Group and the Brand is greater than it actually is in these markets (Red Q?).
Regardless of what transpires with the Qantas Sales Act or espoused Government Intervention neither will resolve the systemic issues within the Group. At the end of the day, if your competitors are operating comparable/better products at a lower cost base you are always going to loose. It's just good money after bad.
There are definitely decisions that management need to held to account for and the degradation of shareholder value is alarming. Without drastic and dynamic change across the board the future of both Qantas and Jetstar is challenged and the losses will continue to mount. The big question is how do you and who can fix it?
Jetstar Asia has failed to make profits (albeit has reported profits in 2011 and 2012) which in the public domain has been credited to wet leasing arrangements and some creative accounting. Tiger's last quarter performance of a loss of SGD$18m has dire implications for Jetstar Asia which operates at a substantially higher cost base but commands the same yields as its lower cost competitors. The shift in focus to a feeder airline only further increases its cost base but alienates it from the point to point market it was designed for. And is tantamount to a resignation that it cannot compete with the likes of Air Asia and Tiger Air.
Jetstar Japan burned through it's original capitalization (circa US$120m) within 12 months and went back to the shareholders to raise another ~$120m. Whilst it is reported here that they have 17 aircraft it is widely understood that 5 are parked and likely to be sub-leased. The business case was wildly aggressive in its ramp up which has contributed to numerous commercial, operational and regulatory issues.
Jetstar Hong Kong; more than likely parked. This demonstrates a lack of understanding of the Hong Kong regulatory environment, local culture and the tenacity of Cathay as a competitor. Aircraft parked as noted in other posts at cost.
These brief examples, in my opinion, sum up the issues of both QF and Jetstar. There is a distinct lack of ability and willingness to adapt to local conditions as they pursue growth markets further away from the comfort of an Australian base. More often than not imposing a higher cost base than necessary. Furthermore, in my opinion, it highlights a level of arrogance assuming that the power of the Group and the Brand is greater than it actually is in these markets (Red Q?).
Regardless of what transpires with the Qantas Sales Act or espoused Government Intervention neither will resolve the systemic issues within the Group. At the end of the day, if your competitors are operating comparable/better products at a lower cost base you are always going to loose. It's just good money after bad.
There are definitely decisions that management need to held to account for and the degradation of shareholder value is alarming. Without drastic and dynamic change across the board the future of both Qantas and Jetstar is challenged and the losses will continue to mount. The big question is how do you and who can fix it?
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If you ever wanted an admission that makes Sunfish's point, its from John Borghetti (again).
General manager warns Qantas shareholders
John Borghetti told yesterday of the Qantas takeover pressure. Picture: Kristi Miller Source: Herald Sun
QANTAS chief executive Geoff Dixon was forced to "abandon" his day job while working on the unsuccessful $11 billion takeover of the airline earlier this year.
In a warning to all shareholders and management of public companies that are the subject of private equity buyouts, Qantas executive general manager John Borghetti yesterday revealed the size of the task facing senior Qantas executives.
Airline Partners Australia launched its $5.45 a share bid in December last year and looked to have sealed the Qantas takeover in May, before a key US investor scotched the bid by failing to accept by the deadline.
Mr Borghetti said Mr Dixon and chief financial officer Peter Gregg were among high-level staff who worked on the deal.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
[my bold] "It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
General manager warns Qantas shareholders
- by: Rhys Haynes
- From: Herald Sun
- August 31, 2007 12:00AM
John Borghetti told yesterday of the Qantas takeover pressure. Picture: Kristi Miller Source: Herald Sun
QANTAS chief executive Geoff Dixon was forced to "abandon" his day job while working on the unsuccessful $11 billion takeover of the airline earlier this year.
In a warning to all shareholders and management of public companies that are the subject of private equity buyouts, Qantas executive general manager John Borghetti yesterday revealed the size of the task facing senior Qantas executives.
Airline Partners Australia launched its $5.45 a share bid in December last year and looked to have sealed the Qantas takeover in May, before a key US investor scotched the bid by failing to accept by the deadline.
Mr Borghetti said Mr Dixon and chief financial officer Peter Gregg were among high-level staff who worked on the deal.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
[my bold] "It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
Mr Borghetti said Mr Dixon and chief financial officer Peter Gregg were among high-level staff who worked on the deal.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
[my bold] "It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
[my bold] "It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
FYSTI, and the Chairman at the time, Margaret Bloody Jackson, let Dixon and Gregg get away with this instead of running the company, increasing shareholder value and the takeover price even more!!!!!!!!
Saint effing Margaret Jackson, the bitch who "broke the glass ceiling" and was a model of "the new way" was rammed down my throat at Melbourne Business School every effing term,and probably later years as well....And she turned out to be just a greedy arsehole like the rest of them.
Tartare, In your post #951, I think you've made a valid observation, that with a growing class of people in Asian able to travel, there will be big increases in the numbers of travellers and that therefore getting into this market at an early stage is a good idea.
But at the same time I also think you've made one vital assumption that might not be correct. You are assuming that all business is a level playing field and that foreign investors moving into this new, increasing market will be afforded the same advantages as the Locals. I think this is where the whole idea falls down, many MANY people have talked of the problems with Western Businesses trying to push into the Orient, how they play a far meaner game than people expect and they already have the contacts and insider knowledge these Western Businesses need and go to great lengths to prevent them ever gaining this knowledge.
Sunfish seems to possess a good knowledge of how things work over there and will and HAS said many times that they will face big problems trying to move in on that Market. Mstr Caution made the obvious observation of their attempt to use Darwin as a launching pad and how that has failed. Surely the fact that Jet* HK has Aircraft sitting around doing nothing is another sign that things aren't going the way they had expected, I'm no grand Management Guru but it's been my experience that you don't have Aircraft sitting around just for the hell of it and if you do then something has gone wrong and it's going to be costly. Not to mention of RedQ which has seemed to go no where despite the bluster of Qantas Management talking it way up. I seem to also remember talk of a few of their Managers being jailed somewhere for some time, Vietnam or Singapore? Can't quite remember right now.It would seem that so far their ventures into Asian have proved to be far more difficult and costly than they are willing to acknowledge and despite any potential big windfalls they may gain eventually by being present when things really go off they have to last long enough to get there!!
But at the same time I also think you've made one vital assumption that might not be correct. You are assuming that all business is a level playing field and that foreign investors moving into this new, increasing market will be afforded the same advantages as the Locals. I think this is where the whole idea falls down, many MANY people have talked of the problems with Western Businesses trying to push into the Orient, how they play a far meaner game than people expect and they already have the contacts and insider knowledge these Western Businesses need and go to great lengths to prevent them ever gaining this knowledge.
Sunfish seems to possess a good knowledge of how things work over there and will and HAS said many times that they will face big problems trying to move in on that Market. Mstr Caution made the obvious observation of their attempt to use Darwin as a launching pad and how that has failed. Surely the fact that Jet* HK has Aircraft sitting around doing nothing is another sign that things aren't going the way they had expected, I'm no grand Management Guru but it's been my experience that you don't have Aircraft sitting around just for the hell of it and if you do then something has gone wrong and it's going to be costly. Not to mention of RedQ which has seemed to go no where despite the bluster of Qantas Management talking it way up. I seem to also remember talk of a few of their Managers being jailed somewhere for some time, Vietnam or Singapore? Can't quite remember right now.It would seem that so far their ventures into Asian have proved to be far more difficult and costly than they are willing to acknowledge and despite any potential big windfalls they may gain eventually by being present when things really go off they have to last long enough to get there!!
Well said, Mr. Sunfish. You may recall the shameful and sickening hand-clapping dance Jackson did on the stage when she thought the APA bid was going ahead and she was getting the approval to bury her snout in the trough to the tune of several millions of dollars as a result.
Hmmm.... I see she's also a director and former chairman at Billabong.
In about five years:
Qantas will cease to exist
Joyce will return to Ireland and, as he banks his millions, blame the unions for its demise,
Like-minded axemen like Eddington will praise him as he did Jackson and point out the realities of doing business in Australia,
Foreign airlines will carve up the market.
Joyce is not in that company for the long term and his actions have demonstrated he has no particular love for it. Good luck to the employees. There are some good people there and some who have already been through it before.
Hmmm.... I see she's also a director and former chairman at Billabong.
In about five years:
Qantas will cease to exist
Joyce will return to Ireland and, as he banks his millions, blame the unions for its demise,
Like-minded axemen like Eddington will praise him as he did Jackson and point out the realities of doing business in Australia,
Foreign airlines will carve up the market.
Joyce is not in that company for the long term and his actions have demonstrated he has no particular love for it. Good luck to the employees. There are some good people there and some who have already been through it before.
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Sunfish,
Given the regard that most people here, including yourself seem to have for management, lets answer those.
2. The OPPORTUNITY COST - None. Would have been lost against a wall, paid out in management bonuses, or used to buy 1 of the wrong aircraft (ie not a 777)
3. The cost of management and Board time spent discussing & analyzing - again given the stead that management and Board is held in, isn't that a good thing
4. But the granddaddy of them all is the MANAGEMENT OPPORTUNITY COST. See above.
Given the regard that most people here, including yourself seem to have for management, lets answer those.
2. The OPPORTUNITY COST - None. Would have been lost against a wall, paid out in management bonuses, or used to buy 1 of the wrong aircraft (ie not a 777)
3. The cost of management and Board time spent discussing & analyzing - again given the stead that management and Board is held in, isn't that a good thing
4. But the granddaddy of them all is the MANAGEMENT OPPORTUNITY COST. See above.
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Mstr Caution made the obvious observation of their attempt to use Darwin as a launching pad and how that has failed
Consider Malaysia where the government has bent over backwards for Tony, and is spending gazillions on the new (admittedly late) klia2 terminal and still promising super-low terminal charges.
Or Singapore Airport, where again the government owned airport, quickly built a budget terminal, moved airlines back to the main terminal when space became available thanks to completed renovations and is now building a higher quality yet still budget Terminal 4. This will undoubtedly help Tiger, Scoot and indeed Jetstar Asia....
Yet in the backwaters of Australia.
We have the privately owned Brisbane Airport that doesn't want to invest in a 2nd runway unless the airlines kick in now for fees, and a privately owned Darwin Airport who when offered an opportunity to substantially increase flights and facilities instead came up with one of the highest charges of any Australian airport reportedly and said that you need to pay for terminal expansion.
All of these things undoubtedly hurt home based airlines more, by virtue of the relative number of flights they have in Australia.
That's before we get into things like depreciation policies.
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Whilst all that can be done I wouldn't say that a pilot could be retrenched and 'easily move to another industry'. You would have to sell your house, move your family and spend your savings and house capital on a degree in a new venture. And then start again in a new industry and hope the bottom doesn't fall out of that one!
Imagine having to work for a living.
MP
short flights long nights
Sell your house, move your family, spend your savings. Sounds like a lot of people in 89.
Whilst all that can be done I wouldn't say that a pilot could be retrenched and 'easily move to another industry'. You would have to sell your house, move your family and spend your savings and house capital on a degree in a new venture. And then start again in a new industry and hope the bottom doesn't fall out of that one!
Imagine having to work for a living.
MP
bandwidth aren't you?
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I just saw a Qantas ad on the telly and it showed, like, planes and staff and red tails and stuff !!
