MERGED: Alan's still not happy......
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Is anyone really surprised? Hasn't this been the plan from the start?
We all ask the questions; How? Why? We mutter incompetence, bad management, failures at the highest levels, CEO, board etc..
No. A long term strategy devised long ago and played out very cleverly through a naive media and gullible public.
I'm only surprised it has taken this long..
We all ask the questions; How? Why? We mutter incompetence, bad management, failures at the highest levels, CEO, board etc..
No. A long term strategy devised long ago and played out very cleverly through a naive media and gullible public.
I'm only surprised it has taken this long..
Aust BT report
Qantas is expected to reveal a record billion dollar loss next week when the airline open its books on the 2013-2014 financial year.
The Flying Kangaroo is tipped to report a pre-tax loss of some $750-770 million, according to analysts, as the airline enters the second year of an ambitious three-year ‘transformation program’ aimed to carve out $2 billion dollars in costs by mid-2017.
But one-off costs from the airline’s restructuring, including redundancy payments for 2,200 workers, are likely to add some $250 million to the tally.
Virgin Australia won't exactly be sending out rays of sunshine either, with analysts pegging Virgin Australia’s pre-tax loss at around $250-$270 million including the lacklustre performance of low-cost airline Tiger, in which Virgin holds a 60% stake.
Qantas will present its annual results next Thursday, August 28, with Virgin Australia following on Friday August 29.
The cost of competition
Australian aviation’s billion dollar sinkhole of 2014 is a stark contrast to just four years ago.
In mid-2010 Qantas was riding high on a pre-tax profit of $377 million, and one year later would see this catapult to $552 million before everything went pear-shaped.
Virgin Australia – then operating as the low-cost airline Virgin Blue – had turned the corner to eke out a net profit of $21 million, compared with a $160 million loss the year prior.
How to account for the turbulent flight path from 2010 to 2014?
It's a result of keen competition between Qantas and Virgin Australia, says CIMB analyst Mark Williams, with both airlines adding more seats or capacity onto the domestic market in an effort to win over travellers or protect their own turf.
“It’s the effect of excess capacity in the domestic market driven by Virgin (initially) increasing its frequencies to target the corporate market, which Qantas then reacted to by putting its own capacity into the market to maintain market share, its 65% line in the sand” Williams told Australian Business Traveller.
“This has been exacerbated by excess capacity in the international markets as well as a number of international carriers have increased their capacity into Australia” Williams says.
The knock-on effect of so many new flights with so many extra seats meant lower passenger revenue or yields for each airline.
“The result of too much capacity has been downward pressure on yields, which has has been the main driver of the losses you are now seeing for both airlines” Williams explains.
A war on two fronts
Qantas has also been squeezed by foreign airlines, with Morningstar Equity Research analyst Scott Carroll describing the international market as “Qantas Achilles’ heel”.
“Qantas International operates at a cost-base disadvantage to Asian and Middle Eastern airlines that have added capacity” into the Australian market, Carroll says.
So while a capacity freeze by Qantas should allow natural market growth to catch up, Carroll predicts the airline’s international recovery will see it “exit loss-making routes, deliver cost saving initiatives and announce new international partnerships.”
Analysts will go into next week’s back-to-back financials from Qantas and Virgin Australia seeking more clarity from both airlines as to how they will claw back costs in the coming year.
Also read: Qantas Frequent Flyer sell-off shelved
Follow Australian Business
The Flying Kangaroo is tipped to report a pre-tax loss of some $750-770 million, according to analysts, as the airline enters the second year of an ambitious three-year ‘transformation program’ aimed to carve out $2 billion dollars in costs by mid-2017.
But one-off costs from the airline’s restructuring, including redundancy payments for 2,200 workers, are likely to add some $250 million to the tally.
Virgin Australia won't exactly be sending out rays of sunshine either, with analysts pegging Virgin Australia’s pre-tax loss at around $250-$270 million including the lacklustre performance of low-cost airline Tiger, in which Virgin holds a 60% stake.
Qantas will present its annual results next Thursday, August 28, with Virgin Australia following on Friday August 29.
The cost of competition
Australian aviation’s billion dollar sinkhole of 2014 is a stark contrast to just four years ago.
In mid-2010 Qantas was riding high on a pre-tax profit of $377 million, and one year later would see this catapult to $552 million before everything went pear-shaped.
Virgin Australia – then operating as the low-cost airline Virgin Blue – had turned the corner to eke out a net profit of $21 million, compared with a $160 million loss the year prior.
How to account for the turbulent flight path from 2010 to 2014?
It's a result of keen competition between Qantas and Virgin Australia, says CIMB analyst Mark Williams, with both airlines adding more seats or capacity onto the domestic market in an effort to win over travellers or protect their own turf.
“It’s the effect of excess capacity in the domestic market driven by Virgin (initially) increasing its frequencies to target the corporate market, which Qantas then reacted to by putting its own capacity into the market to maintain market share, its 65% line in the sand” Williams told Australian Business Traveller.
“This has been exacerbated by excess capacity in the international markets as well as a number of international carriers have increased their capacity into Australia” Williams says.
The knock-on effect of so many new flights with so many extra seats meant lower passenger revenue or yields for each airline.
“The result of too much capacity has been downward pressure on yields, which has has been the main driver of the losses you are now seeing for both airlines” Williams explains.
A war on two fronts
Qantas has also been squeezed by foreign airlines, with Morningstar Equity Research analyst Scott Carroll describing the international market as “Qantas Achilles’ heel”.
“Qantas International operates at a cost-base disadvantage to Asian and Middle Eastern airlines that have added capacity” into the Australian market, Carroll says.
So while a capacity freeze by Qantas should allow natural market growth to catch up, Carroll predicts the airline’s international recovery will see it “exit loss-making routes, deliver cost saving initiatives and announce new international partnerships.”
Analysts will go into next week’s back-to-back financials from Qantas and Virgin Australia seeking more clarity from both airlines as to how they will claw back costs in the coming year.
Also read: Qantas Frequent Flyer sell-off shelved
Follow Australian Business
I know this is slightly off topic, and probably deserves a thread of it's own but:
Every professional pilot know this is BS, but you'd be suprised about how the downward pressure on T+C's is a result of a commonly held belief in management and research circles that airliners fly themselves, that all pilot's do is turn on the magical "autopilot", which by definition does 100% of the job, while the pilots sit back and read the paper.
Even if they can't completely automate airline flying, they believe the advent of technology dumbs down the role of pilots to the extent you can pay and treat them like idiots. This book is a mind opening read into how the higher ups think of pilots, you might disagree with the theory but it's enlightening into how they think:
OK back to the topic at hand,
The fact that many employee EBA's are open at the moment will probably be used with the expected loss as a bargaining tool to drive down T+C's in QF, especially the LH EBA which should be open for renegotiation soon.
6. Please tell me where I can buy a computer which can;
- administer first aid to a passenger having an inflight heart attack, or
- land an A330 with a severe flight control computer malfunction, or
- successfully return to an airport an A380 severely damaged after a engine explosion or a 747 after an unprecedented oxygen cylinder rupture, or
- perform a pre-flight walk-around of an airliner.
- administer first aid to a passenger having an inflight heart attack, or
- land an A330 with a severe flight control computer malfunction, or
- successfully return to an airport an A380 severely damaged after a engine explosion or a 747 after an unprecedented oxygen cylinder rupture, or
- perform a pre-flight walk-around of an airliner.
Even if they can't completely automate airline flying, they believe the advent of technology dumbs down the role of pilots to the extent you can pay and treat them like idiots. This book is a mind opening read into how the higher ups think of pilots, you might disagree with the theory but it's enlightening into how they think:
OK back to the topic at hand,
The fact that many employee EBA's are open at the moment will probably be used with the expected loss as a bargaining tool to drive down T+C's in QF, especially the LH EBA which should be open for renegotiation soon.
Again off topic, but in response to above:
If Discrepancy can do it, then I guarantee a computer can!! **
**Of course both the computer and Discrepancy (especially Discrepancy) would need the help of an exceptional F/O and SCC, but I digress.
- successfully return to an airport an A380 severely damaged after a engine explosion or a 747 after an unprecedented oxygen cylinder rupture, or
- perform a pre-flight walk-around of an airliner.
- perform a pre-flight walk-around of an airliner.
**Of course both the computer and Discrepancy (especially Discrepancy) would need the help of an exceptional F/O and SCC, but I digress.
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I have yet to know of an aeroplane capable of auto take offs. The rest is mute if you can't get the thing off the ground. Is there a capability for a reject scenario to be performed automatically with several non- normals? I don't think so and probably never will be. Happy to be corrected. I would love to make Alan happy.
Sorry, couldn't help myself :)
The rest is mute
muːt/
adjective
1.
subject to debate, dispute, or uncertainty.
"whether the temperature rise was mainly due to the greenhouse effect was a moot point"
synonyms: debatable, open to debate, open to discussion, arguable, questionable, at issue, open to question, open, doubtful, open to doubt, disputable, contestable, controvertible, problematic, problematical, controversial, contentious, vexed, disputed, unresolved, unsettled, up in the air, undecided, yet to be decided, undetermined, unconcluded
"whether the temperature rise is due to the greenhouse effect is a moot point"
2.
NORTH AMERICAN
having little or no practical relevance.
"the whole matter is becoming increasingly moot"
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It must have been the competition.....
https://www.youtube.com/watch?v=07tQqxv-Dlo
Look closely on the deck, that's the pay cheque hanging out of his back pocket....rumour has it the after party went on for weeks....
Never even tried......best described as a greedy coward.....
Look closely on the deck, that's the pay cheque hanging out of his back pocket....rumour has it the after party went on for weeks....
Never even tried......best described as a greedy coward.....
Last edited by Acute Instinct; 22nd Aug 2014 at 07:46.
short flights long nights
Yes, it almost like he has disappeared of the face of the earth.
short flights long nights
Qantas sets up cabin crew support centre pre FY14 results | Plane Talking
Blaming increasing fuel prices...again. A quick check of the IATA fuel price monitor shows that world wide the fuel price has dropped 5.7% in the last year! and in Australia it has fallen 7.4%.
These people could not run a bath.....
Blaming increasing fuel prices...again. A quick check of the IATA fuel price monitor shows that world wide the fuel price has dropped 5.7% in the last year! and in Australia it has fallen 7.4%.
These people could not run a bath.....
“Chocolate rations have been increased from eighty grams to fifty”
“Doublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.”
“He who controls the past controls the future. He who controls the present controls the past.”
"Freedom is slavery.
Ignorance is strength.”
Ignorance is strength.”
From the Plane Talking article:
"
What has happened to Qantas is that it became the plaything of unscrupulous and ignorant people. It is now incapable of surviving as any form of investment grade company because it has failed to pursue the aim of all businesses: "Maximise shareholder value in the long term".
There are a number of competing themes that will be identified in the Qantas epitaph:
The first is that Qantas attracts Directors and Managers to its ranks for all the wrong reasons and failed to screen them. This is partially due to the presence of hedge funds on its shareholder register.
As Gough Whitlam said "Being made a Director of Qantas is the Australian equivalent of being elevated to the House of Lords". A Qantas Directorship opens up a treasure trove of largesse in the form of access to limitless first class International travel and the ability to bestow the same on others. Furthermore, the criticality of air service provision to regional economic development and Qantas Australian dominant position hands huge power over the Australian economy to management and the Board.
So what has Qantas been dealt? A Chairman, CEO and CFO who presided over a failed private equity takeover, neglecting supervision of their core business in the process?
They followed that by starting a low cost model airline that was bound to cannibalise their core business.
They followed that by falling for the "Asian Trap" - taking the bait that investing in "huge Asian markets" would deliver them superior profits, a game as my Father said was played by the Chinese at least Five times to his knowledge since 1935. Nobody makes money off Chinese except other Chinese.
They followed that by destroying what little trust was left between management and employees.
They followed that by deliberately subsidising the bastard child Jetstar at the expense of its parent, destroying profitability and customer loyalty in the process.
They followed that by entering into a business relationship with Emirates that is one sided and toxic to any growth of international services.
So here we are today; A Board with a morbid hatred of its employees and a focus on costs, not value for money; A CEO who only knows low cost airlines and who will defend his creation - Jetstar, to his dying breath; A variety of Asian investments that cannot and will not ever make money for the parent; A customer base that is no longer loyal because they are forced to taste the putrid product that is Jetstar; A bag of hungry competitors that can easily force their way through the gaps Qantas leaves in its business strategy.
I've tasted the Qantas domestic products twice in the last month. Qantas business class domestic was good I thought, Jetstar was simply toxic. What Board in their right mind supports Jetstar???? Jetstar International as well? Are you kidding?
And of course I'm not even mentioning the technical and fleet selection decisions this mob have made over the last Fifteen years.
"
However the deeper concern about the Qantas infatuation with Jetstar is that it deluding itself if it thinks its full service customers will transfer their loyalties to Jetstar.
There is nothing about the Jetstar experience that will engender loyalty from Qantas customers, since it is a cheap price driven product offering, and itself prone to being too expensive if compared to Scoot or AirAsiaX or within Australia, the less available and even less reliable Virgin Australia controlled Tigerair low cost carrier.
No wonder, perhaps, that Qantas isn’t rushing into selling part of the Qantas loyalty scheme, since it is supposed to be about Qantas rewards, not something offered by a partner brand to whom the loyalty of Qantas customers cannot be taken for granted.
There is nothing about the Jetstar experience that will engender loyalty from Qantas customers, since it is a cheap price driven product offering, and itself prone to being too expensive if compared to Scoot or AirAsiaX or within Australia, the less available and even less reliable Virgin Australia controlled Tigerair low cost carrier.
No wonder, perhaps, that Qantas isn’t rushing into selling part of the Qantas loyalty scheme, since it is supposed to be about Qantas rewards, not something offered by a partner brand to whom the loyalty of Qantas customers cannot be taken for granted.
There are a number of competing themes that will be identified in the Qantas epitaph:
The first is that Qantas attracts Directors and Managers to its ranks for all the wrong reasons and failed to screen them. This is partially due to the presence of hedge funds on its shareholder register.
As Gough Whitlam said "Being made a Director of Qantas is the Australian equivalent of being elevated to the House of Lords". A Qantas Directorship opens up a treasure trove of largesse in the form of access to limitless first class International travel and the ability to bestow the same on others. Furthermore, the criticality of air service provision to regional economic development and Qantas Australian dominant position hands huge power over the Australian economy to management and the Board.
So what has Qantas been dealt? A Chairman, CEO and CFO who presided over a failed private equity takeover, neglecting supervision of their core business in the process?
They followed that by starting a low cost model airline that was bound to cannibalise their core business.
They followed that by falling for the "Asian Trap" - taking the bait that investing in "huge Asian markets" would deliver them superior profits, a game as my Father said was played by the Chinese at least Five times to his knowledge since 1935. Nobody makes money off Chinese except other Chinese.
They followed that by destroying what little trust was left between management and employees.
They followed that by deliberately subsidising the bastard child Jetstar at the expense of its parent, destroying profitability and customer loyalty in the process.
They followed that by entering into a business relationship with Emirates that is one sided and toxic to any growth of international services.
So here we are today; A Board with a morbid hatred of its employees and a focus on costs, not value for money; A CEO who only knows low cost airlines and who will defend his creation - Jetstar, to his dying breath; A variety of Asian investments that cannot and will not ever make money for the parent; A customer base that is no longer loyal because they are forced to taste the putrid product that is Jetstar; A bag of hungry competitors that can easily force their way through the gaps Qantas leaves in its business strategy.
I've tasted the Qantas domestic products twice in the last month. Qantas business class domestic was good I thought, Jetstar was simply toxic. What Board in their right mind supports Jetstar???? Jetstar International as well? Are you kidding?
And of course I'm not even mentioning the technical and fleet selection decisions this mob have made over the last Fifteen years.