Qantas and the 787-900
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Professor:
Pilots experience not relevant to pay, market forces?
- legacy pilots have saved the day so many times in the last few years, their contracts have been renewed so many times - that IS "market forces"
The argument re time served is that many of the young wiz kids have NFI!
CEO pay is NOT market forces, or QF managers would be on similar pay as airline CEOs, managers in other Airlines: not greatly above them - see pay scales for CEOs for ANY other major airline worthwhile!
Our bosses parrot Harvard MBA **** but have little idea of how to run an airline, unfortunately.
Luckily the crews do a good job or a couple of hull losses would put us in a terrible position.
(Basically your argument is full of ****)
Pilots experience not relevant to pay, market forces?
- legacy pilots have saved the day so many times in the last few years, their contracts have been renewed so many times - that IS "market forces"
The argument re time served is that many of the young wiz kids have NFI!
CEO pay is NOT market forces, or QF managers would be on similar pay as airline CEOs, managers in other Airlines: not greatly above them - see pay scales for CEOs for ANY other major airline worthwhile!
Our bosses parrot Harvard MBA **** but have little idea of how to run an airline, unfortunately.
Luckily the crews do a good job or a couple of hull losses would put us in a terrible position.
(Basically your argument is full of ****)
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CEO compensation and benefits are subject to market forces
Any basic economics course will teach you about market distortions.
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Professor,
The fact remains that QF profits will be approximately one billion dollars this year and increasing to around two billion the next year.
The fall in the AUD and the sustained fuel price falls are why. Both of these elements are forecast to stay low for years. Particularly the AUD, now that commodity prices have corrected from record highs,and the RBA are at record low rates.
The economic reality is that as the dollar falls so does the attraction for foreign tourists to visit Australia. The fares Qantas charge in foreign dollar amounts are worth more in AUD terms so the yield improves. Foreign competitors stop flooding the market with capacity too as the AUD fares they charge are not so valuable.
As the dollar falls 30-40% so does the cost base in USD terms too. Qantas International now has its upswing.
You can bang on all you want throwing around legacy tripe. Like I said. I'll wait to see what the "legacy" profits bring this year and next.
If Alan makes $10-$15 million dollars in bonuses it makes it very hard to cry wolf now things have turned around. Especially as QF start to make record profits.
I don't really care about your industrial ideology. Let's just see what the results/profits are.
Those who work at Qantas should be very pleased that things have improved so dramatically and look set to remain positive for quite some time.
Rapidly rising share prices and profits are good for shareholders, CEO bonuses, and staff.
The fact remains that QF profits will be approximately one billion dollars this year and increasing to around two billion the next year.
The fall in the AUD and the sustained fuel price falls are why. Both of these elements are forecast to stay low for years. Particularly the AUD, now that commodity prices have corrected from record highs,and the RBA are at record low rates.
The economic reality is that as the dollar falls so does the attraction for foreign tourists to visit Australia. The fares Qantas charge in foreign dollar amounts are worth more in AUD terms so the yield improves. Foreign competitors stop flooding the market with capacity too as the AUD fares they charge are not so valuable.
As the dollar falls 30-40% so does the cost base in USD terms too. Qantas International now has its upswing.
You can bang on all you want throwing around legacy tripe. Like I said. I'll wait to see what the "legacy" profits bring this year and next.
If Alan makes $10-$15 million dollars in bonuses it makes it very hard to cry wolf now things have turned around. Especially as QF start to make record profits.
I don't really care about your industrial ideology. Let's just see what the results/profits are.
Those who work at Qantas should be very pleased that things have improved so dramatically and look set to remain positive for quite some time.
Rapidly rising share prices and profits are good for shareholders, CEO bonuses, and staff.
"Unlike legacy pilots, CEO compensation and benefits are subject to market forces, what will the shareholders pay to retain the person in that role. AJ is paid exactly in line with his value to the company, nothing more and nothing less. He is paid more than some in the industry and less than many"
Professor, please enlighten us as to which airline Ceos are paid more than Mr Joyce??
Maybe in the land of rampant capitalism, the USA,i believe the CEOs of American/United/Delta paid more, but then again they are managing vastly bigger operations than Qantas!!
Beyond them as mentioned please enlighten us as to any Airline CEO paid more?
Professor, please enlighten us as to which airline Ceos are paid more than Mr Joyce??
Maybe in the land of rampant capitalism, the USA,i believe the CEOs of American/United/Delta paid more, but then again they are managing vastly bigger operations than Qantas!!
Beyond them as mentioned please enlighten us as to any Airline CEO paid more?
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Network taking over 717 operations? Well maybe.... but consider for a second the scale of moving an operation of that size, not to mention NJS currently employs what, 200+ pilots? Network would have to hire a huge chunk of them? Who says QF won't buy out NJS and run the show themselves?
I have to agree with Going Nowhere though, 717 isn't a good fit for QLD ops. A LOT of flying is going back to the Q400 because the loads are so low.... sometimes 20 pax on a MKY....
I have to agree with Going Nowhere though, 717 isn't a good fit for QLD ops. A LOT of flying is going back to the Q400 because the loads are so low.... sometimes 20 pax on a MKY....
Professor of what exactly?
Speaking of market distortions, narcissist, professor, self appointed MENSA graduate, etc. - how many people actually vote on the remuneration package in most large companies? Oh, I remember now, a handful of fund managers get to (effectively) proxy vote on behalf of the real shareholders. I guarantee most real owners of the shares don't vote in the affirmative or more accurately, wouldn't vote yes for the remuneration packages if they had the chance! Strangely, the little cartel looks after itself...
"sustained fuel price drop, as well as the fall in the AUD from $1.15 to 0.77c"
Both of these contribute to a short term airline windfall but are systemic of greater problems brewing.
According to the Brookings institute "oil prices have been in a free fall, with demand dropping across Europe, Japan, India, China, Brazil"
The major contributer to a drop in oil prices is the significant drop in demand as a result of a global slowdown. Dancing a jig over cheap oil is false economy.
"Professor, please enlighten us as to which airline Ceos are paid more than Mr Joyce??"
About 30 seconds of research found that the CEO of DL for example was paid in total about 15m for one year. Probably more out there but I think you will find the several million Joyce is paid is not that high compared to many.
Both of these contribute to a short term airline windfall but are systemic of greater problems brewing.
According to the Brookings institute "oil prices have been in a free fall, with demand dropping across Europe, Japan, India, China, Brazil"
The major contributer to a drop in oil prices is the significant drop in demand as a result of a global slowdown. Dancing a jig over cheap oil is false economy.
"Professor, please enlighten us as to which airline Ceos are paid more than Mr Joyce??"
About 30 seconds of research found that the CEO of DL for example was paid in total about 15m for one year. Probably more out there but I think you will find the several million Joyce is paid is not that high compared to many.
Oicur,
You obviously did not read my post, i already acknowledged that the CEOs of the big 3 USA Airlines,including Delta would be on more than Joyce, and given the size of those Airlines, some what understandable!
However i beleive he is over paid compared to most Airline CEOs running airlines of a comparable size to Qantas!
You obviously did not read my post, i already acknowledged that the CEOs of the big 3 USA Airlines,including Delta would be on more than Joyce, and given the size of those Airlines, some what understandable!
However i beleive he is over paid compared to most Airline CEOs running airlines of a comparable size to Qantas!
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However i beleive he is over paid compared to most Airline CEOs running airlines of a comparable size to Qantas!
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You are incorrect in why oil prices have declined.
THe US producers have been adding 4 million barrels per day from shale oil into the market!
This is a significant supply increase. You must look at the supply side of the equation too and not focus simply on demand.
Whilst it is true that demand tapered off slightly in China and the poorer parts of Europe, OPEC has maintained supply, as has the USA.
This is an attempt by OPEC to hurt the Shale oil producers in the USA as they attempt to be oil self sufficient in the next few years.It also affects Russia and Venezuela.
The Weighted price of oil needed by US companies to remain profitable is US $60-62 per barrel.
Hence why OPEC must make a sustained effort over many years to affect the US oil market and keep the price low.
Sub $90 fuel and possibly sub $60 fuel is here to stay for a long time yet.The US shale oil boom won't be going anytime soon.Many are forecasting sub $40 oil for the next ten years.
Airlines benefit the most.
For Qantas the fuel bill for International is approximately $4.8 billion. You can see what a greater than 50% drop in fuel prices does to QF profits.
Combine that with a weaker AUD and less foreign competition and things are very rosy indeed for QF.
The Feb half year results and June full year results will be the proof in the pudding.
I'm happy Alan will get a $10-$15 million dollar bonus even if the 5000 sackings, VR did not do the heavy lifting.
He certainly did not waste a crisis.
That crisis has well and truly passed, as has his pay freeze.
The executive bonuses will be very plump this financial year.
THe US producers have been adding 4 million barrels per day from shale oil into the market!
This is a significant supply increase. You must look at the supply side of the equation too and not focus simply on demand.
Whilst it is true that demand tapered off slightly in China and the poorer parts of Europe, OPEC has maintained supply, as has the USA.
This is an attempt by OPEC to hurt the Shale oil producers in the USA as they attempt to be oil self sufficient in the next few years.It also affects Russia and Venezuela.
The Weighted price of oil needed by US companies to remain profitable is US $60-62 per barrel.
Hence why OPEC must make a sustained effort over many years to affect the US oil market and keep the price low.
Sub $90 fuel and possibly sub $60 fuel is here to stay for a long time yet.The US shale oil boom won't be going anytime soon.Many are forecasting sub $40 oil for the next ten years.
Airlines benefit the most.
For Qantas the fuel bill for International is approximately $4.8 billion. You can see what a greater than 50% drop in fuel prices does to QF profits.
Combine that with a weaker AUD and less foreign competition and things are very rosy indeed for QF.
The Feb half year results and June full year results will be the proof in the pudding.
I'm happy Alan will get a $10-$15 million dollar bonus even if the 5000 sackings, VR did not do the heavy lifting.
He certainly did not waste a crisis.
That crisis has well and truly passed, as has his pay freeze.
The executive bonuses will be very plump this financial year.
Qantas angels, agitprop and disinformation
Oicur and the Professor appeared a few months back on threads like this one, coincidentally about the same time Wirth revealed her master stroke to bomb social media and fora (why do you twiter tho, thenturiun?) such as this.
I am late for a guided tour of the local third world debauchery or I would spend more energy on a refutation of their disinformation campaign. In the meantime, as an exercise for the student, look up "agitprop" and see if it doesn't match exactly the contributions made by the aforenamed.
Finally, can we all stipulate that the CEO is grossly over paid by any rational measure? And that Gareth (no, I am not lisping again, honest) mentioned in public a 1.6 Billion loss to date on all of the various JQ brain farts? And that AJ will be magically awarded a hefty windfall >$10 million because the exchange rate is reverting to the mean and that OPEC has issued a bitch slap to the over-leveraged US shale oil guys?
(and as a bonus screw Russia, Venuzuela and those fun boys and girls in Iran?)
"Nice work if you can get it" sums up my feelings on that. I guess this CEO caper is more about having absent oversight that anything else. A normally constituted board (ie: without <insert scathing pejorative character assasination here>) would have given him the old "heave-ho" a couple of billion ago*
Anyway...i hear the siren song of the equatorial night. Over and out.
I am late for a guided tour of the local third world debauchery or I would spend more energy on a refutation of their disinformation campaign. In the meantime, as an exercise for the student, look up "agitprop" and see if it doesn't match exactly the contributions made by the aforenamed.
Finally, can we all stipulate that the CEO is grossly over paid by any rational measure? And that Gareth (no, I am not lisping again, honest) mentioned in public a 1.6 Billion loss to date on all of the various JQ brain farts? And that AJ will be magically awarded a hefty windfall >$10 million because the exchange rate is reverting to the mean and that OPEC has issued a bitch slap to the over-leveraged US shale oil guys?
(and as a bonus screw Russia, Venuzuela and those fun boys and girls in Iran?)
"Nice work if you can get it" sums up my feelings on that. I guess this CEO caper is more about having absent oversight that anything else. A normally constituted board (ie: without <insert scathing pejorative character assasination here>) would have given him the old "heave-ho" a couple of billion ago*
Anyway...i hear the siren song of the equatorial night. Over and out.
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I am no economist, and I openly admit that - unlike some of my fellow pilots and PPRuNers who think they are.
But I will add a contrarian viewpoint on oil prices.
This is based on pure common sense and mathematics that a 12yo should understand (does it have to be more complicated?)
Sure, a reduction in oil prices will improve every airline's bottom line in the short term.
But if those oil prices remain low, the market price for tickets will adjust accordingly, with the lower priced airlines reducing ticket prices and forcing the higher priced airlines to do likewise. In other words, the supply/demand equation for airline tickets will conspire to reduce all airlines to tiny margins again in time. What this will also do is increase the market for airline travel in general, as more people can afford to fly, so Boeing and Airbus will sell more aircraft, more airlines will pop up, and capacity will generally increase, also impacting on the bottom line of existing airlines.
Now, what happens with an increase in oil prices? All airlines suffer greatly in the short term (as we have witnessed). It takes a long time for the industry to adjust to higher oil prices and generate profits at the new oil level because it's a lot harder to downsize capacity than to upsize it. You have to sell aircraft to an industry that isn't buying aircraft. Sacking staff is a lot harder and more expensive than employing staff (in Western countries at least). It's impossible to sell half an airport terminal that you have just spent $50M building. The $500M IT/communications infrastructure you just invested in won't cost you less if you start using it less. Many other fixed costs were fixed at the existing capacity and won't reduce if you sell or park 20% of your fleet. This is why the LC/AJ strategy of cutting routes and reducing fleet was absurd. Many of the fixed costs remain, and your unit cost of operating your remaining aircraft/routes increase accordingly. Hence the huge operating losses in the course of reducing capacity.
Anyone who thinks that they can maintain profitability in a shrinking airline had better have a damn good long term plan in place. Did LC/AJ have one? Here's a clue: "We will not re-invest in QF international until it returns a profit." First prize. Are any of their KPI's based on having a damn good long term plan in place? And by long term, airline investment needs a 10-20 year outlook at least. Are any of their KPI's based on a 10-20 year outlook? Big problem right there from the top down.
The irony is that a high oil price benefits most the premium carriers. It is the LCC's that suffer most with a high oil price. The reason is that the price of fuel becomes a far greater percentage of operating costs, and that the unit staff cost becomes a far lower percentage. And it is the unit staff cost that makes LCC's competitive against the premium carriers. Also, as the ticket prices rise with fuel prices, the bottom end of the ticket market vanishes. You can't sell a $50 ticket for $100, because the folks that pay $50 won't pay $100. Whereas the folks that pay $400 will still pay $450.
So I am interested to see what happens if the oil prices do stay low - this should benefit the LCC's more than the premium carriers. It will also benefit the airlines operating out of low wage countries more than the high wage countries. Neither of these two observations are good for the future of QF mainline.
My only hope is that the short term gain QF will experience from the drop in fuel prices will provide the cash to actually order some new aircraft and get the airline back on it's feet. LC/AJ will take the bonuses to a tax haven and retire on luxury yachts. It won't be a result of any of their expert management, they were just bloody lucky that the US shale oil producers jumped into the market just in time to save their arses. They will be awarded full credit, of course, and I know you and I will see right through that and remain forever disheartened. The journalists will herald them as heroes, because we don't have journalists in Australia anymore, apart from Ben). But hopefully the next round of management will be employed to actually run an airline instead of grounding one (or selling one, as per the previous Chair/CEO) and we will all look forward to a new Qantas that isn't solely focussed on busting unions (which haven't been busted), disengaging its staff, and pissing off it's loyal passengers.
But I will add a contrarian viewpoint on oil prices.
This is based on pure common sense and mathematics that a 12yo should understand (does it have to be more complicated?)
Sure, a reduction in oil prices will improve every airline's bottom line in the short term.
But if those oil prices remain low, the market price for tickets will adjust accordingly, with the lower priced airlines reducing ticket prices and forcing the higher priced airlines to do likewise. In other words, the supply/demand equation for airline tickets will conspire to reduce all airlines to tiny margins again in time. What this will also do is increase the market for airline travel in general, as more people can afford to fly, so Boeing and Airbus will sell more aircraft, more airlines will pop up, and capacity will generally increase, also impacting on the bottom line of existing airlines.
Now, what happens with an increase in oil prices? All airlines suffer greatly in the short term (as we have witnessed). It takes a long time for the industry to adjust to higher oil prices and generate profits at the new oil level because it's a lot harder to downsize capacity than to upsize it. You have to sell aircraft to an industry that isn't buying aircraft. Sacking staff is a lot harder and more expensive than employing staff (in Western countries at least). It's impossible to sell half an airport terminal that you have just spent $50M building. The $500M IT/communications infrastructure you just invested in won't cost you less if you start using it less. Many other fixed costs were fixed at the existing capacity and won't reduce if you sell or park 20% of your fleet. This is why the LC/AJ strategy of cutting routes and reducing fleet was absurd. Many of the fixed costs remain, and your unit cost of operating your remaining aircraft/routes increase accordingly. Hence the huge operating losses in the course of reducing capacity.
Anyone who thinks that they can maintain profitability in a shrinking airline had better have a damn good long term plan in place. Did LC/AJ have one? Here's a clue: "We will not re-invest in QF international until it returns a profit." First prize. Are any of their KPI's based on having a damn good long term plan in place? And by long term, airline investment needs a 10-20 year outlook at least. Are any of their KPI's based on a 10-20 year outlook? Big problem right there from the top down.
The irony is that a high oil price benefits most the premium carriers. It is the LCC's that suffer most with a high oil price. The reason is that the price of fuel becomes a far greater percentage of operating costs, and that the unit staff cost becomes a far lower percentage. And it is the unit staff cost that makes LCC's competitive against the premium carriers. Also, as the ticket prices rise with fuel prices, the bottom end of the ticket market vanishes. You can't sell a $50 ticket for $100, because the folks that pay $50 won't pay $100. Whereas the folks that pay $400 will still pay $450.
So I am interested to see what happens if the oil prices do stay low - this should benefit the LCC's more than the premium carriers. It will also benefit the airlines operating out of low wage countries more than the high wage countries. Neither of these two observations are good for the future of QF mainline.
My only hope is that the short term gain QF will experience from the drop in fuel prices will provide the cash to actually order some new aircraft and get the airline back on it's feet. LC/AJ will take the bonuses to a tax haven and retire on luxury yachts. It won't be a result of any of their expert management, they were just bloody lucky that the US shale oil producers jumped into the market just in time to save their arses. They will be awarded full credit, of course, and I know you and I will see right through that and remain forever disheartened. The journalists will herald them as heroes, because we don't have journalists in Australia anymore, apart from Ben). But hopefully the next round of management will be employed to actually run an airline instead of grounding one (or selling one, as per the previous Chair/CEO) and we will all look forward to a new Qantas that isn't solely focussed on busting unions (which haven't been busted), disengaging its staff, and pissing off it's loyal passengers.
Last edited by Derfred; 18th Feb 2015 at 13:19.
Australogrumpikiss
Sorry mate, didnt realise you were such a grumpy old bastard.
"can we all stipulate"
always scares me when someone tries to encourage group think. Can we all . . . no we cant mate, sorry.
Sorry mate, didnt realise you were such a grumpy old bastard.
"can we all stipulate"
always scares me when someone tries to encourage group think. Can we all . . . no we cant mate, sorry.
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MOST execs would love the pay and benefits of an A380 captain
The executive bonus system is a cancer eating away at the core business. Decisions are being made based on the anticipated bonus, not necessarily for the ongoing good of the business.
Here's a thought, do a good job and the bonus is, you can keep your job.
Last edited by caneworm; 19th Feb 2015 at 14:19. Reason: Spelling & grammar
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Caneworm,
I would not get too troubled by a few people fishing for a bite on the forum.
There will always be water cooler discussions about what the highest paid A380 SCC/Manager is paid and incorrectly assume all 2500 mainline pilots get paid that!
You hear lots of ideology, but very little in the way of facts or statistics.
Today's good news from the Financial Review is that Virgin profits are up due to fuel price drops and yield improvements. Virgin only benefit 25% from fuel price drops and Qantas benefit in 75% EXPOSURE to the drops!!!!! Well done QF Treasury!!!
With only a 25% exposure Virgin go from a $3 million benefit 1Half to a $50 million benefit second half:
Qantas fuel burn international alone is $4.5-$4.8 billion. Work out at least a 50-60% fall, and at 75% of that its still a huge number
Won't see a great deal of that in the first half year but the full year will be massive.
Article also says that Australians' insatiable appetite for travel is NOT being weakened by the lower dollar either with Webjet reporting a 38% rise in INTERNATIONAL bookings despite the lower dollar.
Did someone say BIG BONUS time!!!!
With Qantas shares soaring to $2.70, I wonder what Alan's options are worth that were issued at around 0.80cents
I would not get too troubled by a few people fishing for a bite on the forum.
There will always be water cooler discussions about what the highest paid A380 SCC/Manager is paid and incorrectly assume all 2500 mainline pilots get paid that!
You hear lots of ideology, but very little in the way of facts or statistics.
Today's good news from the Financial Review is that Virgin profits are up due to fuel price drops and yield improvements. Virgin only benefit 25% from fuel price drops and Qantas benefit in 75% EXPOSURE to the drops!!!!! Well done QF Treasury!!!
With only a 25% exposure Virgin go from a $3 million benefit 1Half to a $50 million benefit second half:
Qantas fuel burn international alone is $4.5-$4.8 billion. Work out at least a 50-60% fall, and at 75% of that its still a huge number
Won't see a great deal of that in the first half year but the full year will be massive.
Article also says that Australians' insatiable appetite for travel is NOT being weakened by the lower dollar either with Webjet reporting a 38% rise in INTERNATIONAL bookings despite the lower dollar.
Did someone say BIG BONUS time!!!!
With Qantas shares soaring to $2.70, I wonder what Alan's options are worth that were issued at around 0.80cents
My tip....nuthin.
just more of the same 'the sky is falling, tighten the belts, lower costs, transformation yadda yadda yadda'
Probably some mention of the dwindling mining flying etc etc.
I hope I'm pleasantly surprised
just more of the same 'the sky is falling, tighten the belts, lower costs, transformation yadda yadda yadda'
Probably some mention of the dwindling mining flying etc etc.
I hope I'm pleasantly surprised