So you need a new fleet Leigh?

[ExtraShot]

There are alternatives to a new fleet, including outsourcing flying to other carriers or simply doing less flying .

Ha. Tell us again how Virgin Australia’s model is the shining example of what you spout! You know, that airline that is currently doing more flying with its own metal than anytime in its previous history!

Otherwise, perhaps provide an example of how and where this outsourcing of flying operations has worked? Sure, Flight Centre does quite well I see.

No, Qantas does not HAVE to purchase a new fleet. However, if management wish to compete and grow the Airline, yes they do. The ability to innovate and outdo the competition, providing the best quality product that delights your customers, and not only has them return time and time again, but has them telling everyone they know how great you are, will not happen when reliability, and quality, inevitably become an issue (leaving aside the enormous discrepancy in fuel efficiency). Then your unhappy customers stop returning and they’ll tell all of their family and friends not to buy a ticket...

There is no way around it, Either Qantas develops a fleet renewal program for the next decade and beyond, that focuses on high quality passenger experience and fuel efficiency, or it should announce to the market it intends to cede it’s position to the competition and transition to a Travel Agency.

Rated De is correct. Qantas, if it intends to remain an Airline that retains market share and reliably services it’s customers, Needs to start purchasing A New Fleet.

[RealityCzech]

Originally Posted by neville_nobody

What a load of rubbish. What actually is QANTAS? An Airline or a Travel Agent? There is no point in an airline to outsource the majority of it's flying. Why not just shut it down and pocket what's left over. Why the hell would you run a so-called airline then outsource your product and lose complete control over product and safety?

Qantas and other airlines already do this. It’s called code sharing.

[RealityCzech]

Originally Posted by IsDon

So, Qantas’s biggest mistake was selling the Connies.

Think of the money we could have saved if we follow your philosophy.

Brainless dolt.

Thanks for the insults.

The Connies are irrelevant to the business case for a new 787/777/350 fleet. Nowhere have I said Qantas should not or will not renew its fleet, I’ve just made the point that it depends on the contermpernaous market conditions, as well as its own cost base at the time. Just because 747s replaced 767s and so on does not mean Qantas needs to replace its current fleet. It will only do so if that option is the most commercially sound choice

As for Virgin currently doing the most of its own metal flying - this is a misleading statement with respect to the international medium-losing haul market, which is what we are talking about in respect to Qantas. Where are the huge 777/350 orders for Virgin if the international market ex AUS is such an obviously lucartive market?

I see no mention of the enormous cap growth to/from AUS over the.last decade. Even the likes of the highly profitable AA have now started reducing cap on the LAX route (777>787) because of the overcapacity that affected yields.

I do think Qantas will acquire more 787s, given the business case is sound with niche markets like PER-LHR and demand still being strong enough to North America to justify shifting 380s to Asia and 787s to Nth America. I also think it is probable that it will get 777s or 350s - but only if the numbers stack up. That is very different to NEEDING to buy them.

[crosscutter]

That last RC post is a truism. If the business case is sound they will get them but they don’t need to get them? What if we said to make the business sound a new fleet is needed? The board and exec are paid handsomely to get these decisions right. Different leaders for different times...eg) Churchill. Maybe Clifford and Joyce have had their time in the sun and they aren’t the right people for this time.

All we see is growth opportunities and a training system under immense stress. These same execs were given a heads up numerous times that this crunch was imminent. Making a business case for new aircraft seems irrelevant when running the crewing operations efficiently is beyond this lot.

[Rated De]

You fail to understand the true value of Qantas' ownership of Jetstar and the size of its operation in Australia.

Enlighten us, not with qualitative 'opinion' give us quantitative empirical evidence of the 'value of JQ'

Qantas do not need a new fleet is correct with one important caveat: They desire to allow the business to wither and eventually collapse cease. It would seem that this is the 'theme of your posts' and is interesting from a European perspective that other airlines used a similar implied threat last time round. Nothing new under the Sun! 'We can kill this airline off if you pesky employees don't sign'.

Practically speaking , ignoring the execution risk, the Qantas business is worth more than the segmented parts. Case in point the International network feeds the domestic and indeed is the reason for the "Frequent Flyer' business. Without an international network to 'redeem points' into it is not much more than a marketing database. Ask Macquarie what their valuation was without an International flying business. Airlines around the world understand this, analysts understand this, so please enlighten us how Qantas not getting a fleet with rising fuel prices is sound business acumen? We are not quite sure they would be able to claim the business is 'de-transformed' again, when they personally proclaimed its transformation less than three years ago, receiving huge option driven bonuses for proclaiming so.

So if this bunch are actually running an airline, it is elementary that strategic decisions are now well overdue: Qantas need a new fleet

[fearcampaign]

What reality Czech says varies entirely to what we were told at a
group meeting with the CFO years ago.
Qantas International had shrunk to its minimum size.
In the current form it is still dramatically smaller. For example look at London.
Qantas had 4 747s a day to LHR and it now only has one A380 and one 787.
Gareth Evans made the point that if Qantas shrank any more it would put the Frequent flyer business in jeopardy.
The love child of Jetstar Domestic and Asia and Japan could lose control of a massive feed as would Qantas Domestic.
It would be the equivalent of outsourcing your entire army. The CFO pointed out that there was a limit to how small it could shrink and guarantee a secure, dependable feed for all the other entities. As he said there was a minimum Qantas fleet size.
Emirates or whomever the partner could effectively suffocate the business should circumstances change and wield significant power. Qantas executives have made some questionable decisions however that would be beyond stupid.
Pilot wages are 1-3 % of the operational cost as explained by Tony Webber the ex Qantas economist.
To paint pilots as the make or break factor is disengenuous and factually incorrect. Understand RC hates pilots but that’s the math. It must annoy RC enough to troll PPRUNE to deny that limited supply and high demand is driving Airline pilot wages higher. It must be upsetting for him to see market forces not go his way. Pilot Pay globally is on the rise. Every credible financial press has numbers to back it up. Forbes, Bloomberg etc etc etc.
International is doing well now and routes are being added. That will have more to do with the economy and fuel price than pilot costs or executive genius.
Qantas benefits disproportionately to a lower fuel price as the fleet is one of the oldest globally and hence has a high fuel burn.
Apart from eight 787 Qantas really haven’t replaced or replenished or grown the fleet at all.
As fuel costs rise we will see just how wonderful the emperors clothes are.
Qantas will need a new fleet, but the executives have been happy spending billions buying back shares which is great in the SHORT term for shareholders and thus executive bonuses. Long term the business Would benefit far more from a steady and measured renewal of the fleet. Lower fuel burn, less maintenance, passenger comfort, improved OTP. Bonuses and short term share prices are not measured on such discipline and long term windows. Qantas is not alone in this global trend.
The banking royal commission has uncovered the perils of short term decision making and thus bonus culture in many ASX companies. The banks are not alone.
Rated D is correct. Qantas need a new fleet. Short term share price movement and record bonuses will delay this as long as possible. Inevitable when you get paid $30 million to delay spending.

[No Idea Either]

So if QF placed an order today, what would be the expected delivery time frame.

[Australopithecus]

Originally Posted by No Idea Either

So if QF placed an order today, what would be the expected delivery time frame.

Like everything else: “It depends”. There are two primary choices with subset options. 1: The 777-8, smaller/farther and the -9, bigger/sub-sunrise* range.

2: A350 in its two iterations. If only those pesky RR engines weren’t the sole choice.

The order books for both types are heavily skewed to the ME3. The ME3 may all be in the cancellation risk zone for a variety of factors evident after a cursory search. Hint: Politics, pride, hubris, ineptitude, vanity, self-fascination, bluster, Dunning-Kruger effect, incandescent rage that there are fewer pilot applicants than MBa grads....etc. The usual litany of malfeasance that seems to bedevil airlines near and far.

* Sunrise project: Is it just me, or does anyone else think this idea is dumber than dog sh*t? Given that the planet's circumference seems to be 2.78 times longer than the average J class passenger's civility endurance. Y class? Fugedaboutit.

Assuming the ME3 don’t defer any deliveries, maybe late 2021 for an A350 and a trickle thereafter (cannot comment on simulator delivery).

777 may be 2022 with some cancellations

The earliest 330 hulls will be around 72,000 hrs in 2021. And time-ex three years later assuming there are no extended service goals in place. Its bad enough to contemplate getting too far beyond the original 60K service life let alone breaching the intermediate life limits.

There also is the A330neo. Anyone buying that stop-gap measure lacks either money or vision. So, maybe...yeah.

To spare Rated De the keystrokes: Qantas needs a new fleet

[Rated De]

You fail to understand the true value of Qantas' ownership of Jetstar and the size of its operation in Australia.

Enlighten us, not with qualitative 'opinion' give us quantitative empirical evidence of the 'value of JQ'

Qantas do not need a new fleet is correct with one important caveat: They desire to allow the business to wither and eventually collapse cease. It would seem that this is the 'theme of your posts' and is interesting from a European perspective that other airlines used a similar implied threat last time round. Nothing new under the Sun! 'We can kill this airline off if you pesky employees don't sign'.

Practically speaking , ignoring the execution risk, the Qantas business is worth more than the segmented parts. Case in point the International network feeds the domestic and indeed is the reason for the "Frequent Flyer' business. Without an international network to 'redeem points' into it is not much more than a marketing database. Ask Macquarie what their valuation was without an International flying business. Airlines around the world understand this, analysts understand this, so please enlighten us how Qantas not getting a fleet with rising fuel prices is sound business acumen? We are not quite sure they would be able to claim the business is 'de-transformed' again, when they personally proclaimed its transformation less than three years ago, receiving huge option driven bonuses for proclaiming so.

So if this bunch are actually running an airline, it is elementary that strategic decisions are now well overdue: Qantas need a new fleet

[Rated De]

Could it be that Qantas 'executive management' beta test IR strategy here?


You know to whom this question is addressed

* Sunrise project: Is it just me, or does anyone else think this idea is dumber than dog sh*t? Given that the planet's circumference seems to be 2.78 times longer than the average J class passenger's civility endurance. Y class? Fugedaboutit.

Project sunrise amused Boeing. It was however a 'game changer' for Qantas a whole 'team' spent a week coming up with the name!

To spare Rated De the keystrokes: Qantas needs a new fleet

Thanks Austral

[IsDon]

Originally Posted by Rated De

Project sunrise amused Boeing. It was however a 'game changer' for Qantas a whole 'team' spent a week coming up with the name!

When they were finished with that, the “team” went on to other “game changing” initiatives like deciding the shape of a salad bowl.

Funny as it sounds, I'm actually not joking.

[Australopithecus]

Originally Posted by IsDon

When they were finished with that, the “team” went on to other “game changing” initiatives like deciding the shape of a salad bowl.

Funny as it sounds, I'm actually not joking.

Which, it will come as no surprise, they screwed up. The new crockery/glasswear does not stack in the carts and there are now safety issues as a result.

[Rated De]

Does Qantas actually have the money for the 99 A320 order?

With the US treasury yield nudging 3.00% credit costs are rising.


Has Qantas' self indulgent share buybacks (totaling $2 billion) mean they lack sufficient capital and will defer/cancel any further re-equipment of Qantas International in order to fund the 'non-cancellable' JQ order? Has Qantas realised that the cost of funds has increased. Combined with contango in the jet fuel price, Qantas faces a self induced problem of a fuel inefficient fleet, rising jet fuel prices, a $9.5 billion order for the under performing JQ brand, and rising credit costs. Almost like the tide has turned?

If so it makes sense that the industrial narrative being pedaled by 'RealityCzech' that Qantas International may again, despite their pronouncements of 'transformation' (and consequent big bonus payments) be in jeopardy. It would suit an industrial play to obfuscate the real issue of management incompetence. In other words, 'Qantas do not need a new fleet' and blame the labour unit costs (pilots) hoping that no body remembers the FY15 'transformation'.

Qantas need a new fleet

[V-Jet]

and will defer/cancel any further re-equipment of Qantas International in order to fund the 'non-cancellable' JQ order?

Or even capacity to borrow.

Qantas Debt/Equity ratio was around 75% BEFORE any JQ jets were put back on the books. Along with everything else that Qf has wasted money on, those bonuses were VERY expensive.

Nice to know Qantas still have some of their Avro 504 fleet in the domestic terminal. If the shrinking program is successful enough returning to it's original (and it has to be said, highly successful!) format, then maybe RC is correct, and QF could operate Sydney Harbour Joyflights - possibly advertising is virtual presence with a towed banner up the Northern Beaches? Has anyone looked at this? Is the Avro on the books as far as IFRS16 is concerned?

[Rated De]

Qantas Debt/Equity ratio was around 75% BEFORE any JQ jets were put back on the books. Along with everything else that Qf has wasted money on, those bonuses were VERY expensive.

This is a very important point. The impact of IFRS16 is difficult to gauge (for the individual airlines), but its impact is widespread. Qantas is not the only airline having to re-organise the lease structure.
The DE ratio is definitely something concerning firms long airline stocks. Qantas may well find some pressure in FY19 on their funding costs (think credit rating) Time will tell.

Ultimately the type of narrative Mr Clifford was seeking to bed in (the point of this thread) may indicate pressure is becoming evident. As the yield curve now indicates a higher interest rate environment, rising fuel prices levers up pressure on Qantas' fuel included CASK. Combine this with a possibly weaker AUD and Qantas input prices rise disproportionately. RealityCzech is assisting this 'Clifford narrative' by linking fleet to Qantas' International future prospects. The fleet renewal is well overdue, they know it. Their expansion of JQ, although ambitious has never reaped a tangible return. Low fuel price saved the day.As we monitor multiple sources of input price volatility, it appears that Qantas could be sailing into a storm entirely of their own making. Indeed it is suggestive that the self indulgent (share buy backs) beahaviour has exposed the shareholder when prudent financial strategic management would have seen the business better prepared to handle what are clearly for Qantas at least rising seas and falling tides.

[CaptCloudbuster]

Originally Posted by Rated De

hoping that no body remembers the FY15 'transformation'.

With the 4th estate failing miserably to hold QF Management to account over claims of QF International in “Terminal Decline” shortly before an amazing “Transformation” without any Govt handouts - if a new narrative 180 degrees different is trotted out - I expect that the general public won’t remember this time either.

[Keith Myath]

Originally Posted by Rated De

Presently it is impossible to see how poorly JQ International do. Despite having more aircraft than the Qantas segment, management do not dis-aggregate into Domestic and International. Something Qantas management did in 2012 to show how 'poorly' Qantas International was faring.

You have stated a number of times that JQ international have more aircraft than Qantas international. How do you arrive at that proposition?

[V-Jet]

QF Fleet 2005
12 x 747-338
30 x 767
32 x 744

Qf Fleet 2018 (after the Great Turnaround of 2013)
12 x 380
10 x 744 (reducing as per 787 increasing below)
4 x 787 (mustn’t forget the gamechanging extra FOUR!! arriving ‘soon’)
26 x 330

JQ - I don’t know exactly. Someone will.

Shrinking to greatness.

[SandyPalms]

Qantas never had 12 747-300’s. In the early 2000’s, They had 6 300’s Plus 5 200’s and 2 SP’s. By 2005 all the 200’s and SP’s had gone.

The 744 fleet at 32? I’m pretty sure it topped out at 30. There was a BA leased aircraft at one point, but that was before the ER’s showed up. Do you mean 747 fleet in total, including the classic?

I count 28 A330’s.

[Rated De]

Originally Posted by Keith Myath

You have stated a number of times that JQ international have more aircraft than Qantas international. How do you arrive at that proposition?

Keith corrected for readability.
Jetstar group have more aircraft.

Jetstar International will never be reported as a separate segment despite Qantas management swiftly deciding to suddenly report Qantas International separately in FY12. Qantas management wanted a narrative of 'terminal decline' Thus to open Jetstar to any sort of like for like comparison invites disaster, which is why they refuse to segment it.