Go Back  PPRuNe Forums > PPRuNe Worldwide > Australia, New Zealand & the Pacific
Reload this Page >

So you need a new fleet Leigh?

Australia, New Zealand & the Pacific Airline and RPT Rumours & News in Australia, enZed and the Pacific

So you need a new fleet Leigh?

Old 22nd Jul 2018, 13:48
  #521 (permalink)  
 
Join Date: Nov 2006
Location: Auckland, New Zealand
Posts: 388
Ah, but specifically what airplanes, how many of each type and for what routes?
Chris2303 is offline  
Old 22nd Jul 2018, 21:45
  #522 (permalink)  
Thread Starter
 
Join Date: Sep 2017
Location: Europe
Posts: 1,412
Originally Posted by Chris2303 View Post
Ah, but specifically what airplanes, how many of each type and for what routes?
Qantas 'worst major airline' for fuel efficiency on trans-Pacific flights, study suggests - ABC News (Australian Broadcasting Corporation)

Start there.

With respect to the domestic network it lacks a 767 twin aisle replacement. Qantas tried the 'liquid overhaul' approach of the 767. The 767 was a gift from the Australian taxpayer, prior to privatisation. The A330 is insufficient in numbers and neither designed nor configured for high frequency domestic operations.

Qantas ordered 14 788 for mainline operations

For reasons best known to little Napoleon, in another random walk, all of them (now 11) were instead given to JQ. Mr Buchanan believed that he needed a lower unit cost as the metrics on low fare Long haul were not working. Telling the board of the reality cost him his career. He was shortly thereafter sent on gardening leave. This is the reason why JQ International is not segmented yet Qantas is: JQ International was and remains a basket case.

So Qantas is left with a domestic 737 operation, where the first batch approaching 16 years old and no word of a replacement.

A 788 running between Sydney and Melbourne with dual aisle and say 260 passengers in Y and J class needs nearly two airframes of the 737 and double the pilots (more cabin crew) in an already congested airspace, with limited tarmac and gate space, to carry the same passenger count. It requires more flight planning support, fuel, engineers and generates double the Air Navigation charges.
Add in the marketing bonanza and higher yielding J class options and Qantas had a real point of difference between itself and VAH.

Add in what Roger Montgomery was politely describing was that cheap fuel is not a given and Qantas fleet metrics only look fine while yields generate a sufficient operating cashflow surplus.
Heck even their Chief Pilot (probably from self interest as his KPI is likely linked to fuel savings) has pointed out that fuel price has risen 50% in the last year.

Finally, nearly every other airline sees higher fuel efficiency and fleet strategy as key determinants. Why doesn't the self professed world's smartest airline management?

Qantas need a new fleet.
Rated De is offline  
Old 23rd Jul 2018, 08:30
  #523 (permalink)  
Thread Starter
 
Join Date: Sep 2017
Location: Europe
Posts: 1,412
From another financial newsletter in Australia...

If nothing else, it makes me wonder about Qantas Airway Ltd’s [ASX:QAN] future. It’s likely going to face continual cost pressure on wages. Not only that, it’ll have to contend with higher fuel bills if oil continues to stay at this level or go higher.One note I saw suggests that Qantas could see a $700 million negative shift in fuel costs over this financial year at around the current spot price of oil. The next financial year could be even worse if the trends in oil I’m tracking play out as expected.This could prove to be a massive problem for Qantas.

But there’s more…

Qantas’ fleet of planes is now older than at the previous peak in 2009.That means the company is going to need to spend a lot of money replacing these planes — if they can even get the aircraft. There’s hot demand all over the world for new planes. And delivery times are lengthening. Qantas is also on track to start paying tax again and has finished its recent stock buyback.For now, the market appears unworried about any of this. The outlook for the Aussie economy is good. That drives a lot of Qantas’ earnings.Let’s wait for the next set of numbers to see how the market reacts.
There could be a very good shorting opportunity setting up here. At the very least, it’s a stock probably best avoided.

Stay tuned for more on this.
Net out the JQ fleet and Qantas fleet age is closing on 11 years, which is at the higher end.
Jetstar sits at 8. Curiously little napoleon has committed to JQ fleet renewal (remember the fanfare order for 110 A320?)

Having spent over $1.75 billion pumping their own pockets full of options bloated with buy back leverage...
As the tide goes out, imagine the wrinkled carcass of Mr Leigh Clifford and little napoleon swimming around naked..What is seen cannot be unseen.

Qantas need a new management

Last edited by Rated De; 23rd Jul 2018 at 08:54.
Rated De is offline  
Old 27th Jul 2018, 08:33
  #524 (permalink)  
 
Join Date: Jun 2011
Location: S33E151
Posts: 835
I watched ‘The Drum’ last night for the very first time ever (because the TV was on) and was struck with the insight of Andrew Jaspan. I’m 100% certain I’d disagree with his politics and he’s no doubt never actually employed people himself, but I could not help but see the similarities to Qf in his comments. Can anyone imagine a current or ex Chief Pilot saying similar???

Why is it the media is so easy to bribe in matters of QF (G/A?) and yet have people in their midst who do actually have insight?

Gerard Henderson’s piece in the Oz today could have intersposed Andrew Jaspers comments for ‘most anyone’ working for Qf proper:
FAIRFAX MEDIA’S DEATH FOLLOWED CONTEMPT FOR ITS TRADITIONAL BASE

It’s just five years since MUP published Colleen Ryan’s Fairfax: The Rise and Fall. This seemed a somewhat presumptuous proposition at the time. But yesterday the death of Fairfax Media became a reality.

There are many and varied reasons for the demise of a media company early in the 21st century — primarily, of course, the decline of advertising in its traditional forms.

But perhaps the unfashionable point is that, years ago, the likes of the Sydney Morning Herald and The Age lost contact with their base. Traditionally both newspapers sold well in Coalition voting areas in the suburbs of Sydney and Melbourne as well as in rural and regional areas of NSW and Victoria respectively.

The problem was that in recent decades Fairfax Media’s proprietors allowed left-wing journalists to attack the company’s base of support. Namely Coalition voters, social conservatives who were Christian and sent their children to non-government schools — along with businesses that were big, medium and small. In short, the Sydney Morning Herald and The Age ran stories that demeaned the actions and beliefs of their readership and advertising base. At times, The Age in particular read a bit like the Green Left Weekly.

On the ABC TV’s The Drum last night, one-time Age editor Andrew Jaspan conceded that, unlike News Corp, Fairfax Media did not really know what it was about. Rupert Murdoch is sometimes accused of being tribal — but at least he has a tribe. Mr Jaspan identified Fairfax Media’s lack of direction — but failed to recognise that when Age editor between 2004 and 2008 he was part of the problem.

There is diversity in News Corp’s media outlets — including Fox News in the United States. But News Corp journalists do not spend their days and nights beating-up on the activities and views of readers and viewers who buy its product by purchasing newspapers in print or online or who pay for subscription viewing.

The death of a media company is invariably sad. But the fact is that Fairfax Media mastheads lost contact with their traditional supporters many years ago. And, in time, the inevitable happened.

V-Jet is offline  
Old 27th Jul 2018, 08:50
  #525 (permalink)  
 
Join Date: Feb 2018
Location: Canberra
Posts: 0
Originally Posted by V-Jet View Post
The problem was that in recent decades Fairfax Media’s proprietors allowed left-wing journalists to attack the company’s base of support. Namely Coalition voters
ain't that the truth!
Dee Vee is offline  
Old 4th Aug 2018, 21:29
  #526 (permalink)  
 
Join Date: Aug 2007
Location: sydney
Posts: 864
I had been wondering why there was such haste in getting rid of the 747s from Qantas and now some light has been thrown on the subject for me. Firstly, this was done in haste and everyone at the coal face was shocked. The reason I am told is Napoleon made this decision on his own to have them gone by the 100th anniversary of the airline in November 2020 which he has publicly said he will preside over. Makes sense to me another lousy decision similar to getting rid of the 767s so quickly.
dragon man is offline  
Old 4th Aug 2018, 22:34
  #527 (permalink)  
 
Join Date: Feb 2018
Location: Canberra
Posts: 0
Originally Posted by dragon man View Post
I had been wondering why there was such haste in getting rid of the 747s from Qantas and now some light has been thrown on the subject for me
Doesn't sound like it was done in haste to me, quite the opposite in fact. These dinosaurs are well overdue for replacement.
Dee Vee is offline  
Old 4th Aug 2018, 22:37
  #528 (permalink)  
 
Join Date: Aug 2007
Location: sydney
Posts: 864
It was actually the 6 ERs were in the plan till 2023, there were 50 SOs to go on the aircraft in the last 8 months of this year.



dragon man is offline  
Old 5th Aug 2018, 06:19
  #529 (permalink)  
Keg

Nunc est bibendum
 
Join Date: Apr 1999
Location: Sydney, Australia
Posts: 5,177
I reckon part of this is to have out engineering and maintenance before too many 787s arrive. The 767s were retired early to get rid of LAMEs off the tarmac as well as a whole back of house support system. If they get rid of those 744s early the 787s won’t yet be at a place to need heavy and thus the engineering support for the 744 will also be made redundant and gotten rid of. Therefore when the 787s finally need maintenance there will no internal capability and it will have to be off shored.

Then we really will test whether these new aeoplanes need less maintenance than the previous generation.
Keg is offline  
Old 5th Aug 2018, 11:00
  #530 (permalink)  
 
Join Date: Nov 2001
Location: Queensland
Posts: 163
Originally Posted by Dee Vee View Post
Doesn't sound like it was done in haste to me, quite the opposite in fact. These dinosaurs are well overdue for replacement.
Put one of those “dinosaurs” at a gate between a A380 and a 787 and I know exactly which gate I would go to.
Wonderworld is online now  
Old 5th Aug 2018, 15:40
  #531 (permalink)  
 
Join Date: Jul 2006
Location: nsw
Posts: 7
Yep, a 380.
mrhooker is offline  
Old 5th Aug 2018, 22:12
  #532 (permalink)  
 
Join Date: Feb 2018
Location: Canberra
Posts: 0
Originally Posted by mrhooker View Post
Yep, a 380.
that's a no brainer, the A380 wins by a country mile.
Dee Vee is offline  
Old 5th Aug 2018, 22:47
  #533 (permalink)  
 
Join Date: Jun 2001
Location: Wherever I can log on.
Posts: 1,700
Originally Posted by Dee Vee View Post
Doesn't sound like it was done in haste to me, quite the opposite in fact. These dinosaurs are well overdue for replacement.
In fact, the last nine B747's in service are just approaching 3/4 of the lifespan that Qantas has usually used before retiring them so they are not overdue. The fact that their fuel burn is high compared to the B777 is the issue and goes back to the decision made by Geoff Dixon in Nov 2000 when he ordered A380's, A330's and 6 B747ER's. The majority of staff wanted Triplers instead of the B747's but Dixon didn't want to introduce another fleet (on top of the Airbus types).

If the B747's have to be retired due to excessive fuel burn, why aren't the A380's also being retired?
Going Boeing is online now  
Old 5th Aug 2018, 22:47
  #534 (permalink)  
Thread Starter
 
Join Date: Sep 2017
Location: Europe
Posts: 1,412
Originally Posted by dragon man View Post
I had been wondering why there was such haste in getting rid of the 747s from Qantas and now some light has been thrown on the subject for me. Firstly, this was done in haste and everyone at the coal face was shocked. The reason I am told is Napoleon made this decision on his own to have them gone by the 100th anniversary of the airline in November 2020 which he has publicly said he will preside over. Makes sense to me another lousy decision similar to getting rid of the 767s so quickly.
To be fair to little Napoleon, he didn't order the 747, nor the A380. In fact he hasn't ordered, other than the six 789 any aircraft for Qantas. His entire focus was JQ where aircraft orders flowed thick and fast.

The key insight for observers is strategic planning. Qantas has lost its way. For a decade big twin engined aircraft have lowered fuel included CASK from an operational cost perspective and as fuel price whipsaws would significantly protect profit margin.

From the appointment of little Napoleon the JQ 'myth' resulted in a huge number of airframes, increased expansion and volume growth, however JQ generates little operating profit margin. The advent of IFRS16 changes JQ optics somewhat. Fortunately AASB 8 does not require 'materiality threshold' consideration meaning the degree to which parent pays for the child's expenses never sees the light of day.

The reason Qantas can do this as a company is largely a result of a dominant position domestically and the excess cashflow that segment generates. A significant component of this feed is driven from QF International and also the FF business. Modern 'airline mis-management' does not think of an airline like that (as the sum is greater than the parts), preferring the 'segment' approach as this is taught in business MBA. The business as a WHOLE generates the segment value. It is and always has been an integrated and dynamic business.

Thus this board and little Napoleon's error is to believe their own brilliance. Over investing in the JQ product, creating a well over scale business is not clever; anyone can spend other people's money.
Airline work is a grind (pun intended) and little Napoleon is not interested.

That Qantas need a new fleet is axiomatic.

Mr Dixon despite his clearly obvious failings, did order the 788 for Qantas mainline. The 14 of them were diverted to JQ International as Boston Bruce Buchanan desperately sought to stem losses from JQ International. His honesty to the board, admitting LH low fare airlines do not work saw him sent to the woodshed.

It was not long ago, Little Napoleon ran to the Abbott government (December 2013) wanting a $3 billion bailout, only to rescind the need six weeks later, before going on to post a big loss and amazing turnaround in only 15 months...

As it was in FY2015, they got lucky with a falling fuel price and a well timed (management choice) depreciation change.
It is plausible that little Napoleon lurches from crisis to crisis, with probably less than ten direct reports (all from pole climbers) information is scant, at least information necessary for actually driving a dynamic business.

That he now wanders around, claiming some intellectual leadership for airline management brilliance ordering a few aircraft to replace an aging fleet is testament to a flawed character, but robust ego.

Little Napoleon could have taken Qantas in an entirely new direction,broken away from the failed APA disaster, instead he did something entirely different.
He presides over the oldest fleet in Qantas' privatised history. He and the board rewarded themselves with over $1.75 billion of share buy backs, which is pretty close to the Cap ex they need to fund a fleet renewal.

Whilst little napoleon has fixed those horrible teeth with shiny veneers, underneath it all his teeth are still a row of derelict terrace houses.
Qantas fleet optics are not much better.

Let all hope that the fuel price doesn't rise too quickly for even the most blind to see which airline CEO swims naked.
Rated De is offline  
Old 5th Aug 2018, 23:05
  #535 (permalink)  
Thread Starter
 
Join Date: Sep 2017
Location: Europe
Posts: 1,412
If the B747's have to be retired due to excessive fuel burn, why aren't the A380's also being retired?
It isn't simply a case of fuel burn. The fleet replacement decision is a strategic decision: It requires nuanced timing.

As younger air frames they have a higher residual book value. Qantas depreciate straight line for aircraft between 2.5 to 20 years.

'The Qantas Group uses straight-line depreciation rates for all of its property, plant and equipment (excluding freehold land, which is not depreciated) using rates ranging from 2.5 years to 40 years. Useful lives and residual values are reviewed annually and reassessed having regard to commercial and technological developments, the estimated useful life of assets to the Qantas Group and the long-term fleet plan.'

Thus they are stuck with them (A380) for a while yet.
  • The decision to pocket millions on share buy backs delayed having sufficient capital to REPLACE the depreciated 747 fleet.
  • They chose self interest over shareholder interest.
  • One might argue they chose self interest over the environment.
  • They burn more fuel per ASK than the competitors because they delayed the 747 retirement and refused to commit capital to replacement.
  • Their competitors have already done so, replacing depreciated 747 generation aircraft up to a decade ago.

Qantas has a group fleet plan or so they tell investors, but it is clear at 'Executive management' level nobody bothers reading it. Qantas wrote off the 747 fleet in FY14 (the big on paper loss)
Replacing that fleet has not bitten them for one reason only; the fuel price fell.

Qantas need new management
Rated De is offline  
Old 5th Aug 2018, 23:07
  #536 (permalink)  
 
Join Date: Aug 2011
Location: NDB
Age: 48
Posts: 103
In fact he hasn't ordered, other than the six 789 any aircraft for Qantas.
He didn't even order them, the 787s were ordered by Dixon. Mr Joyce has never ordered one aircraft for Mainline in his tenure.
OnceBitten is offline  
Old 5th Aug 2018, 23:48
  #537 (permalink)  
 
Join Date: Feb 2018
Location: Canberra
Posts: 0
Originally Posted by Going Boeing View Post
If the B747's have to be retired due to excessive fuel burn, why aren't the A380's also being retired?
Subjective I know, not trying to create an argument, but they are quieter, better cabin pressure, more modern, "most" passengers who have flown both prefer them.
Dee Vee is offline  
Old 6th Aug 2018, 03:43
  #538 (permalink)  
 
Join Date: Jun 2001
Location: Wherever I can log on.
Posts: 1,700
Yes, there is no doubt that there is a strong passenger preference for the A380 but the operating cost Vs payload figures are worse than the B747-400ER's - another poor decision which Dixon which has saddled the airline with. B777's doing point-to-point flights would have been a much smarter decision.
Going Boeing is online now  
Old 6th Aug 2018, 11:45
  #539 (permalink)  
 
Join Date: May 2018
Location: The street
Posts: 39
Alan Joyce isn’t so stupid.
His plan was never to grow Qantas. The 787 aircrafts are simply a replacement type for the 747.
As Rated D commented, billions have been spent on share buybacks not Aircraft to grow the fleet. All he has done is use previous orders to replace the 747 fleet.
Pilots having sacrificed all to appease the master desperately keep banging on about 787s in the order of 25-50 Which is BS.
Pilots were the only union that offered up 30% productivity increase and a pay reduction in order for the privilege to fly a 747 replacement for more work and less money. Sadly Got to hand Alan the credit for getting one over the unions negotiators,it’s pilots and the contract apart.
The A350 or the 777 will do exactly the same and simply replace the A380.
Until Alan departs at the 100 year mark with close to 100 million in total remuneration I can’t see a change.
FightDeck is offline  
Old 6th Aug 2018, 11:58
  #540 (permalink)  
 
Join Date: Nov 2001
Location: Queensland
Posts: 163
Originally Posted by Dee Vee View Post
that's a no brainer, the A380 wins by a country mile.
No thanks. 747 for me every time.
Wonderworld is online now  

Thread Tools
Search this Thread

Contact Us Archive Advertising Cookie Policy Privacy Statement Terms of Service

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.