So you need a new fleet Leigh?
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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.
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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.
Nunc est bibendum
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.
Then we really will test whether these new aeoplanes need less maintenance than the previous generation.
If the B747's have to be retired due to excessive fuel burn, why aren't the A380's also being retired?
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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.
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.
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If the B747's have to be retired due to excessive fuel burn, why aren't the A380's also being retired?
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
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In fact he hasn't ordered, other than the six 789 any aircraft for Qantas.
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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.
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.
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.
For the pilots the change has been made, they dug their own grave.
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“Dug their own grave” - give me strength.... Obviously still plenty of pilots willing to live the horrible 787 existence. The cabin crew became QCCA/QDom/MAM 15+ years ago. The LAMEs have seen their total workforce size go backwards. The pilot workforce is growing.
Amazing that the 787 could have given a “30% productivity increase” to quote FLightDeck above. If this is accurate then the non-787 long haul terms and conditions must’ve been horribly unproductive to begin with.
Amazing that the 787 could have given a “30% productivity increase” to quote FLightDeck above. If this is accurate then the non-787 long haul terms and conditions must’ve been horribly unproductive to begin with.
The productivity increase is due to been able to fly 180 stick hours every 56 days instead of the current approx 140 for the same money due to night credits for 4 person crew going. They have sacrificed lifestyle family balance big time. Having done 850 stick average the last 3 years on long haul I can tell you I would not want a 40 year career of it especially ultra long haul with the time changes.
As opposed to horribly inefficient management today, of course.
It is disgusting to see a company drone criticising extremely long term staff for wanting a company to succeed and hoping for success, but knowing they are being lied to, every single step of the way.
The unfortunate truth is that not a single person at Qf (except the people you deride) have any interest in the company existing beyond their personal tenure.
But, fear not RC, total apathy has indeed taken hold and valuable staff simply do not care anymore. Fortunately it’s not my company or I would be deeply concerned. Unfortunately, the litany of titanically disastrous decisions can all be sheeted home to the great financially mythical being called ‘Other People’s Money’.
It is disgusting to see a company drone criticising extremely long term staff for wanting a company to succeed and hoping for success, but knowing they are being lied to, every single step of the way.
The unfortunate truth is that not a single person at Qf (except the people you deride) have any interest in the company existing beyond their personal tenure.
But, fear not RC, total apathy has indeed taken hold and valuable staff simply do not care anymore. Fortunately it’s not my company or I would be deeply concerned. Unfortunately, the litany of titanically disastrous decisions can all be sheeted home to the great financially mythical being called ‘Other People’s Money’.
Last edited by V-Jet; 7th Aug 2018 at 08:44.