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So you need a new fleet Leigh?

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So you need a new fleet Leigh?

Old 17th Feb 2019, 01:36
  #801 (permalink)  
 
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Originally Posted by CSTGuy View Post
And now the 747ís are being utilised to rescue J* flying. Thereís no way the 747ís are going away anytime soon.
The QANTAS Source ? QANTAS News and Information
Id like to agree with you, however OJS leaves today and OEB April 4. Would they cut off their nose to spite their face? Yes, absolutely.
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Old 21st Feb 2019, 03:23
  #802 (permalink)  
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'Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could. That's easier to achieve in the domestic market than on longer international routes where fuel is a much bigger factor, and that's reflected in the segment results we're reporting today.
Little Napoleon, dollars short and years late. Four engine aircraft traipsing around the globe will axiomatically burn a huge amount more fuel than twin engine aircraft.
That in turn blows out operating cost as fuel included CASK rises above your competitors at an alarming rate.

Qantas desperately need leadership.
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Old 22nd Feb 2019, 06:28
  #803 (permalink)  
 
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The parlous state that long haul presently finds itself in has not occurred by accident, it is the plan and it is going smashingly. Long haul died years ago, they are just waiting for the most opportune time to announce it.
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Old 22nd Feb 2019, 06:40
  #804 (permalink)  
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Originally Posted by Don Diego View Post
The parlous state that long haul presently finds itself in has not occurred by accident, it is the plan and it is going smashingly. Long haul died years ago, they are just waiting for the most opportune time to announce it.
It is precisely why, the 'terminal decline' narrative was established in 2011.
That they 'transformed' the business means it would be the foolhardy to attempt it again.

Little Napoleon in December 2013 claimed he needed 'AUD$3 billion" of taxpayer assistance, only recanting six weeks later.
That the government of the day required diligence beyond which Little Napoleon wanted was the reason for the rather abrupt reversal.
Although foolhardy, with a new circus in town, given the low wattage dullards sitting in Parliament (on both sides) perhaps a Chairman's lounge membership and 'forever' upgrades will carry the day.
After all nobody asked any questions of the grounding, nor the amazing 'transformation' with 'amazingly' well timed option vesting.
The little 'investment' in Helloworld Travel seems also to be paying dividends as the Finance Minister forgets to pay his own bills...
The CEO just also happens to be a Liberal party treasurer. Soft corruption a good investment in modern Straya.
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Old 23rd Feb 2019, 20:02
  #805 (permalink)  
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Fuel costs rose $416 million in the December half, driving the carrier's key measure of underlying profit before tax to its biggest decline in four-and-a-half years, its results published this week show. The pain was particularly concentrated on longer overseas routes, which accounted for just over half of the increased kerosene spending.
Pretty obvious by now.

Little Napoleon's legacy is complete. He has 'transformed' airline CEO remuneration.

That Mr Goyder sits there, fiddling as his predecessor was fond of, the fleet gets older, the competitors move further away, having lowered their fuel included CASK a decade ago and the long suffering staff prepare for yet another industrial campaign (distraction)

Kind of ironic that the decline in earnings a result of the 'higher fuel cost' was observed before the self enriching 'transformation' program in FY15.
The 'transformation' year profit was $597 million of reduced fuel cost, a depreciation change and not much else....
Now the increased fuel cost is responsible for the decline in profit.

Is Qantas 'de transforming' ?

A village is calling.
Qantas need leadership.
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Old 23rd Feb 2019, 22:50
  #806 (permalink)  
 
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Rated, you do realise that:
  • fuel prices changes affect Qantas's competitors just as much as Qantas
  • Qantas and its competitors try to adjust ticket prices and flying patterns to absorb fuel price rises, and to capture additional price sensitive traffic as prices fall, and
  • as such, fuel price changes only affect profitability to the extent that Qantas and other airlines are unable to respond to them fully?
I ask, because Qantas International has been more profitable than its competitors (SQ, CX, EK etc) over the past few years, and continues to be the case today. And, Qantas is predicting that it will recover the higher fuel costsby the end of the year. All for that is despite the fact that (as you point out) Qantas has more, older, four-engined planes, that burn more fuel.

From where I sit, that's actually pretty good evidence that Qantas is doing a far better job at managing non-fuel costs and revenue than most of its competitors.
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Old 23rd Feb 2019, 23:01
  #807 (permalink)  
 
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Originally Posted by PlasticFantastic View Post
Rated, you do realise that:
  • fuel prices changes affect Qantas's competitors just as much as Qantas
  • Qantas and its competitors try to adjust ticket prices and flying patterns to absorb fuel price rises, and to capture additional price sensitive traffic as prices fall, and
  • as such, fuel price changes only affect profitability to the extent that Qantas and other airlines are unable to respond to them fully?
I ask, because Qantas International has been more profitable than its competitors (SQ, CX, EK etc) over the past few years, and continues to be the case today. And, Qantas is predicting that it will recover the higher fuel costsby the end of the year. All for that is despite the fact that (as you point out) Qantas has more, older, four-engined planes, that burn more fuel.

From where I sit, that's actually pretty good evidence that Qantas is doing a far better job at managing non-fuel costs and revenue than most of its competitors.
You canít be serious. 3 787s will burn the same amount of fuel as 1 380.
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Old 23rd Feb 2019, 23:22
  #808 (permalink)  
 
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Originally Posted by Troo believer View Post


You canít be serious. 3 787s will burn the same amount of fuel as 1 380.
I agree that Qantas's 747s and A380s burn more fuel. I thought I was pretty clear about that.

What do you disagree with? That profitability depends on managing revenue and non-fuel costs, as well as fuel costs? That Qantas International has a tonne of competitors? That those competitors also have to buy fuel at roughly the same price as Qantas? That those competitors (generally) have more fuel efficient fleets? That Qantas International has been more profitable than almost all of those competitors for the past few years, and still is? Or so you think that that profitability comes from some magical source that isn't Qantas burning less fuel (because it definitely isn't that, flying 747s), managing its non-fuel costs better, or managing its revenue better?

I'm all for having a good debate, but could you please tell me what you disagree with?
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Old 23rd Feb 2019, 23:48
  #809 (permalink)  
 
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you forget to mention most competitors have slave labour and basically can crew an entire A380 for the cost of one QF A380 captain !
ground staff mostly earning around $100 per week.
cabin crew weight limits or if the cabin crew average 30kilod less each times 20 then thatís 600kg of extra payload .
​​​​​​​good luck competing with that !
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Old 23rd Feb 2019, 23:52
  #810 (permalink)  
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You can’t be serious. 3 787s will burn the same amount of fuel as 1 380.
Precisely Troo.

The source of Qantas International's 'profitability' was:
  • Drop in fuel price leading to FUEL cost saving of $597 million.
  • A curiously well timed impairment of the International fleet (CGU) resulting in a reduction of $326 million non-cash charge in deprecaition
That the fuel fuel price declined and has stayed, despite some contango lower with the accumulated depreciation reduction is the base case for profitability. When combined with the fact that the FY14 'loss' allowed carried forward tax credits for the next few years ceteris paribus, the source of the profitability is largely financial and a bit of luck.
With the tax offsets gone and higher fuel price, Qantas is again exposed as their fleet metrics lag the industry such that when fuel price rises their fuel included CASK increase disproportionately to their peers.

Overlooking the statement that Little Napoleon sprouted out about fuel cost recovery by the end of the year, you neglected to mention two caveats:
  1. International demand remaining as it is (ie no worsening of the international economy
  2. No other pertinent change.
It is possible that this is the case, it is equally possible that declining demand and yield falls impact revenue.
Perhaps the reason the competitors are actually withdrawing capacity is because they assess that yields will fall and the world economy worsens.
Thus with a narrower operating margin than their competitors due their horrible fleet metrics, the gap closes (revenue declining quickly and costs largely static and higher than their competitors) far quicker than it does for their competitors due their fuel inefficient lagging the industry fleet mix.


https://www.abc.net.au/news/2018-01-...-study/9333616
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Old 24th Feb 2019, 00:04
  #811 (permalink)  
 
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Originally Posted by Scooter Rassmussin View Post
you forget to mention most competitors have slave labour and basically can crew an entire A380 for the cost of one QF A380 captain !
ground staff mostly earning around $100 per week.
cabin crew weight limits or if the cabin crew average 30kilod less each times 20 then thatís 600kg of extra payload .
good luck competing with that !
I actually wanted to steer clear of the IR side of things, because it's such a hot topic! But, despite any payroll disadvantage, and a definite fuel burn disadvantage, Qantas International is doing better than most of its competitors and has expanded it's market share ex-Australia over the past few years.

That isn't because Qantas has had a windfall from lower fuel costs. If that was the case, all of its competitors would be rolling in money.

It's because it has managed its revenue other non-fuel costs better, which has allowed it to retain more of the fuel cost benefits than its competitors, and to offset more of the impact of the recent fuel cost increases.
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Old 24th Feb 2019, 01:21
  #812 (permalink)  
 
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.It's because it has managed its revenue other non-fuel costs better, which has allowed it to retain more of the fuel cost benefits than its competitors, and to offset more of the impact of the recent fuel cost increases.
It's put its revenue into share buybacks and Jetstar. Qantas has managed its costs appallingly badly. Even if what you suggest actually is the case (and anyone with any idea of what is going on inside QF knows that to be patent rubbish) just imagine how well Qf SHOULD have been doing if money was not thrown away on Jetstar and share buybacks but instead spent on a fleet of 777's. Fuel is the biggest expense and fuel is the one thing that has the QF fleet absolutely hamstrung.

You cannot compare a 380 burning 13,000kgs of fuel per hour and carrying 480 odd pax with a 777 burning 4,500kgs per hour carrying 400 pax. Those extra 80 pax are consuming 8,500kgs per HOUR every hour the jets are in the air. To put that another way, every flight QF takes to LAX they are selling an extra 80 odd seats but burning 120,000kgs of jet fuel extra to just about all their major competitors. London it's 240,000kgs. One way.

Unless Qantas has the capital to fix this self induced problem, it is in serious trouble. Joyce might take solace in the fact he can make money domestically with a quasi monopoly and blame International for giving him a big fuel bill, but HE has created and exacerbated that problem by throwing money away on rubbish self enrichment programmes and not ordering a single jet. There is absolutely no getting around it.

Also - almost unique to Qantas is the enormous housing price growth in the major capital cities. That has now stopped, but for the last ten years anyone has been able to borrow on the value of their home and spend on travel. It is not an insignificant factor.
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Old 24th Feb 2019, 01:45
  #813 (permalink)  
 
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​​You cannot compare a 380 burning 13,000kgs of fuel per hour and carrying 480 odd pax with a 777 burning 4,500kgs per hour carrying 400 pax. Those extra 80 pax are consuming 8,500kgs per HOUR every hour the jets are in the air. To put that another way, every flight QF takes to LAX they are selling an extra 80 odd seats but burning 120,000kgs of jet fuel extra to just about all their major competitors. London it's 240,000kgs. One way.

Close. The 777 Burns 8600kg per hour on long haul and carries 350 in a 3 class config.
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Old 24th Feb 2019, 02:08
  #814 (permalink)  
 
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Config changes - I picked a mid config B777 which was two class. As per burn, I am not a 777 guru, but have asked guys what their burn has been in cruise and 'generally' the answer is 4,000-5,000kgs/hr. I can't recall any higher. Of course that's in cruise, a 744 burns 40,000kg/hr on the takeoff roll
I can quote this which was posted here a few years ago as a specific flight in 2010, an EK 777-200LR carried 98t of trip fuel (Flight Time: 13h55m). I didn't make a note of the load (if it was even available), but that indeed shows a higher figure of c7,000kgs/hr.

So to make the adjustment that's 'around' an extra 85,000kgs one way to LAX (170,000kgs one way to LHR) for 'around' 100pax extra. Better hope they fill those 100-odd seats or it gets VERY expensive
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Old 24th Feb 2019, 02:34
  #815 (permalink)  
 
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A heavy A330 will burn over 5t per hour so your 777 figures are on the low side...
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Old 24th Feb 2019, 02:37
  #816 (permalink)  
 
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Originally Posted by V-Jet View Post
It's put its revenue into share buybacks and Jetstar. Qantas has managed its costs appallingly badly. Even if what you suggest actually is the case (and anyone with any idea of what is going on inside QF knows that to be patent rubbish) just imagine how well Qf SHOULD have been doing if money was not thrown away on Jetstar and share buybacks but instead spent on a fleet of 777's. Fuel is the biggest expense and fuel is the one thing that has the QF fleet absolutely hamstrung.

You cannot compare a 380 burning 13,000kgs of fuel per hour and carrying 480 odd pax with a 777 burning 4,500kgs per hour carrying 400 pax. Those extra 80 pax are consuming 8,500kgs per HOUR every hour the jets are in the air. To put that another way, every flight QF takes to LAX they are selling an extra 80 odd seats but burning 120,000kgs of jet fuel extra to just about all their major competitors. London it's 240,000kgs. One way.

Unless Qantas has the capital to fix this self induced problem, it is in serious trouble. Joyce might take solace in the fact he can make money domestically with a quasi monopoly and blame International for giving him a big fuel bill, but HE has created and exacerbated that problem by throwing money away on rubbish self enrichment programmes and not ordering a single jet. There is absolutely no getting around it.

Also - almost unique to Qantas is the enormous housing price growth in the major capital cities. That has now stopped, but for the last ten years anyone has been able to borrow on the value of their home and spend on travel. It is not an insignificant factor.
V-Jet, if you're trying to argue that QF should have bought the 77W instead of the A380 back in 2000, then sure, I agree with you. But that's ancient history. You seem to be arguing that QF should have bought factory-new 777s in the last couple of years. That would be a bad decision. The 787, A350 and 777X have (or will have) vastly superior economics to 77Ws. QF would be locking in poor operating economics for the next 15-20 years. That's probably why most of QF's competitors have ordered new-generation planes to replace their 77Ws as they retire. Qantas itself is replacing its 747s with 787s. It's also progressively moving the A380s from long-haul to regional flying, where it is far more cost-competitive. It's also planning to order A350 or 777Xs this year.

You're trying to compare QF's 480-seat, premium A380 configuration with a high-density, 400-seat 77W configuration, and as donpizmeov has pointed out, your fuel burn numbers for the 77W are off by a country mile. I've also seen lower burn numbers for A380s. Once you add in lower crew costs and yield premium, the A380 can equal or better the 77W. (Leeham has a decent analysis, if you want to see some numbers: https://leehamnews.com/2018/12/06/is...n-a-777-300er/). The risk with the A380 has always been whether you can fill it, not its CASM numbers, and QF does a reasonably good job of filling its A380s.

Yes, QF is more exposed to the Australian economy than international airlines. But, QF targets premium customers and corporates, who tend to be less affected by issues like the housing market (short of a major recession). Also, it is the international airlines who tend to add and subtract capacity into Australia based on our market conditions, so there is something of an automatic stabiliser in the market.

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Old 24th Feb 2019, 02:46
  #817 (permalink)  
 
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It doesn’t matter if you fill it or not it all boils down to yield. Just ask Freddie Laker, 100% load factors and he went broke.
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Old 24th Feb 2019, 02:49
  #818 (permalink)  
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Data tells the story.
Their fuel included CASK is out of the park bigger, the problem for them is simply lack of fleet planning.
At some point they will need to fund it. At that point the tide is out and the market will see who was swimming naked.

With respect to the relative staff costs, if that argument had statistical credibility then the salary of say Philippines Airlines flight crew, office staff, cabin crew and engineers would see operating margins for PAL at many multiples those of their more 'expensive' competitors. That it not the case.

Qantas International is doing better than most of its competitors and has expanded it's market share ex-Australia over the past few years.
That isn't because Qantas has had a windfall from lower fuel costs. If that was the case, all of its competitors would be rolling in money.
Qantas International showed a net route reduction and static ASK from the 'terminal decline' year on.
With respect to the 'fuel windfall' it is their fleet metrics that mean they suffer more from rising prices and benefit more from falling prices.

Factually, from 2009 to 2015 the amazing year of 'transformation' the competitors were in fact, rolling in money.
  • SIA Aggregate Net Profit after Tax AUD$ 3.4 billion
  • CX Aggregate Net Profit after Tax AUD $4.5 billion
  • ANZ Aggregate Net Profit after Tax AUD$ 900m

In the corresponding period Qantas by stark comparison had net losses of AUD$ 2.0 billion
That Qantas now have increased their ASK incrementally does not translate to increased market share, they have in actual fact surrendered market share ex-Australia as the JQ rollout continued. In so doing they hoped the consumer would brand substitute away from QF. The customers did, except they didn't substitute JQ for QF, they went elsewhere. The brand damage done by their 'strategy' is estimate by external research to total around AUD$1 billion. Having read the analysis it is really difficult to quantify, however in real terms the revenue of the group has declined. Brand damage and yield dilution is part of the result.
Swapping out an A380 for a B789 may improve yield but with far fewer seats their revenues decline markedly.
This is why another 'austerity drive' is on the cards.
Little Napoleon has much higher operating costs. Instead of correctly attacking fuel expense per ASK they hacked into staff.
Penny wise maybe, but pound moronic.

Last edited by Rated De; 24th Feb 2019 at 03:00. Reason: arithmetic
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Old 24th Feb 2019, 05:25
  #819 (permalink)  
 
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V-Jet, if you're trying to argue that QF should have bought the 77W instead of the A380 back in 2000, then sure, I agree with you. But that's ancient history.
It is. What has Napoleon done with the 19 years since? Nothing except self enrich and throw precious capital at windmills.

If Qf is so protective of the premium market, why did they move heaven and earth to throw all those precious customers away to EK.

The figures aren't out by a country mile, Napoleon is.

.Little Napoleon has much higher operating costs. Instead of correctly attacking fuel expense per ASK they hacked into staff.
Penny wise maybe, but pound moronic.
90% right. They hacked into real staff. The ones they should have hacked got off scott free to hack for themselves another day. And another one. And another one after that. But I repeat myself
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Old 24th Feb 2019, 06:23
  #820 (permalink)  
 
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Factually, from 2009 to 2015 the amazing year of 'transformation' the competitors were in fact, rolling in money.
Geeze, talk about cherry-picking statistics to try and prove a point. Why not look at the most recent 3 years? Or are you trying to prove the Ďtransformationí was a great success?

As for harping on about CASK, you donít seem to understand that a cabin that has a high ratio of premium seats (787, A380) in turn leads to lower ASKís. This also means less seats to defer fixed costs against. But the higher premium seat mix delivers significantly higher PROFIT. That is what the business is all about.

Your commentary about stagnant ASKís or rising CASK is largely irrelevant. Qantas is there to make as much profit as possible, not ship the largest amount of passengers. They could fill the planes with economy seats, drive up ASKís and drive down CASK, for what? And that is already what the low cost side of the brand has done.

Chasing market share (in the domestic sphere) is what primarily led to Qantasís huge loss you refer to. Thatís not the strategy any more and itís paying off big time.

Iím not suggesting Joyce is a good manager. The Ďline in the sandí was his strategy and it was an utter disaster. But to be constantly trying to trash talk Qantasí business metrics while they are pumping out bumper profit after bumper profit in stark contrast to their only local competitor, makes it look like you donít understand the business as well as you pretend to.

Last edited by Beer Baron; 24th Feb 2019 at 10:38.
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