So you need a new fleet Leigh?
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Crosscutter - JQI would not have survived if JQ did not take on the 787's asap. The operating economics of the 330 and the 787 are worlds apart. I suspect JQI is already financially hammered. The 330 would have obliterated it.
'ROIC' is a better measure here.
Dragonman - Product can be replaced. You can make a clapped-out frame look new again with a new interior and fresh coat of paint. Reliability - that may subjective. Well maintained aircraft with the right schedules will be reliable. It is component failure/wear that drives this.
'ROIC' is a better measure here.
Dragonman - Product can be replaced. You can make a clapped-out frame look new again with a new interior and fresh coat of paint. Reliability - that may subjective. Well maintained aircraft with the right schedules will be reliable. It is component failure/wear that drives this.
ROIC is correct...thanks.
My point I guess, is QF need to generate a certain ROIC for any investment. For Mainline that ROIC seems a lot higher than for JQI. No JQ bashing here, just pointing out that now that both businesses are ‘mature’ any investment decisions should be based on similar criteria. For this to occur JQI’s financials should be released.
My point I guess, is QF need to generate a certain ROIC for any investment. For Mainline that ROIC seems a lot higher than for JQI. No JQ bashing here, just pointing out that now that both businesses are ‘mature’ any investment decisions should be based on similar criteria. For this to occur JQI’s financials should be released.
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Rated D - what about the impact of capital cost or lease cost incurred to 'reequip' the Qantas fleet. This is a financial consideration that has not been discussed. It is easy to say cASK is lowered by more fuel-efficient aircraft, but to reequip also incurs considerable expense. Would Qantas not consider these factors in its decision to invest now or hold?
Arguably, better use can be made of capital than enriching the insiders.
Qantas have deferred fleet decisions preferring to engage in social discourse, identity politics and advance the agenda held by the CEO, running an efficient airline ranked nowhere near its list of priorities.
- The A330 is likely beyond a mid life airframe. What is to replace these?
- The A380 is likely at book value way in excess of the actual realised sale value (second hand)
- The 747 (with the exception) of the ER (6) aircraft are aged and have substantial CASK inefficiency.
- The oldest of the 737 fleet are in excess of 17 years.
Whether that business can deliver an IR nirvana and an adequate ROIC is debatable.
A 'transformed' Qantas has no doubt improved the CASK, a replacement of international fleet would improve their fuel included CASK by a considerable margin.
It ought improve operating margins.
That they do not do this perhaps has something to do with ideology rather than economics.
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There you go you old fossil Leigh, it wasn't the Qantas Sale Act 1992 making aircraft purchase difficult.
See Little Napoleon, just like the little engine you can order aircraft.
Did this have a special project name? A secret team?
Did you need apply the same template to Jetstar's route economics as you claim you do for Qantas, just what ROIC do you actually achieve?
Have you repatriated a tangible profit from Singapore yet, how about Vietnam, what about Japan? Of course leasing aircraft back and forward isn't really profit now is it?
https://www.qantasnewsroom.com.au/me...Z_9GpwUhZjB3-g
See Little Napoleon, just like the little engine you can order aircraft.
Did this have a special project name? A secret team?
Did you need apply the same template to Jetstar's route economics as you claim you do for Qantas, just what ROIC do you actually achieve?
Have you repatriated a tangible profit from Singapore yet, how about Vietnam, what about Japan? Of course leasing aircraft back and forward isn't really profit now is it?
https://www.qantasnewsroom.com.au/me...Z_9GpwUhZjB3-g
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You can also call cousin Willie he just did it too...
https://simpleflying.com/iag-boeing-737-max-order/
https://simpleflying.com/iag-boeing-737-max-order/
Even though that approach seems to have worked so well for Alan, repetition of a theme does not make a viewpoint less accurate - especially so with new data arriving daily!
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.... the further an LCC plane flies the less of a cost advantage it has over traditional airlines. Fuel can rise from 30 to 50 per cent of operating costs shrinking profit margins.
Last year, Jetstar’s earnings before tax was $461 million. Qantas doesn’t factor out Jetstar’s international revenue, however, only saying it had “strong earnings”.
Imagine if Qantas had decided lowering unit cost at the 'transformed' Qantas International was met with a new fuel efficient fleet.
Qantas could have much improved RASK/CASK margin, lower fuel spend, generate less pollution and do so generating more revenue.
“Many of the markets developed under the long-haul low-cost banner may prove sustainable, but the operating model seems likely to be lower cost rather than true low cost,” said Flight Global's Lewis Harper.
https://www.news.com.au/travel/trave...82a6d22ab19415
Qantas, not Jetstar need the new fleet.
If they get 321 and Qantas get the 787s back you might be surprised as it would partly satisfy the present problem.
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These long range A321’s I’m guessing at least half will go to mainline, this is what they have been craving for ages. Who knows about 787 transfers but so what.
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Though it is about Boeing, it articulates a more general observations about the extractive nature of the top level predators across the business world.
What will it be, Boeing? Great airplanes that generate cash flow or great cash flow, period?
Employees come to work to do their jobs. We aren’t usually aware of workplace culture, even over a span of years.We learn culture from co-workers and managers when they make decisions and demonstrate problem-solving skills. Leadership messages affect thousands of decisions that add up to success or failure of the organization.
For many years, Boeing competed with Airbus and other producers for airline customers based on performance of its products. As a recent news report put it, Boeing now competes for investors with Exxon and Apple.
Boeing rose to the top of the airplane business as an engineering company, focused on performance of its products. Boeing made bold decisions that “bet the company” and prevailed over competitors.
In the ’90s, Boeing business culture turned to employee engagement, process improvement and productivity — adopting the “quality” business culture that made Japanese manufacturers formidable competitors.
In the late ’90s, Boeing’s business culture shifted again, putting cost-cutting and shareholder interests first.
Some business cultures are well-suited to commodity-like products but are a bad fit with performance-driven products.
Ask a financial analyst, “Are airplanes commodity-like or performance-driven?”
Business instinct is to cast the question as a market transaction. Airline customers worry about price, delivery dates, training costs, spares, maintenance and other factors, but, overall, those considerations come out very close in the end. The last major innovation in air travel was the jet engine in the 1950s. A business analyst would say the airplane business is “mature,” the products are standardized, innovation is slow, so airplanes are commodity-like.
Now ask a different question: “Are the design, development, testing and manufacture of airplanes commodity-like or performance-driven?” Whoa. Tough question.
Actually, making airplanes is performance-driven.
Success or failure of an airplane program turns on productivity. The first airplanes off the production line sell at a loss. Costs come down over time, the quicker the better. If your business model emphasizes productivity, employee engagement and process improvement, costs go down faster. This was the essence of the “quality” business model Boeing followed in the mid-’90s. The 777 had the best “learning curve” in the business.
On the other hand, if your industry is mature, and your products are commodity-like, business-school theory says a cost-cutting model is appropriate.
Wal-Mart perfected its particular version of the cost-cutting business model. Amazon adapted that model to its industry. Boeing has adapted it to high-end manufacturing. These companies are super-stakeholders with market power over their supply chains. The point of this business model is that the super-stakeholder extracts gains from the subordinate stakeholders for the short-term benefit of investors.
Subordinate stakeholders are made to feel precarious and at-risk. Each supplier should see other suppliers as rivals. Similarly, each work location should know it competes on cost with rival work locations. Each state or local government should compete for incentives against rival states.
In this model, subordinate stakeholders never say “no” to the super-stakeholder — not workers, not suppliers, not state legislatures.
This cost-cutting culture is the opposite of a culture built on productivity, innovation, safety, or quality. A high-performance work culture requires trust, coordination, strong problem-solving, open flow of information and commitment to the overall success of the program. In a high-performance culture, stakeholders may sacrifice for the good of the program, understanding that their interests are served in the long run.
In the productivity-based 777 program, it would have been career-limiting to withhold negative information from managers. They needed timely information to find a solution as far upstream as possible.
According to Boeing’s annual reports, in the last five years Boeing diverted 92% of operating cash flow to dividends and share buybacks to benefit investors. Since 1998, share buybacks have consumed $70 billion, adjusted for inflation. That could have financed several entire new airplane models, with money left over for handsome executive bonuses.
Boeing’s experience with its cost-cutting business culture is apparent. Production problems with the 787, 747-8 and now the 737 MAX have cost billions of dollars, put airline customers at risk, and tarnished decades of accumulated goodwill and brand loyalty.
https://www.seattletimes.com/opinion...h-flow-period/
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Makes the AUD$2.5 billion wasted on share buy backs a rather interesting indulgence.
Wonder what the book value is versus the saleable value now?
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For what reason does QF persist on hanging onto the A380 fleet while every other carrier in existence signed 10 year leases and is walking at year 10?
Why does the QR/SQ strategy of short term high turnover lease agreements not seem to apply to QF?
I understand all the tax and depreciation issues we face here, but surely they would still be better off handing back the keys at the ten year mark and write off subsequent losses. It’s the 10-20 year mark that seems to be financially and operationally destructive.
Why does the QR/SQ strategy of short term high turnover lease agreements not seem to apply to QF?
I understand all the tax and depreciation issues we face here, but surely they would still be better off handing back the keys at the ten year mark and write off subsequent losses. It’s the 10-20 year mark that seems to be financially and operationally destructive.
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For what reason does QF persist on hanging onto the A380 fleet while every other carrier in existence signed 10 year leases and is walking at year 10?
Why does the QR/SQ strategy of short term high turnover lease agreements not seem to apply to QF?
I understand all the tax and depreciation issues we face here, but surely they would still be better off handing back the keys at the ten year mark and write off subsequent losses. It’s the 10-20 year mark that seems to be financially and operationally destructive.
Why does the QR/SQ strategy of short term high turnover lease agreements not seem to apply to QF?
I understand all the tax and depreciation issues we face here, but surely they would still be better off handing back the keys at the ten year mark and write off subsequent losses. It’s the 10-20 year mark that seems to be financially and operationally destructive.
Leaving aside the depreciation and taxation differences, there has been a drain of knowledge from QF.
Ironically, they seem to have little problem rolling and renewing fleet for JQ, ultimately though the aircraft are owned by Qantas and the QF carries the book value, real or imagined.
Given Little Napoleon has sold most of the silverware including the buildings, catering and even terminal leases, overpriced aircraft are all they really have as assets with which to leverage.
It was long a concern for many analysts that Qantas carried long-haul fleet on the books for far more than they were really worth in the second hand market.
Suffice to say as the reason for the 'biggest loss' and stunning' transformation' an aircraft write down provides great leverage for nefarious management, as well as a personal enrichment scheme when 'fortunately' one has a whole bunch of well timed options.