REX to transition to ATRs, start domestic jet ops
Interesting opinion 43” but I see it very differently. .
Qantas’s debt was actually lower this half than the previous half. Sold off underused property.
Net debt is now at $5.5bn. Prior to COVID it was at $4.7bn in a much higher interest rate environment.
Not much of an increase in debt and the terms of the debt will be much better.
Qantas have weathered the extreme adversity of COVID surprisingly well. Despite not asking for a bailout, they received hundreds of millions of dollars in government assistance. They have used the pandemic to be fairly ruthless in reducing costs. Ground handlers and cleaners all outsourced, pushing through company-wide multi-year wage freezes, or possibly worse for our cabin crew colleagues.
It is looking like the world (and even WA) is emerging from COVID restrictions so I expect Qantas to return to bumper profits, having trimmed their costs and increased their domestic market share.
All that being said, I think QF IR are a disgrace they treat their employees very poorly, but I don’t think they’ll be going broke.
Qantas’s debt was actually lower this half than the previous half. Sold off underused property.
Net debt is now at $5.5bn. Prior to COVID it was at $4.7bn in a much higher interest rate environment.
Not much of an increase in debt and the terms of the debt will be much better.
Qantas have weathered the extreme adversity of COVID surprisingly well. Despite not asking for a bailout, they received hundreds of millions of dollars in government assistance. They have used the pandemic to be fairly ruthless in reducing costs. Ground handlers and cleaners all outsourced, pushing through company-wide multi-year wage freezes, or possibly worse for our cabin crew colleagues.
It is looking like the world (and even WA) is emerging from COVID restrictions so I expect Qantas to return to bumper profits, having trimmed their costs and increased their domestic market share.
All that being said, I think QF IR are a disgrace they treat their employees very poorly, but I don’t think they’ll be going broke.
It is looking like the world (and even WA) is emerging from COVID restrictions so I expect Qantas to return to bumper profits, having trimmed their costs and increased their domestic market share.
Last edited by 43Inches; 26th Feb 2022 at 23:32.
QF is currently over 70% domestic owned. A couple of $b there in foreign investment if they really wanted, they just don’t want to dilute the share price whilst debt is a relatively cheaper option.
They also have much greater diversified business as opposed to Rex and even Virgin. A goliath FF program expanded into insurance etc and an exponentially growing freight business.
They also have much greater diversified business as opposed to Rex and even Virgin. A goliath FF program expanded into insurance etc and an exponentially growing freight business.
Current foreign ownership as of the last notifications was just under 36%. No investment firm would be interested in 14% of a company unless they saw significant ROI, they would want significant returns and some for of meaningful board representation for Billions in investment, this has been the issue for a long time. Virgin had the same problem with too many entities spoiling the broth and none able to control direction to the point it was worth investing in. They just had Veto controls to ensure VA didn't cross their paths and interfere with their own agendas.
I agree to a point, but the cash cow for QF is its domestic operation, every opposition airline knows this, and it is always quoted as the "underlying profit maker". The FF program and other sundries are worth very little without QF airlines at the helm.
All you have to do is read the pilot responses to the customer complaint in the other thread about how QF pilots have no avenue to pass on critical customer suggestions to management that might be heard to see how fractured the company is.
They also have much greater diversified business as opposed to Rex and even Virgin. A goliath FF program expanded into insurance etc and an exponentially growing freight business.
All you have to do is read the pilot responses to the customer complaint in the other thread about how QF pilots have no avenue to pass on critical customer suggestions to management that might be heard to see how fractured the company is.
has run out of high value assets to sell, so you wont be seeing much more of that coming up
Sell off Jetstar Japan and for heavens sakes just close Jetstar Asia.
The Sale Act does not block another shares placement so long as subsequent to the placement foreign ownership doesn't exceed the threshold 49 percent articulated in Part 3 of the Act. Qantas could easily launch another $1.5 billion equity raising through institutional placements and manage the foreign component.
That still doesn't buy them a partner willing to pump funds in the likes of Bain and PAG, QFs big partners in crime such as emirates are also treading water, and QF burned its bridge with SQ. On that point you will probably find SQ probably getting cosy with either VA or Rex soon for on carriage. Share dilution is not something you do willy nilly, if the books really start looking bad the share price is likely to tank. My thoughts are that VA is going to seriously challenge QF in the domestic scene over the coming years, Rex will eke out a niche like it did with regional services. QF will have to temper its fever pitched hold the line at 60% however as it will be bleeding cash to do so.
And share dilution isn't an issue because of those share buy backs, much maligned as they were from some quarters. The buy-backs afford Qantas significant flexibility in re-issuing shares via equity raisings. They could likely raise $1 billion next month without raising a sweat.
And it's probably worth noting that Qantas, even on the heels of those pretty ordinary HY1 results, is trading at a 37 percent premium to the placement price of the last institutional placement. As troubling as the last two years has been for the industry I'd much rather be in Qantas's shoes than Rex’s, or Bonza's (thongs, most likely for them).
I think you really don't understand that a company can't just generate infinite shares from ever producing more shares. First they have to be worth something, to get the desired return, then there has to be willing buyers which is usually not an issue, and then you have to avoid diluting investors shares already invested. Every time you float more shares each share loses value, which turns off potential investors if that continues. Coles is going down a similar path to QF at the moment, its quest on dominating market share is seeing it setting up stores to compete with its other stores sometimes within a km of each other. The onus is then placing ever increasing pressure on labor to cut costs in staff numbers and conditions which are now below award. QF wont get away with that for pilots as its in a highly competetive environment so its starting with the stood down FAs and other segments. The writing is on the wall for both companies.
I think you really don't understand that a company can't just generate infinite shares from ever producing more shares. First they have to be worth something, to get the desired return, then there has to be willing buyers which is usually not an issue, and then you have to avoid diluting investors shares already invested. Every time you float more shares each share loses value, which turns off potential investors if that continues. Coles is going down a similar path to QF at the moment, its quest on dominating market share is seeing it setting up stores to compete with its other stores sometimes within a km of each other. The onus is then placing ever increasing pressure on labor to cut costs in staff numbers and conditions which are now below award. QF wont get away with that for pilots as its in a highly competetive environment so its starting with the stood down FAs and other segments. The writing is on the wall for both companies.
Rex's HY1 results are comparatively much worse than Qantas's. Rex's revenue for the half of $116.5 million was down by just $9 million on HY1-21 but their operating loss (EBITDA) was over $33 million. That compares to an operating profit for HY1-21 of $24.8 million off of revenue of $125 million. That's nearly a $60 million swing over a year. What's the fundamental difference between the six months to December 20 and the six months to December 21? Jet ops. It should be ringing alarm bells.
Yes, but its apples and oranges, Rex is in a rapid expansion phase, most would have a breakeven mark at two years plus with extremely steep startup costs in the first two years, I wont even add in Covid. QF is purely in damage control with its international ops on life support and its domestic just coming out of hibernation. Rex could probably drop a share float tomorrow and pick up 100mil in cash flow if it wanted to, as you said it's a matter currently of cheap loans add to that not wanting to dilute the share mix. Virgin did similar just before it crashed in a heap. There is a vast difference to floating shares for expansion or for life support and the market will respond accordingly.
PS in comparing the two airlines, they both had the same % increase in revenue of just over 34% Rex and 31% for QF. Comparing share value, Rex each share has a net tangible value of +$1.28 per share, where Qantas the tangible value has gone further negative to -0.35cents. That last bit really shows how bad QFs debt position is, the company has no tangible value if you broke it up.
PS in comparing the two airlines, they both had the same % increase in revenue of just over 34% Rex and 31% for QF. Comparing share value, Rex each share has a net tangible value of +$1.28 per share, where Qantas the tangible value has gone further negative to -0.35cents. That last bit really shows how bad QFs debt position is, the company has no tangible value if you broke it up.
Last edited by 43Inches; 27th Feb 2022 at 02:26.
... Comparing share value, Rex each share has a net tangible value of +$1.28 per share, where Qantas the tangible value has gone further negative to -0.35cents. That last bit really shows how bad QFs debt position is, the company has no tangible value if you broke it up.
Well, Rex's now halfway through that two year rapid expansion phase. How are they doing?
You cannot possibly believe that. Rex essentially doubled its issued shares with the PAG deal. There is no way possible that they could issue another $100 million in shares. That's just rank nonsense.
Well, we saw exactly how the market responded to Qantas's share placement "for life support" in late 2020. $1.36 billion raised from the institutional placement and the shares are currently trading at a 35 percent premium to the issue price.
Now you're getting close to what Qantas's short-term problem is - I'm surprised no analyst has commented on it yet. That said, that "market" you were quoting earlier values their shares just north of $5 a pop. That is how the market views their recovery and future earnings potential. Through the pandemic Qantas's FF program alone generated four times the revenue and eight times the profit that Rex could manage in a very good year. But if you want to go long on Rex, I doubt anyone will look to get in your way.
Nope, just a realist, and I'm not just on Rex, I feel Virgin will be strong the next few years as its now in good position cashed up with cheap leases. As I said QF stuffed up and should have pushed for a handout for it and VA, it's better having debt nobbled opposition than a now financial giant backed lean operation.
I notice we haven’t heard from PoppaJo re pax loads for a while. That might be due to the fact load factors are really starting to pick up.
Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.
The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.
Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.
The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.
I notice we haven’t heard from PoppaJo re pax loads for a while. That might be due to the fact load factors are really starting to pick up.
Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.
The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.
Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.
The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.
Looking at the Rex numbers, today was busy, yesterday some good and bad patches. Mid week not overly fantastic but but better as the week closes out. Melbourne to Gold Coast however is not pretty as you say. Sydney should be busy for all this week with Mardi Gras etc.
April should hopefully be a good month for everyone with demand surging and everyone back at full rosters!
Took off from ML (RWY16) to SY the other day directly behind REX. We had 175 punters on board. They outclimbed us by 7000’ at ALBAK. I don’t think they had many on board……… unless they were going full rated at best rate
This is a traditional low time for leisure travel in Australia, but possibly some uptick this year due to people travelling to catch up with family and get some face to face business done post covid. Queensland might stay a bit sedated with the weather pattern that's smashing them at the moment. I've noticed a few people doing silly things like going to the pacific islands during hurricane season just because of pent up travel bugs. Things you would normally avoid unless you really needed the cheaper fares. There's also not much or no cruising at the moment so that whole sector of leisure travel is still completely missing.