Leadership the Qantas Way
Thread Starter
Leadership the Qantas Way
Alan Joyce's $24m golden parachute.
After four years of stalemate, and a two-year pay freeze, Qantas domestic cabin crew this week voted up a new enterprise bargaining agreement with the company.
Flight attendants will maintain their existing conditions, get a 3 per cent increase in base pay (from as low as $49,400) plus minor increases to allowances (worth up to $25,000 annually), and finally receive bonuses from 2018 and 2022, withheld by the company on the basis they were contingent on a new agreement. This is colloquially known as legal extortion.
Inflation in the 12 months to February was 6.8 per cent.The deal with the Flight Attendants Association means that Qantas has now bedded down all of its major outstanding industrial agreements.
This will be of no small relief to chief executive Alan Joyce, who could scarcely have the company in a protected bargaining period with its engineers or ground staff (at least those it hasn't already sacked illegally) when the finer details of his own pay are finalised in September.Dollar numbers that large will knock the conciliatory stuffing out of even the most co-morbid union official.
Unsurprisingly, 2023 will go down as a far, far better year for Joyce financially than reputationally. The haul will be more than sufficient to balm his egoic injuries. Joyce will receive his base salary of $2.2 million. His short-term bonus, at target, is also $2.2 million but could be as high as $4.3 million.
Under the 2022-23 Recovery Retention Plan, he will receive 698,000 Qantas shares worth $4.5 million (based on yesterday's closing price of $6.49). While these shares don't vest until June 30, the Qantas board set the performance conditions so low that Joyce has already met them. Under Joyce's 2021-23 long-term incentive scheme, up to 1,349,000 Qantas shares will vest on June 30. Half of those shares are based on Oantas' total shareholder returns versus the ASX100, while the other half are based on Oantas TSR versus a basket of global airline peers.
If Qantas is in the top quartile, Joyce gets the full allocation. If Oantas ranks merely in the second quartile, he gets half the allocation. As of today (with just three of 36 months remaining), Qantas ranks 27th in the ASX 100 and first in the global basket. Anything can still happen in markets, but Joyce is currently tracking to nearly 100 percent of this award, worth $8.8 million today. Those outcomes would represent realised pay for financial 2023 of between $15.5 million and $17.6 million, still short of his record $23.9 million pay for FYI8. However, there are a further three successive long-term incentive schemes that vested in the pandemic years of 2020, 2021 and 2022 under whiles Joyce reccheda total of1.040.500 shares worth $6.8 million
today. Each August, Joyce has offered- and the Qantas board has dutifully agreed -to"defer the decision on whether his rights will be forfeited or allowed to comert to shares by anocher 12 months.
To give Joyce his due. he received no short-term bonus in any of those three years, and for several months in calendar 2020, he even forwent his base salary.
Nevertheless, those bonuses are for years In which Qantas posted cumulative statutory losses of $6.3 billion. It would have been been a terrible look had Joyce banked them at the time, especially as his staff - the ones not already stood down or made redundant- were on a pay freeze. It's still a terrible look to bank them , decision has never been in question. Come August 2023, Joyce will trouser every last one of them. If you include the deferred bonuses, and still relying on today's share price. Joyce stands to take home between $22 3 million and $24.4 milition in the 14 months to August.
In Alan Joyce's industrial instrument,the Better Off Overall Test is that everyone eise makes him better off overall. He makes a killing in the good years. He sets aside his LTI in the terrible years, but then takes them later anyway.What a method.Joyce has made hard decisions Some of these will bear rich fruit over the long term. Others have poisoned the tree. Has he left the company in better shape than in 2008?It's only when the capes wave washes in that well really find out.
But to trash the brand on the way out the door-that is an absolutely calculated bargain by management to maximise their money. After the lean years they are filling their boots. It's a cyclical business and this is their timel But there are ways, ard there are ways. Joyce is on the last lap here and it’s alol about being an Australian business legend.
That's the long term bonus he's chasing now and the Qantas board is facilitating the joy ride.
He's accumulated enough monty to want for nothing material. What fills the void after that are the trappings of office and the adulation of his peers. Those are pricoless.
He will never regain the respect of his customers again.
FROM TODAYS AFR.
After four years of stalemate, and a two-year pay freeze, Qantas domestic cabin crew this week voted up a new enterprise bargaining agreement with the company.
Flight attendants will maintain their existing conditions, get a 3 per cent increase in base pay (from as low as $49,400) plus minor increases to allowances (worth up to $25,000 annually), and finally receive bonuses from 2018 and 2022, withheld by the company on the basis they were contingent on a new agreement. This is colloquially known as legal extortion.
Inflation in the 12 months to February was 6.8 per cent.The deal with the Flight Attendants Association means that Qantas has now bedded down all of its major outstanding industrial agreements.
This will be of no small relief to chief executive Alan Joyce, who could scarcely have the company in a protected bargaining period with its engineers or ground staff (at least those it hasn't already sacked illegally) when the finer details of his own pay are finalised in September.Dollar numbers that large will knock the conciliatory stuffing out of even the most co-morbid union official.
Unsurprisingly, 2023 will go down as a far, far better year for Joyce financially than reputationally. The haul will be more than sufficient to balm his egoic injuries. Joyce will receive his base salary of $2.2 million. His short-term bonus, at target, is also $2.2 million but could be as high as $4.3 million.
Under the 2022-23 Recovery Retention Plan, he will receive 698,000 Qantas shares worth $4.5 million (based on yesterday's closing price of $6.49). While these shares don't vest until June 30, the Qantas board set the performance conditions so low that Joyce has already met them. Under Joyce's 2021-23 long-term incentive scheme, up to 1,349,000 Qantas shares will vest on June 30. Half of those shares are based on Oantas' total shareholder returns versus the ASX100, while the other half are based on Oantas TSR versus a basket of global airline peers.
If Qantas is in the top quartile, Joyce gets the full allocation. If Oantas ranks merely in the second quartile, he gets half the allocation. As of today (with just three of 36 months remaining), Qantas ranks 27th in the ASX 100 and first in the global basket. Anything can still happen in markets, but Joyce is currently tracking to nearly 100 percent of this award, worth $8.8 million today. Those outcomes would represent realised pay for financial 2023 of between $15.5 million and $17.6 million, still short of his record $23.9 million pay for FYI8. However, there are a further three successive long-term incentive schemes that vested in the pandemic years of 2020, 2021 and 2022 under whiles Joyce reccheda total of1.040.500 shares worth $6.8 million
today. Each August, Joyce has offered- and the Qantas board has dutifully agreed -to"defer the decision on whether his rights will be forfeited or allowed to comert to shares by anocher 12 months.
To give Joyce his due. he received no short-term bonus in any of those three years, and for several months in calendar 2020, he even forwent his base salary.
Nevertheless, those bonuses are for years In which Qantas posted cumulative statutory losses of $6.3 billion. It would have been been a terrible look had Joyce banked them at the time, especially as his staff - the ones not already stood down or made redundant- were on a pay freeze. It's still a terrible look to bank them , decision has never been in question. Come August 2023, Joyce will trouser every last one of them. If you include the deferred bonuses, and still relying on today's share price. Joyce stands to take home between $22 3 million and $24.4 milition in the 14 months to August.
In Alan Joyce's industrial instrument,the Better Off Overall Test is that everyone eise makes him better off overall. He makes a killing in the good years. He sets aside his LTI in the terrible years, but then takes them later anyway.What a method.Joyce has made hard decisions Some of these will bear rich fruit over the long term. Others have poisoned the tree. Has he left the company in better shape than in 2008?It's only when the capes wave washes in that well really find out.
But to trash the brand on the way out the door-that is an absolutely calculated bargain by management to maximise their money. After the lean years they are filling their boots. It's a cyclical business and this is their timel But there are ways, ard there are ways. Joyce is on the last lap here and it’s alol about being an Australian business legend.
That's the long term bonus he's chasing now and the Qantas board is facilitating the joy ride.
He's accumulated enough monty to want for nothing material. What fills the void after that are the trappings of office and the adulation of his peers. Those are pricoless.
He will never regain the respect of his customers again.
FROM TODAYS AFR.
The following 9 users liked this post by dragon man:
Top Answer
16th Apr 2023, 14:17
Thread Starter
Rear Window 
Save
Share
Last month, the country’s leading institutional broker UBS became the first to downgrade Qantas stock on the basis that “after several years of below-average investment… the scale of new fleet capex is likely to exceed previous cycles and may surprise the market” and noting “we believe consensus capex forecasts are at risk of increasing in order to support revenue and earnings already assumed.”
At the risk of sounding like Christopher Joye, we have been saying this for some time.
Qantas chief executive Alan Joyce is on track to retire this Christmas with roughly $125 million in total realised pay over his 15 years in charge. Louise Kennerely The same week as the UBS downgrade, Qantas launched a major tactical advertising campaign – occupying billboards, bus shelters, printed newspapers and any website trafficking in cookies – to reassure the airline’s deeply jaded customers that it would receive “1 [new] aircraft every 3 weeks over the next 3 years.”
The detailed fleet research behind the UBS recommendation, led by analyst Andre Fromyhr, estimates that 70 aircraft (or 22 per cent of the Qantas fleet by number of planes) will be retired over the 2024-2028 financial years and that Qantas will need to spend $12 billion in that period just to meet its committed deliveries and replace aircraft that have reached the hoary age of 25 years old. It would cost far, far more than $12 billion to keep the fleet at its present age.
For some sense of scale, $12 billion is the rough equivalent of three years of (record) operating cashflow. This maintenance capex will significantly impair the company’s ability to maintain shareholder distributions at anything like their current levels. Of course, none of this will be Joyce’s problem.Joyce inherited a fleet in 2008 “forecast to remain between 8.5 and 8.9 years [based on] the existing contractually committed long-term fleet plan.” By 2014, the Qantas Group passenger fleet was even younger, at 7.7 years. It had blown out to 14.1 years by December 2022 (bear in mind, these average ages exclude Network Aviation, whose average aircraft age is already 25 years).
In August 2021, Qantas told the market that its “nominal retirement age” of 20 years had been extended to between 24 and 26 years, partly justified by reduced usage during COVID. This brought Qantas into line with its global peers Iran Air and Air Zimbabwe, though Australia is not at this stage subject to international sanctions.
Today, Qantas management argues that age is just a number. Group treasurer Greg Manning told The Australian this month that average age “has always been a factor in our fleet planning process but it’s definitely not the main factor and hasn’t been for some time.”
Part of this argument is valid. Shareholders don’t want Qantas to be overcapitalised and so are supportive of prolonging aircraft life (with new engines and new seats).
The rest of the argument is a post-rationalisation for extreme underinvestment designed to artificially juice profits and the share price in the final years of Joyce’s reign, right before he takes his massive sack of bonuses and pulls the ripcord on his parachute, leaving the company flying into a capex mountain.
Joyce cannot blame any of this on COVID. He didn’t order a single new aircraft for Qantas mainline until 2019. He’d been CEO for 11 years. He’d already slashed the standing order for 787 Dreamliners from 65 to 25. He made a huge new Airbus order for Jetstar in 2011, which he deferred in 2014, in 2017 and again in 2018.
Here’s an instructive comparison. The Qantas Group took delivery of just five new passenger aircraft in financial 2018 (the year Joyce was paid $24 million) and three in FY19. According to UBS, Qantas will receive 25 new passenger planes in FY25 and 26 in FY26. The timing couldn’t be more perfect for Joyce. It’s almost like he made it that way!
Joyce recently complained to The Australian Financial Review about his coverage in this column, and to demonstrate the full support of the Qantas board, chairman Richard Goyder held his hand as Joyce made the complaint. They are aggrieved that my criticism of Joyce has become personal.
It is not personal, of course. I am unconcerned whether Joyce is short or tall, gay or straight, Irish or Australian, here or there. I’ve never criticised his DNA, only what he says and does in the course of his work.
Over the past year, Joyce became liable to say ridiculously self-unaware things: that he’s not a public figure (so don’t ask him to justify his European vacation in the peak of a company crisis); that Qantas received “very little government support” in the pandemic; that “union claims… cause a lot of people to lose their jobs” when since 2008 he’d eliminated more than 15,000 (or 42 per cent) of jobs from the Qantas workforce; then that Qantas will hire 8,500 new staff by 2033 (what is he now, a clairvoyant?); even implying that Qantas would reduce its egregiously high airfares just as soon as its competitors started adding more flights.
Joyce now requests that at the end of any column I write about Qantas, I should disclose that I am a former employee. I left the company 13 years ago on perfectly good terms.
Such a disclaimer would make everything right! It would cause all valid criticism to disappear, miraculously reverse the underinvestment in the Qantas fleet and suddenly all of his customers would love Qantas again. Is this seriously the best Alan’s got?! Incidentally, his request is refused.
Joyce confuses personal criticism with individualised criticism, and my criticism is individualised because he is the individual whose ego totally dominates the Qantas organisation. His executives are in the bunker with a mad king in his last days and for any person who presents a truth he doesn’t like, the consequences are real. Joyce’s lieutenants mete out the same justice to their underlings. Goyder has been warned about this culture on multiple occasions and has declined to act.
Joyce’s CFO (and heir apparent) Vanessa Hudson wouldn’t even say to him last month, “No thanks Alan, I won’t be putting my name on this embarrassing letter to the Financial Review wading into your fight.” Where was her judgment?
The problem for people who surround themselves exclusively with sycophants is that they become ill-equipped to cope with negative feedback.
The role of the Qantas board here is coming into sharp focus. It is simply extraordinary that the directors consider it their responsibility to rehabilitate the egoic injuries of Alan Joyce. That soothing his hurt feelings would chew up a moment of the board’s time is truly wacky.
Rather, the board should be paying Joyce lip service while actually focused on getting him out the door before he does the company any further reputational damage.
Joyce is on track to retire this Christmas with roughly $125 million in total realised pay over his 15 years in charge. It’s not enough – he needs to be revered, too. He’s a Companion of the Order of Australia, don’t you know? An Australian business legend.
There is a difference between backing your CEO and indulging him. By now, any half-shrewd chairman would’ve told Alan to harden the f--- up
Alan Joyce has had enough
Joe AstonColumnistApr 16, 2023 – 7.30pmSave
Share
Last month, the country’s leading institutional broker UBS became the first to downgrade Qantas stock on the basis that “after several years of below-average investment… the scale of new fleet capex is likely to exceed previous cycles and may surprise the market” and noting “we believe consensus capex forecasts are at risk of increasing in order to support revenue and earnings already assumed.”
At the risk of sounding like Christopher Joye, we have been saying this for some time.
Qantas chief executive Alan Joyce is on track to retire this Christmas with roughly $125 million in total realised pay over his 15 years in charge. Louise Kennerely The same week as the UBS downgrade, Qantas launched a major tactical advertising campaign – occupying billboards, bus shelters, printed newspapers and any website trafficking in cookies – to reassure the airline’s deeply jaded customers that it would receive “1 [new] aircraft every 3 weeks over the next 3 years.”The detailed fleet research behind the UBS recommendation, led by analyst Andre Fromyhr, estimates that 70 aircraft (or 22 per cent of the Qantas fleet by number of planes) will be retired over the 2024-2028 financial years and that Qantas will need to spend $12 billion in that period just to meet its committed deliveries and replace aircraft that have reached the hoary age of 25 years old. It would cost far, far more than $12 billion to keep the fleet at its present age.
For some sense of scale, $12 billion is the rough equivalent of three years of (record) operating cashflow. This maintenance capex will significantly impair the company’s ability to maintain shareholder distributions at anything like their current levels. Of course, none of this will be Joyce’s problem.Joyce inherited a fleet in 2008 “forecast to remain between 8.5 and 8.9 years [based on] the existing contractually committed long-term fleet plan.” By 2014, the Qantas Group passenger fleet was even younger, at 7.7 years. It had blown out to 14.1 years by December 2022 (bear in mind, these average ages exclude Network Aviation, whose average aircraft age is already 25 years).
In August 2021, Qantas told the market that its “nominal retirement age” of 20 years had been extended to between 24 and 26 years, partly justified by reduced usage during COVID. This brought Qantas into line with its global peers Iran Air and Air Zimbabwe, though Australia is not at this stage subject to international sanctions.
Today, Qantas management argues that age is just a number. Group treasurer Greg Manning told The Australian this month that average age “has always been a factor in our fleet planning process but it’s definitely not the main factor and hasn’t been for some time.”
Part of this argument is valid. Shareholders don’t want Qantas to be overcapitalised and so are supportive of prolonging aircraft life (with new engines and new seats).
The rest of the argument is a post-rationalisation for extreme underinvestment designed to artificially juice profits and the share price in the final years of Joyce’s reign, right before he takes his massive sack of bonuses and pulls the ripcord on his parachute, leaving the company flying into a capex mountain.
Joyce cannot blame any of this on COVID. He didn’t order a single new aircraft for Qantas mainline until 2019. He’d been CEO for 11 years. He’d already slashed the standing order for 787 Dreamliners from 65 to 25. He made a huge new Airbus order for Jetstar in 2011, which he deferred in 2014, in 2017 and again in 2018.
Here’s an instructive comparison. The Qantas Group took delivery of just five new passenger aircraft in financial 2018 (the year Joyce was paid $24 million) and three in FY19. According to UBS, Qantas will receive 25 new passenger planes in FY25 and 26 in FY26. The timing couldn’t be more perfect for Joyce. It’s almost like he made it that way!
Joyce recently complained to The Australian Financial Review about his coverage in this column, and to demonstrate the full support of the Qantas board, chairman Richard Goyder held his hand as Joyce made the complaint. They are aggrieved that my criticism of Joyce has become personal.
It is not personal, of course. I am unconcerned whether Joyce is short or tall, gay or straight, Irish or Australian, here or there. I’ve never criticised his DNA, only what he says and does in the course of his work.
Over the past year, Joyce became liable to say ridiculously self-unaware things: that he’s not a public figure (so don’t ask him to justify his European vacation in the peak of a company crisis); that Qantas received “very little government support” in the pandemic; that “union claims… cause a lot of people to lose their jobs” when since 2008 he’d eliminated more than 15,000 (or 42 per cent) of jobs from the Qantas workforce; then that Qantas will hire 8,500 new staff by 2033 (what is he now, a clairvoyant?); even implying that Qantas would reduce its egregiously high airfares just as soon as its competitors started adding more flights.
Joyce now requests that at the end of any column I write about Qantas, I should disclose that I am a former employee. I left the company 13 years ago on perfectly good terms.
Such a disclaimer would make everything right! It would cause all valid criticism to disappear, miraculously reverse the underinvestment in the Qantas fleet and suddenly all of his customers would love Qantas again. Is this seriously the best Alan’s got?! Incidentally, his request is refused.
Joyce confuses personal criticism with individualised criticism, and my criticism is individualised because he is the individual whose ego totally dominates the Qantas organisation. His executives are in the bunker with a mad king in his last days and for any person who presents a truth he doesn’t like, the consequences are real. Joyce’s lieutenants mete out the same justice to their underlings. Goyder has been warned about this culture on multiple occasions and has declined to act.
Joyce’s CFO (and heir apparent) Vanessa Hudson wouldn’t even say to him last month, “No thanks Alan, I won’t be putting my name on this embarrassing letter to the Financial Review wading into your fight.” Where was her judgment?
The problem for people who surround themselves exclusively with sycophants is that they become ill-equipped to cope with negative feedback.
The role of the Qantas board here is coming into sharp focus. It is simply extraordinary that the directors consider it their responsibility to rehabilitate the egoic injuries of Alan Joyce. That soothing his hurt feelings would chew up a moment of the board’s time is truly wacky.
Rather, the board should be paying Joyce lip service while actually focused on getting him out the door before he does the company any further reputational damage.
Joyce is on track to retire this Christmas with roughly $125 million in total realised pay over his 15 years in charge. It’s not enough – he needs to be revered, too. He’s a Companion of the Order of Australia, don’t you know? An Australian business legend.
There is a difference between backing your CEO and indulging him. By now, any half-shrewd chairman would’ve told Alan to harden the f--- up
The following 3 users liked this post by KRviator:
Quote:
HeQANTAS will never regain the respect of his their customers again.
Don't you mean:
HeQANTAS will never regain the respect of his their its customers again. 
Physics, Science and Maths were my favourites.
Mr Creosote
In Monty Python's "The meaning of life" the gluttonous Mr Creosote stuffs his stomach with more and more food until he explodes.
When I hear of a gluttonous amount of money being stuffed into some individuals pocket in an analogous fashion I can only hope for the same outcome.
When I hear of a gluttonous amount of money being stuffed into some individuals pocket in an analogous fashion I can only hope for the same outcome.
The following users liked this post:
Thread Starter
Qantas is set to party like it's 2020 on Friday night when the airline holds the black tie gala dinner originally planned to mark its 100th birthday almost three years ago.
With a guest list that runs to 1000 people and international acts headlining the entertainment, the evening is being billed as the "hottest ticket in Sydney".
Much like the airline's secretive Chairman's Lounge, Qantas is being tight-lipped about who is invited to the hangar party, which will be catered by celebrity chef Neil Perry.
It's understood the chief executives of banks, mining companies and international airlines did make the guest list, along with television identities, politicians and sports stars Adam Goodes and Bronte Campbell.
A number of Oantas staff have also scored an invitation by way of thanks for sticking with the company through the pandemic - that derailed the original event.
Oantas declined to comment on the entertainment line-up other than to hint that two homegrown international stars would perform, along with the Bangarra Dance Theatre and ARIA award-winning artist Budjerah.
The 21-year-old singer-songwriter recently reached new audiences when he toured with British pop star Ed Sheeran.
Actor Rodger Corser and television presenter Sylvia Jeffreys are set to MC the gala, which will be addressed by CEO Alan Joyce.
He will be joined by Qantas chairman Richard Goyder and the airline's executive team, plus former chief executive Geoff Dixon and ex-chairmen Leigh Clifford and Margaret Jackson.
The budget for the party is also being closely guarded, although there is no question Qantas can afford such a glamorous do.
The carrier clocked a record half-year profit in the six months to December 31 of $1.43bn. Qantas last formal affair in 2015 was attended by John Travolta and his wife, the late Kelly Preston, supermodels Miranda Kerr and Jess Hart, and singer Ronan Keating. Bernard Fanning and Tina Arena serenaded the crowd, who were welcomed into the cavernous hangar by aerial acrobats.
On Thursday, a Qantas insider revealed the most asked question by invitees was "would Travolta return?"
A long-time ambassador of the airline and qualified pilot, Travolta was expected to attend a memorial for his former co-star Olivia Newton-John in Melbourne last month but failed to appear.
He has kept a low profile since breaking down at the Oscars, while paying tribute to Dame Olivia.
Kelly Preston, 57, lost her battle with breast cancer in July 2020. She and Travolta were married for 28-years.
THE AUSTRALIAN
With a guest list that runs to 1000 people and international acts headlining the entertainment, the evening is being billed as the "hottest ticket in Sydney".
Much like the airline's secretive Chairman's Lounge, Qantas is being tight-lipped about who is invited to the hangar party, which will be catered by celebrity chef Neil Perry.
It's understood the chief executives of banks, mining companies and international airlines did make the guest list, along with television identities, politicians and sports stars Adam Goodes and Bronte Campbell.
A number of Oantas staff have also scored an invitation by way of thanks for sticking with the company through the pandemic - that derailed the original event.
Oantas declined to comment on the entertainment line-up other than to hint that two homegrown international stars would perform, along with the Bangarra Dance Theatre and ARIA award-winning artist Budjerah.
The 21-year-old singer-songwriter recently reached new audiences when he toured with British pop star Ed Sheeran.
Actor Rodger Corser and television presenter Sylvia Jeffreys are set to MC the gala, which will be addressed by CEO Alan Joyce.
He will be joined by Qantas chairman Richard Goyder and the airline's executive team, plus former chief executive Geoff Dixon and ex-chairmen Leigh Clifford and Margaret Jackson.
The budget for the party is also being closely guarded, although there is no question Qantas can afford such a glamorous do.
The carrier clocked a record half-year profit in the six months to December 31 of $1.43bn. Qantas last formal affair in 2015 was attended by John Travolta and his wife, the late Kelly Preston, supermodels Miranda Kerr and Jess Hart, and singer Ronan Keating. Bernard Fanning and Tina Arena serenaded the crowd, who were welcomed into the cavernous hangar by aerial acrobats.
On Thursday, a Qantas insider revealed the most asked question by invitees was "would Travolta return?"
A long-time ambassador of the airline and qualified pilot, Travolta was expected to attend a memorial for his former co-star Olivia Newton-John in Melbourne last month but failed to appear.
He has kept a low profile since breaking down at the Oscars, while paying tribute to Dame Olivia.
Kelly Preston, 57, lost her battle with breast cancer in July 2020. She and Travolta were married for 28-years.
THE AUSTRALIAN
The following users liked this post:
The following 2 users liked this post by PPRuNeUser01531:
Meanwhile 787 crew are being assigned annual leave to manage a surplus of pilots due to the rolling delay of the next three aircraft.
The company have stated they couldn’t possibly afford to wear the surplus for a month or so. Disgraceful…again!
The company have stated they couldn’t possibly afford to wear the surplus for a month or so. Disgraceful…again!
The following 6 users liked this post by Transition Layer:
Thread Starter
Surely you didn’t expect any different. Use your sick leave.
The following 3 users liked this post by dragon man:
Thread Starter
The following users liked this post:
The following users liked this post:
Thread Starter
The 380 operating to London yesterday was 2.5 hours late. It was in the hangar for Alan’s party Friday night. Rumour has it that that was the cause of the delay.
The following users liked this post:
Thread Starter
Faced with its oldest average plane fleet age in living memory - at 15.4 years including freighters - Qantas Airways has determined this measure is no longer a main strategic requirement, according to Qantas group treasurer Greg Manning Average age has always been a factor in our fleet planning process, but it's definitely not the main factor and hasn't been for some time," Mr Manning said.
"For the period of time we keep most aircraft, we'll replace the cabins and replace or refurbish engines, so it's not as simple as the date of manufacture."It's a significant change from previous management who liked to keep average fleet age at about 10 years and cited the better fuel efficiency, longer range and greater reliability of newer aircraft as a key reason to spend figures such as $US11Om ($164m) per Boeing 787 aircraft. Numerous former top-level executives shake their heads at the idea that chief executive Alan Joyce and his team no longer consider fleet age a main strategic imperative for Qantas.
"He is leaving a financial mess for the next CEO to contend with and it was a mess that was developing long before Covid," says one senior staffer.
There are certainly many who question whether Qantas has been deferring capital expenditure to boost profitability and boost the share price. Its other decision - while understandable - to write down the value of aircraft parked in the desert during Covid - has also given it an unusually depreciation expense-free period. Two months ago, Qantas announced a record underlying half year profit of $1.43b and analysts expect a record full year profit to follow as it benefits from the pent up demand for travel post-Covid, lower expenses, and a lag in competition following international border closures.
Mr Joyce is expected to announce timings for leaving Qantas in coming months, with either chief financial officer Vanessa Hudson, whose remit includes fleet, or Oliva Wirth who runs the Frequent Flyer, expected to take control.
Should either of the two appointed disagree with Qantas's "age is just a number " approach, they will face a massive $20bn-plus task of rebuilding the back closer to 10 years old.
That's a massive jump from the $US5bn Oantas says it needs to spend over the next four years - the difference explained by a downgrading of fleet age as a strategic priority.
Investment house UBS puts the figure at about $12bn.
Fleet management - how to pay aircraft and which ones work on which routes - is a complex and critical part of running an airline, particularly for Qantas as an end-of-line carrier.
The international business can be so lumpy that Mr Joyce was considering selling the whole operation splitting it off into a joint venture with the Chinese carrier.
Now of course, this division is making a killing - Qantas can't keep up with the pent-up post Covid demand particularly as many competitors are yet to return to the far away shores of Australia.
Margins on international were 12 per cent for the six months to December. and would have been significantly higher on routes such as the US, with Sydney - Dallas a particular highlight, believed to be at least in the high 20s. While Mr Joyce made the decision to keep its international carrier years ago, investment in new aircraft beyond the 787 Dreamliner since then has been lacking.
In response, Qantas points to the fact that ratings company Moody's updated its methodology and removed fleet age from its scorecard for passenger airlines in 2018.
Moody's senior credit officer Ian Chitterer clarified this point, stating that fleet age is still factored into its ratings despite not being in the scorecard, recognising that the optimal fleet structure depends on the business profile of an airline. aircraft flying on a route in WA where there is no competition," Mr Chitterer said. "Fleet needs to be fit for purpose, taking into account the competitor offering on the route."
Oantas flies materially older aircraft in both non-competitive and competitive routes.
The airline has at least one 27-year old Dash 8-200 that flies to Lord Howe Island, and a 31-year old Foker 100 flying in Western Australia. Its key A380s are up to 15 years old, it has a number of A330s around 19-years old, and its 737s are up to 21 years old, all at heavy-maintenance-check age.
To be fair, Qantas and all other airlines are now particularly from Boeing as a result of Covid-related supply chain issues. Qantas is still waiting on three 787s due in 2019.
But the Oantas fleet is still older than most competitors. The average age of rivals include Lufthansa at 13 years, Singapore Airways at seven years, and state-owned Qatar at five years.
Domestically, Virgin Australia has a fleet age of 12, a benefit of being able to hand back some aircraft post administration.
So what does Qantas actually need to buy? It's already announced its headline grabbing Project Sunrise, which will fly non-stop from the east coast of Australia to Europe and the US east coast, flights That service will likely augment rather than replace existing services when it begins flying in late 2025.
The airline has currently signed for 12 A350-1000s.
"There's no plan there for replacing A380s or widebodies in international," says another former senior executive.
Project Winton is designed to replace some of the domestic fleet. Qantas has an ageing fleet of 70 B737-800s, 10 A330-300s and about 23 A330-200.
Winton will replace a chunk of the 717s and 737s.
The airline has ordered 29 A220-300s - with deliveries due to start this year, and 20 Airbus A321XLRs, which should start arriving in 2024. the pandemic - it's likely Qantas achieved the 40 per cent of flag price it usually tries to lock in from aircraft manufacturers.
Qantas says its expecting 80 aircraft to arrive over the next four years and is working through how to replace its ageing A330 fleet but this is yet to be announced.
Mr Joyce has been a deft hand at linking in aircraft orders with industrial reshuffles, such as greater use of subsidiaries National Jet Systems and Network Aviation, which have lower payer deals. It's unclear if that will play a role in any business case for A330 replacements. Mr Joyce – often an antagonist with the unions – probably wouldn't be looking for too much trouble so close to his retirement. The airline has recently struck a deal with domestic cabin crew for a 3 per cent pay increase.
It's a deal that looks good for the financial markets
- by being not too large - but has also kept front line staff calm because of a number of quietly given concessions by the airline to move staff into higher pay brackets within the agreement.
But the opacity around fleet orders could also be just a simple numbers game. UBS puts the figure at $12bn over 2024-2028, which is $2bn higher than consensus estimates. Qantas has a record capex task ahead,” said UBS analyst Andre Fromyhr in his note.UBS believes there is risk the market has not priced in the amount of the spending the airline will need to make into its earnings forecasts."UBS forecasts are above consensus media in FY25-28, which we believe creates a risk that the market has not priced in enough capex to support existing earnings forecasts," UBS said in its note.It's no wonder so many non-investors questioned the common sense of its $500m share buyback.
Even looking at the record profit - when Mr Joyce was asked "is this as good as it gets" - there remains some tricky figures among the detail. The company's net assets per ordinary share is 0.01 cents as at December 2022 and debt to debt plus equity ratio is at 99.8 per cent. Qantas's current assets to liabilities shows a near $5bn shortfall, and revenue received in advance - which is a cash advance from passengers prior to travel and frequent flyer credits - has bulged to $5.7bn.This figure is high in part because of the difficulties people have had getting refunds or flights fromCovid-stalled travel.
So how does this play into who should be the next CEO?At first glance the Qantas board might think Ms Hudson, the current chief financial officer, will be best placed to steady the plane when it comes to fleet strategy. However, she has also been the direct line into Mr Joyce on all fleet decisions since becoming CFO.
Ms Wirth, the CEO of the highly profitable frequent flyer unit, has been distant from decisions on fleet - having run marketing and customer service units - before taking on her current position.
The board's decision on fleet issues may play a role in who they choose to lead Qantas, one of the most demanding jobs in corporate Australia.
FROM TODAYS AUSTRALIAN
"For the period of time we keep most aircraft, we'll replace the cabins and replace or refurbish engines, so it's not as simple as the date of manufacture."It's a significant change from previous management who liked to keep average fleet age at about 10 years and cited the better fuel efficiency, longer range and greater reliability of newer aircraft as a key reason to spend figures such as $US11Om ($164m) per Boeing 787 aircraft. Numerous former top-level executives shake their heads at the idea that chief executive Alan Joyce and his team no longer consider fleet age a main strategic imperative for Qantas.
"He is leaving a financial mess for the next CEO to contend with and it was a mess that was developing long before Covid," says one senior staffer.
There are certainly many who question whether Qantas has been deferring capital expenditure to boost profitability and boost the share price. Its other decision - while understandable - to write down the value of aircraft parked in the desert during Covid - has also given it an unusually depreciation expense-free period. Two months ago, Qantas announced a record underlying half year profit of $1.43b and analysts expect a record full year profit to follow as it benefits from the pent up demand for travel post-Covid, lower expenses, and a lag in competition following international border closures.
Mr Joyce is expected to announce timings for leaving Qantas in coming months, with either chief financial officer Vanessa Hudson, whose remit includes fleet, or Oliva Wirth who runs the Frequent Flyer, expected to take control.
Should either of the two appointed disagree with Qantas's "age is just a number " approach, they will face a massive $20bn-plus task of rebuilding the back closer to 10 years old.
That's a massive jump from the $US5bn Oantas says it needs to spend over the next four years - the difference explained by a downgrading of fleet age as a strategic priority.
Investment house UBS puts the figure at about $12bn.
Fleet management - how to pay aircraft and which ones work on which routes - is a complex and critical part of running an airline, particularly for Qantas as an end-of-line carrier.
The international business can be so lumpy that Mr Joyce was considering selling the whole operation splitting it off into a joint venture with the Chinese carrier.
Now of course, this division is making a killing - Qantas can't keep up with the pent-up post Covid demand particularly as many competitors are yet to return to the far away shores of Australia.
Margins on international were 12 per cent for the six months to December. and would have been significantly higher on routes such as the US, with Sydney - Dallas a particular highlight, believed to be at least in the high 20s. While Mr Joyce made the decision to keep its international carrier years ago, investment in new aircraft beyond the 787 Dreamliner since then has been lacking.
In response, Qantas points to the fact that ratings company Moody's updated its methodology and removed fleet age from its scorecard for passenger airlines in 2018.
Moody's senior credit officer Ian Chitterer clarified this point, stating that fleet age is still factored into its ratings despite not being in the scorecard, recognising that the optimal fleet structure depends on the business profile of an airline. aircraft flying on a route in WA where there is no competition," Mr Chitterer said. "Fleet needs to be fit for purpose, taking into account the competitor offering on the route."
Oantas flies materially older aircraft in both non-competitive and competitive routes.
The airline has at least one 27-year old Dash 8-200 that flies to Lord Howe Island, and a 31-year old Foker 100 flying in Western Australia. Its key A380s are up to 15 years old, it has a number of A330s around 19-years old, and its 737s are up to 21 years old, all at heavy-maintenance-check age.
To be fair, Qantas and all other airlines are now particularly from Boeing as a result of Covid-related supply chain issues. Qantas is still waiting on three 787s due in 2019.
But the Oantas fleet is still older than most competitors. The average age of rivals include Lufthansa at 13 years, Singapore Airways at seven years, and state-owned Qatar at five years.
Domestically, Virgin Australia has a fleet age of 12, a benefit of being able to hand back some aircraft post administration.
So what does Qantas actually need to buy? It's already announced its headline grabbing Project Sunrise, which will fly non-stop from the east coast of Australia to Europe and the US east coast, flights That service will likely augment rather than replace existing services when it begins flying in late 2025.
The airline has currently signed for 12 A350-1000s.
"There's no plan there for replacing A380s or widebodies in international," says another former senior executive.
Project Winton is designed to replace some of the domestic fleet. Qantas has an ageing fleet of 70 B737-800s, 10 A330-300s and about 23 A330-200.
Winton will replace a chunk of the 717s and 737s.
The airline has ordered 29 A220-300s - with deliveries due to start this year, and 20 Airbus A321XLRs, which should start arriving in 2024. the pandemic - it's likely Qantas achieved the 40 per cent of flag price it usually tries to lock in from aircraft manufacturers.
Qantas says its expecting 80 aircraft to arrive over the next four years and is working through how to replace its ageing A330 fleet but this is yet to be announced.
Mr Joyce has been a deft hand at linking in aircraft orders with industrial reshuffles, such as greater use of subsidiaries National Jet Systems and Network Aviation, which have lower payer deals. It's unclear if that will play a role in any business case for A330 replacements. Mr Joyce – often an antagonist with the unions – probably wouldn't be looking for too much trouble so close to his retirement. The airline has recently struck a deal with domestic cabin crew for a 3 per cent pay increase.
It's a deal that looks good for the financial markets
- by being not too large - but has also kept front line staff calm because of a number of quietly given concessions by the airline to move staff into higher pay brackets within the agreement.
But the opacity around fleet orders could also be just a simple numbers game. UBS puts the figure at $12bn over 2024-2028, which is $2bn higher than consensus estimates. Qantas has a record capex task ahead,” said UBS analyst Andre Fromyhr in his note.UBS believes there is risk the market has not priced in the amount of the spending the airline will need to make into its earnings forecasts."UBS forecasts are above consensus media in FY25-28, which we believe creates a risk that the market has not priced in enough capex to support existing earnings forecasts," UBS said in its note.It's no wonder so many non-investors questioned the common sense of its $500m share buyback.
Even looking at the record profit - when Mr Joyce was asked "is this as good as it gets" - there remains some tricky figures among the detail. The company's net assets per ordinary share is 0.01 cents as at December 2022 and debt to debt plus equity ratio is at 99.8 per cent. Qantas's current assets to liabilities shows a near $5bn shortfall, and revenue received in advance - which is a cash advance from passengers prior to travel and frequent flyer credits - has bulged to $5.7bn.This figure is high in part because of the difficulties people have had getting refunds or flights fromCovid-stalled travel.
So how does this play into who should be the next CEO?At first glance the Qantas board might think Ms Hudson, the current chief financial officer, will be best placed to steady the plane when it comes to fleet strategy. However, she has also been the direct line into Mr Joyce on all fleet decisions since becoming CFO.
Ms Wirth, the CEO of the highly profitable frequent flyer unit, has been distant from decisions on fleet - having run marketing and customer service units - before taking on her current position.
The board's decision on fleet issues may play a role in who they choose to lead Qantas, one of the most demanding jobs in corporate Australia.
FROM TODAYS AUSTRALIAN
Last edited by dragon man; 6th Apr 2023 at 21:33. Reason: Acknowledgemeeent
The problem with the two proposed Joyce replacements is that both of them only know the business, business as opposed to the airline, business. If ever there was a time to appoint someone who understands an airline from the ground up, it’s now. No business can be perpetually run in a piecemeal fashion with one (and only one) eye on the bottom line/shareholders. A holistic approach is badly needed and right now.
The following 3 users liked this post by gordonfvckingramsay:
Thread Starter
The Qantas board need to bring in an outsider who has no association with the vandal who has run the place for the last 14 years. They need operational experience, not marketing ,frequent flyer or god help us HR experience but real hands on front line airline experience. Then a no holding back review of the business which IMO would be very ugly. I can only dream.
The following users liked this post:
Australian Business Review article
SENIOR REPORTERFaced with its oldest average plane fleet age in living memory – at 15.4 years including freighters – Qantas Airways has determined this measure is no longer a main strategic requirement, according to Qantas group treasurer Greg Manning
“Average age has always been a factor in our fleet planning process, but it’s definitely not the main factor and hasn’t been for some time,” Mr Manning said.
“For the period of time we keep most aircraft, we’ll replace the cabins and replace or refurbish engines, so it’s not as simple as the date of manufacture.”
“He is leaving a financial mess for the next CEO to contend with and it was a mess that was developing long before Covid,” says one senior staffer.
There are certainly many who question whether Qantas has been deferring capital expenditure to boost profitability and boost the share price. Its other decision – while understandable – to write down the value of aircraft parked in the desert during Covid – has also given it an unusually depreciation expense-free period.
Two months ago, Qantas announced a record underlying half year profit of $1.43bn and analysts expect a record full year profit to follow as it benefits from the pent up demand for travel post-Covid, lower expenses, and a lag in competition following international border closures.
Mr Joyce is expected to announce timings for leaving Qantas in coming months, with either chief financial officer Vanessa Hudson, whose remit includes fleet, or Oliva Wirth who runs the Frequent Flyer, expected to take control.
Should either of the two appointed disagree with Qantas’s “age is just a number “ approach, they will face a massive $20bn-plus task of rebuilding the fleet over the next six years to get the average age back closer to 10 years old.
That’s a massive jump from the $US5bn Qantas says it needs to spend over the next four years – the difference explained by a downgrading of fleet age as a strategic priority.
Investment house UBS puts the figure at about $12bn.
Fleet management – how to pay aircraft and which ones work on which routes – is a complex and critical part of running an airline, particularly for Qantas as an end-of-line carrier.
The international business can be so lumpy that Mr Joyce was considering selling the whole operation to China Eastern just under a decade ago, or splitting it off into a joint venture with the Chinese carrier.
Now of course, this division is making a killing – Qantas can’t keep up with the pent-up post Covid demand particularly as many competitors are yet to return to the far away shores of Australia.
Margins on international were 12 per cent for the six months to December, and would have been significantly higher on routes such as the US, with Sydney – Dallas a particular highlight, believed to be at least in the high 20s.
While Mr Joyce made the decision to keep its international carrier years ago, investment in new aircraft beyond the 787 Dreamliner since then has been lacking.
In response, Qantas points to the fact that ratings company Moody’s updated its methodology and removed fleet age from its scorecard for passenger airlines in 2018.
Moody’s senior credit officer Ian Chitterer clarified this point, stating that fleet age is still factored into its ratings despite not being in the scorecard, recognising that the optimal fleet structure depends on the business profile of an airline.
“For Qantas, there is no point in having the latest aircraft flying on a route in WA where there is no competition,” Mr Chitterer said. “Fleet needs to be fit for purpose, taking into account the competitor offering on the route.”
Qantas flies materially older aircraft in both non-competitive and competitive routes.
The airline has at least one 27-year old Dash 8-200 that flies to Lord Howe Island, and a 31-year old Foker 100 flying in Western Australia. Its key A380s are up to 15 years old, it has a number of A330s around 19-years old, and its 737s are up to 21 years old, all at heavy-maintenance-check age.
To be fair, Qantas and all other airlines are now facing major delays in receiving aircraft, particularly from Boeing as a result of Covid-related supply chain issues. Qantas is still waiting on three 787s due in 2019.
But the Qantas fleet is still older than most competitors. The average age of rivals include Lufthansa at 13 years, Singapore Airways at seven years, and state-owned Qatar at five years. Domestically, Virgin Australia has a fleet age of 12, a benefit of being able to hand back some aircraft post administration.
So what does Qantas actually need to buy? It’s already announced its headline grabbing Project Sunrise, which will fly non-stop from the east coast of Australia to Europe and the US east coast, flights that cover about 18,000km without stopping.
That service will likely augment rather than replace existing services when it begins flying in late 2025. The airline has currently signed for 12 A350-1000s.
“There’s no plan there for replacing A380s or widebodies in international,” says another former senior executive.
Project Winton is designed to replace some of the domestic fleet. Qantas has an ageing fleet of 70 B737-800s, 10 A330-300s and about 23 A330-200.
Winton will replace a chunk of the 717s and 737s. The airline has ordered 29 A220-300s – with deliveries due to start this year, and 20 Airbus A321XLRs, which should start arriving in 2024. Given the timing of the contract signing – during the pandemic – it’s likely Qantas achieved the 40 per cent of flag price it usually tries to lock in from aircraft manufacturers.
Qantas says its expecting 80 aircraft to arrive over the next four years and is working through how to replace its ageing A330 fleet but this is yet to be announced.
Mr Joyce has been a deft hand at linking in aircraft orders with industrial reshuffles, such as greater use of subsidiaries National Jet Systems and Network Aviation, which have lower payer deals. It’s unclear if that will play a role in any business case for A330 replacements.
Mr Joyce – often an antagonist with the unions – probably wouldn’t be looking for too much trouble so close to his retirement. The airline has recently struck a deal with domestic cabin crew for a 3 per cent pay increase.
It’s a deal that looks good for the financial markets – by being not too large – but has also kept front line staff calm because of a number of quietly given concessions by the airline to move staff into higher pay brackets within the agreement.
But the opacity around fleet orders could also be just a simple numbers game. UBS puts the figure at $12bn over 2024-2028, which is $2bn higher than consensus estimates.
“Qantas has a record capex task ahead,” said UBS analyst Andre Fromyhr in his note.
UBS believes there is risk the market has not priced in the amount of the spending the airline will need to make into its earnings forecasts.
“UBS forecasts are above consensus media in FY 25-28, which we believe creates a risk that the market has not priced in enough capex to support existing earnings forecasts,” UBS said in its note.
It’s no wonder so many non-investors questioned the common sense of its $500m share buyback.
Even looking at the record profit – when Mr Joyce was asked “is this as good as it gets” – there remains some tricky figures among the detail.
The company’s net assets per ordinary share is 0.01 cents as at December 2022 and debt to debt plus equity ratio is at 99.8 per cent. Qantas’s current assets to liabilities shows a near $5bn shortfall, and revenue received in advance – which is a cash advance from passengers prior to travel and frequent flyer credits – has bulged to $5.7bn.
This figure is high in part because of the difficulties people have had getting refunds or flights from Covid-stalled travel.
So how does this play into who should be the next CEO?
At first glance the Qantas board might think Ms Hudson, the current chief financial officer, will be best placed to steady the plane when it comes to fleet strategy. However, she has also been the direct line into Mr Joyce on all fleet decisions since becoming CFO.
Ms Wirth, the CEO of the highly profitable frequent flyer unit, has been distant from decisions on fleet – having run marketing and customer service units – before taking on her current position.
The board’s decision on fleet issues may play a role in who they choose to lead Qantas, one of the most demanding jobs in corporate Australia.
Why Qantas chief Alan Joyce isn’t prioritising Qantas’ ageing fleet
By TANSY HARCOURT
SENIOR REPORTERFaced with its oldest average plane fleet age in living memory – at 15.4 years including freighters – Qantas Airways has determined this measure is no longer a main strategic requirement, according to Qantas group treasurer Greg Manning
“Average age has always been a factor in our fleet planning process, but it’s definitely not the main factor and hasn’t been for some time,” Mr Manning said.
“For the period of time we keep most aircraft, we’ll replace the cabins and replace or refurbish engines, so it’s not as simple as the date of manufacture.”
[size=13px]It’s a significant change from previous management who liked to keep average fleet age at about 10 years and cited the better fuel efficiency, longer range and greater reliability of newer aircraft as a key reason to spend figures such as $US110m ($164m) per Boeing 787 aircraft.[/size]
Numerous former top-level executives shake their heads at the idea that chief executive Alan Joyce and his team no longer consider fleet age a main strategic imperative for Qantas.“He is leaving a financial mess for the next CEO to contend with and it was a mess that was developing long before Covid,” says one senior staffer.
There are certainly many who question whether Qantas has been deferring capital expenditure to boost profitability and boost the share price. Its other decision – while understandable – to write down the value of aircraft parked in the desert during Covid – has also given it an unusually depreciation expense-free period.
Two months ago, Qantas announced a record underlying half year profit of $1.43bn and analysts expect a record full year profit to follow as it benefits from the pent up demand for travel post-Covid, lower expenses, and a lag in competition following international border closures.
Mr Joyce is expected to announce timings for leaving Qantas in coming months, with either chief financial officer Vanessa Hudson, whose remit includes fleet, or Oliva Wirth who runs the Frequent Flyer, expected to take control.
Should either of the two appointed disagree with Qantas’s “age is just a number “ approach, they will face a massive $20bn-plus task of rebuilding the fleet over the next six years to get the average age back closer to 10 years old.
That’s a massive jump from the $US5bn Qantas says it needs to spend over the next four years – the difference explained by a downgrading of fleet age as a strategic priority.
Investment house UBS puts the figure at about $12bn.
Fleet management – how to pay aircraft and which ones work on which routes – is a complex and critical part of running an airline, particularly for Qantas as an end-of-line carrier.
The international business can be so lumpy that Mr Joyce was considering selling the whole operation to China Eastern just under a decade ago, or splitting it off into a joint venture with the Chinese carrier.
Now of course, this division is making a killing – Qantas can’t keep up with the pent-up post Covid demand particularly as many competitors are yet to return to the far away shores of Australia.
Margins on international were 12 per cent for the six months to December, and would have been significantly higher on routes such as the US, with Sydney – Dallas a particular highlight, believed to be at least in the high 20s.
While Mr Joyce made the decision to keep its international carrier years ago, investment in new aircraft beyond the 787 Dreamliner since then has been lacking.
In response, Qantas points to the fact that ratings company Moody’s updated its methodology and removed fleet age from its scorecard for passenger airlines in 2018.
Moody’s senior credit officer Ian Chitterer clarified this point, stating that fleet age is still factored into its ratings despite not being in the scorecard, recognising that the optimal fleet structure depends on the business profile of an airline.
“For Qantas, there is no point in having the latest aircraft flying on a route in WA where there is no competition,” Mr Chitterer said. “Fleet needs to be fit for purpose, taking into account the competitor offering on the route.”
Qantas flies materially older aircraft in both non-competitive and competitive routes.
The airline has at least one 27-year old Dash 8-200 that flies to Lord Howe Island, and a 31-year old Foker 100 flying in Western Australia. Its key A380s are up to 15 years old, it has a number of A330s around 19-years old, and its 737s are up to 21 years old, all at heavy-maintenance-check age.
To be fair, Qantas and all other airlines are now facing major delays in receiving aircraft, particularly from Boeing as a result of Covid-related supply chain issues. Qantas is still waiting on three 787s due in 2019.
But the Qantas fleet is still older than most competitors. The average age of rivals include Lufthansa at 13 years, Singapore Airways at seven years, and state-owned Qatar at five years. Domestically, Virgin Australia has a fleet age of 12, a benefit of being able to hand back some aircraft post administration.
So what does Qantas actually need to buy? It’s already announced its headline grabbing Project Sunrise, which will fly non-stop from the east coast of Australia to Europe and the US east coast, flights that cover about 18,000km without stopping.
That service will likely augment rather than replace existing services when it begins flying in late 2025. The airline has currently signed for 12 A350-1000s.
“There’s no plan there for replacing A380s or widebodies in international,” says another former senior executive.
Project Winton is designed to replace some of the domestic fleet. Qantas has an ageing fleet of 70 B737-800s, 10 A330-300s and about 23 A330-200.
Winton will replace a chunk of the 717s and 737s. The airline has ordered 29 A220-300s – with deliveries due to start this year, and 20 Airbus A321XLRs, which should start arriving in 2024. Given the timing of the contract signing – during the pandemic – it’s likely Qantas achieved the 40 per cent of flag price it usually tries to lock in from aircraft manufacturers.
Qantas says its expecting 80 aircraft to arrive over the next four years and is working through how to replace its ageing A330 fleet but this is yet to be announced.
Mr Joyce has been a deft hand at linking in aircraft orders with industrial reshuffles, such as greater use of subsidiaries National Jet Systems and Network Aviation, which have lower payer deals. It’s unclear if that will play a role in any business case for A330 replacements.
Mr Joyce – often an antagonist with the unions – probably wouldn’t be looking for too much trouble so close to his retirement. The airline has recently struck a deal with domestic cabin crew for a 3 per cent pay increase.
It’s a deal that looks good for the financial markets – by being not too large – but has also kept front line staff calm because of a number of quietly given concessions by the airline to move staff into higher pay brackets within the agreement.
But the opacity around fleet orders could also be just a simple numbers game. UBS puts the figure at $12bn over 2024-2028, which is $2bn higher than consensus estimates.
“Qantas has a record capex task ahead,” said UBS analyst Andre Fromyhr in his note.
UBS believes there is risk the market has not priced in the amount of the spending the airline will need to make into its earnings forecasts.
“UBS forecasts are above consensus media in FY 25-28, which we believe creates a risk that the market has not priced in enough capex to support existing earnings forecasts,” UBS said in its note.
It’s no wonder so many non-investors questioned the common sense of its $500m share buyback.
Even looking at the record profit – when Mr Joyce was asked “is this as good as it gets” – there remains some tricky figures among the detail.
The company’s net assets per ordinary share is 0.01 cents as at December 2022 and debt to debt plus equity ratio is at 99.8 per cent. Qantas’s current assets to liabilities shows a near $5bn shortfall, and revenue received in advance – which is a cash advance from passengers prior to travel and frequent flyer credits – has bulged to $5.7bn.
This figure is high in part because of the difficulties people have had getting refunds or flights from Covid-stalled travel.
So how does this play into who should be the next CEO?
At first glance the Qantas board might think Ms Hudson, the current chief financial officer, will be best placed to steady the plane when it comes to fleet strategy. However, she has also been the direct line into Mr Joyce on all fleet decisions since becoming CFO.
Ms Wirth, the CEO of the highly profitable frequent flyer unit, has been distant from decisions on fleet – having run marketing and customer service units – before taking on her current position.
The board’s decision on fleet issues may play a role in who they choose to lead Qantas, one of the most demanding jobs in corporate Australia.