Qantas May Dump Australian Airlines
 

Fri "Dow Jones"

Qantas May Dump Australian Airlines

SYDNEY (Dow Jones)--Australia's Qantas Airways Ltd. (QAN.AU) is expected to announce plans to ditch loss-making international leisure carrier Australian Airlines later this year as it prepares to begin flying low-cost offshoot Jetstar on international routes in early 2007, The Australian Financial Review reports Friday.

Without citing sources, the newspaper says it understands the plans involve keeping Australian Airlines' operations but absorbing them into either Qantas's or Jetstar's international operations and ultimately killing the Australian Airlines brand.

The announcement might come when Qantas reveals the first routes to be flown by Jetstar in May, but it is believed to be waiting for a clearer picture of the impact of the federal government's industrial relations overhaul before making a decision, the report says.

-By Sydney bureau; 61-2-8235-2950; [email protected]
-Edited by Paul Dekkers

====================================================

That's a fairly serious allegation.

I don't think though, that the Japanese tourist package market is ready yet for "buy your way to Australia" style travel.

ps nice to see Wirraway keeping us reliable informed with press clippings on a regular basis again...thanks very much.

A report on ABC radio today suggests the Japanese tourist market is already severely floundering, with JAL considering withdrawing services to Australia (whether a consequence or co-incident was not clear).

Apparently Thailand, and still Hawaii, are the favourites and Australia has been dumped. A big part of the reason was an increasingly sophisitcated Japanaese tourist market who would not put up with the 'scalping' thye have received by uncscrupulous stores or tour operators. Something Australia has developed some notoriety for (admittedly many of them owned by Japanese companies to start with).

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Friday 27 January 2006



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Qantas may dump Australian Airlines

Author: James Hall
Publication: Australian Financial Review (46,Fri 27 Jan 2006)
Edition: First
Section: Companies and Markets
Keywords: Qantas (15),Australian (13),Airlines (13)

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Qantas Airways is expected to announce plans to ditch loss-making international leisure carrier Australian Airlines later this year as it prepares to begin flying low-cost offshoot Jetstar on international routes in early 2007.

It's understood the plans involve keeping Australian Airlines' operations but absorbing them into either Qantas's or Jetstar's international operations and ultimately killing the Australian Airlines brand.

The announcement might come when Qantas reveals the first routes to be flown by Jetstar in May, but it is believed to be waiting for a clearer picture of the impact of the federal government's industrial relations overhaul before making a decision.

The difficulty under existing industrial relations legislation is that workers in one enterprise-bargaining agreement cannot easily be absorbed into a company with another, higher-paying EBA. This is expected to change when the Workplace Relations Amendment (Work Choices) Act comes into force later this year.

Qantas - already courting controversy with plans to move 3000 maintenance jobs offshore, also dependent on the Work Choices changes - is seeking to cut $3 billion in costs by 2008 as it battles intense competition and high fuel prices.

It is understood that flying three international carriers, Qantas, Jetstar and Australian Airlines, is a luxury the flagship carrier cannot afford.

Qantas chief financial officer Peter Gregg said the airline had several options in terms of the future of Australian Airlines.

"The company is continuing to work on those options and considering how Australian Airlines' operations will continue," Mr Gregg said.

Absorbed into Qantas before the airline's 1996 float, Australian Airlines, like Qantas, was formally owned by the government, but was originally a domestic carrier.

Qantas relaunched it in 2002 as a full-service, single-class carrier flying to destinations in the Asia-Pacific region, including Japan, Hong Kong, Phuket in Thailand, Singapore and Bali.

However, it has now been superseded by the lower-cost Jetstar International. It has been losing both money and patronage, and has suspended some routes.

As both Qantas and Jetstar have reported improvements in passenger numbers and revenue measurements, Australian Airlines' performance has declined, making it the worst performing of the six brands in the Qantas group.

For the 2005-06 financial year to date, Australian Airlines' passenger numbers have fallen 3.6 per cent to 347,000 from 360,000 in 2004-05.

Revenue per passenger kilometre has slumped 8.7 per cent to $1.58 million from $1.73 million and the crucial "revenue seat factor" - which gauges how revenue-efficient each seat on a flight is - has fallen 4.8 percentage points from 73.3 per cent to 68.5 per cent.

In financial year 2004-05, Australian Airlines lost $11.6 million before interest and tax, compared with a $1.1 million profit in 2003-04.

Qantas's decision in December to pay $24 million for 65 new Boeing aircraft, the first of which will be used in Jetstar's international expansion, tellingly omitted any orders of new aeroplanes for Australian Airlines.


KEY POINTS

* Qantas is believed to be awaiting industrial relations changes before cutting Australian Airlines loose.

* Qantas is waiting for 65 new Boeing aircraft for itself and Jetstar, but none are earmarked for AA.

Headline: Qantas may dump Australian Airlines
Author: James Hall
Edition: First
Section: Companies and Markets



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Copyright © Fairfax

And slowly but surely the Nitty Gritty of this Work-choices legislation will appear, particulary as implentatin time approaches.... It's the tip of the ice-berg, there is much worse in it, and its going to come around and bite everyone in the bum, regardless of industry if you are a PAYE taxpayer that is... :mad: no wonder it was rushed through so quick!, as a side-note, I dont think there will be a dual Australian, Jetstar International, it doesnt make sense, some sort of absorption will be on the cards..

MMMMM $24 million for 65 jets, I knew it was a good deal but not that good.

Yes I've had a feeling about this ever since J* started up. What will happen next? Any bets that the Work Choices legislation will allow management to fold Qantas mainline into J* for the sake of getting all staff onto lower wages, then rebrand the whole thing as Qantas again? :eek:

Food for thought maybe. :uhoh:

The plan was for it all to be folded up by the end 2005 but legislation was slow and has now been postponed til May 2006.

OzExpat you have hit the nail on the head, and with the white rat with the Howard Government in its back pocket, it's going to happen a lot faster than G.D had expected.

And Oldmeadow and Dixon will wish they had never started that fight.

Let's see.

300 Jetstar Pilots and 2500 Mainline Pilots.

2500 Mainline pissed off Pilots will not be a good thing for Qantas. The damage will be enormous. It is about time the lies of Oldmeadow are revealed and the Jetstar blokes who have been negotiating today (27/1/06) realise they are setting the benchmark for the future.

Oldmeadow has you on toast, 70% of $70k for a "Cruise F/O". You have got to be kidding. RH, AP, BA, BC and JH. You owe it to the profession to not do the deal you are being sold by Qantas. It is **** and you will live to regret it.

Just like the dual base scenario, crew meals, duty extensions etc. There are those who have walked before you who have seen it all. Don't make this a job that needs a second income to survive. I urge you to not go it alone. You don't have to secure lowly paid International jobs to secure your futures. Your futures are secure. Make sure it is a future you can stomach and one you can hope to retire from a some stage and have a retirement income.

Interesting how Australian Airlines is the worst performing financially of the Qantas Group. How will Jetstar international differ from Australian Airlines. The only real difference will be reduced pilot salaries, costs for flight attendant, fuel, landing charges overflight payments, etc will all be the same. And as we all know, pilot salaries are a very small percentage of the overall cost for an airline

I'm sick of hearing how Jetstar domestic is the best start up low cost carrier, what a load of bull****. It was already an operating airline, just the name was changed and routes siphoned of mainline and given to Jetstar. And as the competition was flying a similar product ie low cost.

Jestar international will not be the success that Qantas thinks it will. Jetstar international will be competing against against full service carriers who are government backed and have deep pockets. Customers will have choice and when faced with the choice of a full service carrier or Jetstar they will choose the full service carrier. Qantas will again piss off their remaining few loyal customers.

Mr Wooby,

I'm sick of hearing how Jetstar domestic is the best start up low cost carrier, what a load of bull****. It was already an operating airline, just the name was changed and routes siphoned of mainline and given to Jetstar. And as the competition was flying a similar product ie low cost.


The power of branding and marketing at work. Should be awarded the best spin job of 2005.

jakethemuss

No disrespect intended, but as an outsider what exactly are 2500 mainline pissed of pilots going to do? Resign?

Is this twice now that QF has killed the "Australian" brand?

Its not killed off it's only shelved until a lower cost model can be worked out and then it will be resurrected to screw down Jet* costs.

One day we will have to pay for the privilege to work.

Pardon my cynicism, but a piece from Jakethemuss' post from the AFR above caught my eye.
Is that intense competition coming from Australian and Jetstar? That battle with high fuel prices must be a doozey too, even if it is one-sided. No mention about the biggest battles Qantas has: maintaining firm government support, keeping viable competitors out of its marketplace and retaining a stranglehold on terminal space and landing slots for as long as possible, while holding the lid down on employee dissent. The story makes it sound as though Qantas is the victim. Sigh!

one big jetstar coming
 

alan joyce has also beeen given the controls over jetstar asia. adding j* international he'll be a very busy man. to coordinate schedules of all the J* brand (which by the way runs on a different reservation system then qf) will be an interesting task. and dont forget he wants to sell a lot of pizzas onboards as well.

When it comes to speculation on the future of our jobs we are usually cynical for the sake of self preservation, understandable after the experience that most airline pilots endured in the GA community prior to entering airlines.
Many pprune readers would have been burned by GA companies, regional airlines folding up and some by the demise of Ansett. Having said that perhaps this discussion on the future of Australian Airlines could be enhanced with the introduction of some facts. I will list a few and I invite anyone who is better informed than I to correct me.
Australian Airlines will be receiving its 6th aircraft soon. This at reasonable expense due to the re-configuration and re-paint required. The airline's offices in Cairns are being refurbished at great expense. The company is evaluating new uniforms for the pilots. There are currently about half a dozen pilots being trained for promotion/conversion on the 767 to work for Australian which is paid for by Australian. The airline is currently recruiting flight attendants. They are about to start twice daily services to Narita. They are introducing premium economy into the fleet in June which will involve the expense of re-configuring all of their aircraft.
These are the facts as I understand them, not speculation. Everything in yesterdays AFR and the comments I have read here on pprune are speculative at best. I have read many newspaper articles over the last few years where journalists have reported the future of Qantas with the assistance of his inside sources, only to be proven completely wrong. Perhaps I have become cynical, but these days I just work on the prima facie truths and try to ignore expert commentary.

Lip.


You presume that airline management don't make costly, bad decisions. Eh.

Beanies, don't we just love em.

Good luck to the Q group, I think they may need it. Didn't they say back about 16yrs ago that it would be Q's turn some day soon.

Point taken, facts do give strength to your arguement that your job may still be there next year, But this company keep their cards close to their chest and wouldn't be openly sharing them with the likes of you or me, so whats left is speculation. Another good way of seeing into the crystal ball is look to the past and how they have made their move before.

I cam recall a time when they were promising heavy maintenance that they had no intention of sending work over seas, and had one of the 747 SP a/c in for a major D check just to show how busy the work was. Its first flight after the EBA was signed and the check was complete at an expense of many many millions was to the Nevada Desert to be cut up for scrap.

So timing is everything and you continue to believe but we all know better.

It seems funny that this thread has run so far without anyone really questioning the source and reason for the initial article. Although the AFR is reasonably highly regarded, I can't but think that this article could merely be scare tactics to divide the masses. These 'masses' are indeed various QF Group pilots that the Company wants to divide, and fulfil it's responsibility to drive wages down. I believe AO pilots are currently negotiating their EBA, and threats that the Company may not be around may be a vain attempt to gain leverage in these negotiations. Shallow promises and the sign off on a deal to compete with the wage levels of an airline (J* Int) that doesn't yet exist for mine is where it's coming from.

All AO Pilots have contracts. There is a heap of infrastructure associated with the business and a heap of Flight Attendants. Methinks at worst a change of paint scheme & uniform will occur here, with the associated industrial hubbub. Yes the name may be dumped, but who cares what uniform or paint scheme it becomes? Qantas certainly don't, and the general public don't seem to either at the moment. Provided the bird has 'Qantas Group' written in small letters on the side who cares? However I think the big wheel of 'Low Cost' will turn (like scrapped 'Song' in the US etc) and QF will become one again eventually (albeit on different agreements). In the interrim pilots will have to accept that it is senior QF management's job to divide & conquer at any (low) cost. Their ploys though are not normally as transparent as this.

I bet there are a few Compass 1 & 2 and Ansett people who wished they had believed what they read in the AFR, and bolted a little earlier! :ouch:
Lucky for the AO guys, they have the mainline safety net under their @rses this time around. You guys might not need to dust off the resumes, update the log books and head down to lowes mensware for a cheap polyester interview suit just yet....:E You might need to do those things for your JeffStar interviews though! :}
Seriously, I wouldnt wish that morale busting ****e on my worst enemy. Bl@@dy journos. :mad: fair enough unsubstantiated rumours on pprune, thats fair game, but in our ""finest" newspapers? "Thats just Unaustralian"! If it was fed to these parasites of humanity by management as Boyscout suggests, they too can consider themselves "Unaustralian". Surely management arent stupid enough to talk the company down when they are paid in accordance with its performance? As a passenger I wouldnt be racing to the travel agent to by tickets when Qantas is talking about shutting it down. Thats the bottom line, this sort of publicity in a price sensitive market forces people to travel with other carriers, or simply choose another holiday destination. It is not like the people in Cairns or the Japanese are starved for choice! You can see how some journo's BS can become a self fulfilling prophesy. :* :yuk:

Information
 

When you want to know anything talk to the caterers.
From CNS catering......
1.QF 60/167 WAS to go to AO.That has been postponed `til June.
2.This a rolling decision.
3.It is likely AO will be rolled into Jetstar.

the 'delay' is to allow for AO re-config for Premium Economy

Of course it is .........

AO is currently profitable only on the cns-nrt -cns run. the rest of the network is losing. its going to be interesting what they do with the surplus of qf seconded pilots. there is no way J* is going to pay AO pilots wages. cabin crew will be rolled over into J*.

AO is currently profitable only on the cns-nrt -cns run. the rest of the network is losing. its going to be interesting what they do with the surplus of qf seconded pilots. there is no way J* is going to pay AO pilots wages. cabin crew will be rolled over into J*. alan jouce has been put in charge of J* asia recently. the new plan has him take control of all J* (domestic, international, asia).
:ok:

AO don't operate CNS - NRT

Qcc2, interesting AO is only profitable on cns nrt when it doesnt even fly it yet! Do you mind having another look into your crystal ball and PMing me Thursday and Saturdays lotto numbers?? :}

AO pilots just go straight back to mainline in rank on the 76. Even if there are no requirements for 76 drivers. QF is very tight on the 76 at the moment, so they would be a welcome relief for the mainline guys.

Cns/nrt
 

AO were supposed to take the route in March...the beginning of BP 243.
It has been postponed 'til June

From the original press release:

and

From an Operations point of view, AO have always planned on CNS - TKO starting mid year.

From a management perspective, the last I heard recently was that QF would fly CNS-TKO on behalf of AO from March. Why it has been set-up this way I am not sure, but it seems to be 'Commercial' smoke and mirrors going on. Whether its slots, marketing, branding, codeshare issues or whatever I dont know.

Perhaps...?
 

A Jetconnect arrangement ....QF colours,uniform but employed by ADDeCCO?

AO to start flying cns-nrt by 1st week of MAY. I'm sure there would be some engineers in SYD or BNE that would know when the AO a/cs' are going into the shop for re-fit. 1st week of May spot on!!

With regards to AO being dumped! Just a brand change. AO will continue to operate out of CNS. Sorry to the long haul crew that were hoping for a return to Japan.

Actually, Cairns is the only place in Australia which is bucking this national trend. I saw the complete report in the paper the other day. Japanese numbers are actually on the increase into CNS. I know ive noticed it (work at CNS international)

part of todays statement by GD
 

it looks like GD waits until the new legislation is through and then paint AO planes back into QF colors

* The development of two distinct and competitive brands - Qantas and Jetstar in the premium/leisure market and in the value based market.
The Jetstar strategy involves expanding the domestic network, launching international operations and bringing the Jetstar Asia operation closer to the Jetstar Group. New Jetstar joint ventures are also planned for other parts of the world.
This will mean considerable growth for both brands, especially Jetstar internationally in the next three years, Qantas in new international markets, and the movement of Australian Airlines into the Qantas Airlines structure.

We should start a pool on when the exact same thing will happen with Jetstar as well! I have some thoughts on the issue but they would be considered 'inflammatory' so I won't bother with them.

Hey Keg... are your thoughts anything like mine, back on page 1?:eek:

From SMH 16/6/06

Is AO starting to look like a hot potato?

Can't see too much changing, just a re-organisation of management structure. QF will gain control, so will no longer operate independently. CNS base to stay. May even see an expansion on flying.
All will probably be revealed in the next few weeks. Keg is most probably right, one day it will be one again. Sadly not the way it once was.

mid assist

No Oz, my thoughts were nothing like yours. I suggested starting a pool and making some money from it! :p :cool: :E :}

And i suggest instead of complaining, get rid of the current government and abolish these disasterous new work- non-choices legislation, it is the bain of our future. That is our priority. It is ludicrous we have a party in power for such a long period of time, this is what happens when we allow it to occur...