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Austral
Except in exceptional circumstances, auditors never seem to face scrutiny ! Funny about that, most guys I have seen receive a hospital pass were wiped out almost immediately. He has survived for 6 years without paying a dividend so the financial institutions must like him. They never complain. someone must like him ! |
The average Joe will only hear " 2.8 Billion lost" and think "blood in the water". The 2.4B comes from the split of QFI into a separate CGU, some of those costs come from the 90's when the dollar was high compared to the US. The $646m loss is the important number As far as fleet changes go, -2 A332, -2 738 (1 QFD and 1 JC). I take it this is after the additional -738's and 332's are delivered |
But that is hardly a revelation? The average joe being ignorant of accounting nuances? I guess that a charm offensive should begin any minute reassuring the hoi poloi that their reservations and advance purchases are safe.
I know I shall be issuing hollow promises to my family this evening, so I had better catch up on the QF talking points today... |
Apparently everything is on track and as per the grand plan. So carry on regardless chaps.
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I guess it's similar to the media reporting a go around as "Passenger aircraft seconds from disaster as it avoids deadly runway collision by mere metres"
And that doesn't deter the public from flying The cash position went from +2.4B at the half year to +3B now |
The cash position went from +2.4B at the half year to +3B now To me it does look like they are separating International out and positioning it for sale. |
As Murray Walker once said when Nigel blew a tyre in ADL when attempting to get back to the pits.... "Spin Spin Spin!!"
I mean really, kiddies selling home made lemonade from a roadside stall can do better... An absolute disgrace.... Clearly the plan is to make it a 'virtual' airline... No aircraft, fuel, staff, terminals, unions etc etc... Just buy code share tix as and when you need them on a seasonally adjusted basis and add a margin... In the meantime, ruin the lives and careers of dedicated folk who give 110% to try and keep it in the air... Grrr |
Boy Steve were you off the mark.
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Decks are clear. Transformation on track and returning to profitability next FY- ie already. QSA is being revised and may yet be revised further. My money's on China Southern being the cash coming in and then that means fleet investment and so on.
Overall I reckon its a genius strategy given they still have a narrative to belt the various unions over the head with in upcoming EA negotiations. I'd rate Qantas now as a 'buy'- at least for the medium to long term. It'll be pretty volatile over the next day or so. |
Underlying loss is less than I or the market predicted. This 2.8B is just a fantasy figure to make them look good next year. This is a clear signal that Alan Joyce is here to stay.
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Boy Steve were you off the mark. With cash in the bank and the new Int'l entity, it definitely has the "come and look at me overseas players" song sheet about it |
Obviously a Medium/Long hold strategy would be the only option, but at what price would you look at QAN and say pull the trigger?...
I'm just watching it for my own intrigue, but what do the investors think? Im looking at this with the knowledge of basic Accounting and Investment subjects done at Uni before I changed courses. And as ElZincho said, how can you go from $2.6b back to profit in 6 months from the following: QANTAS OUTLOOK The Group expects a return to an Underlying Profit Before Tax in the first half of FY15, subject to factors outside its control. This is based on the following expectations:
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Share market up 6%
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Send AJ to Long Bay
When will these muppets get back to the basics..
How about just running the airline as it stands right now.. Clearly the biggest issue is fuel and wrong aircraft.. Enough of this accountant BS… Thats the problem so fix it. They have the money there to go and purchase aircraft. Yes in their current state is not ideal as cost of servicing debt has now increased. But delaying fixing the basic elements of running the airline just festers the cancer within. Instead of spending money on f#wit accountants and lawyers on how to spilt international into two entity's so we can undermine our own current international to further the rot all for the sake of some airline overseas who thinks they will make a quick buck… (prob will cause their terms will stitch QF who will have no choice as we "need" the money… resonates EK deal) You have the product, you have the right staff, you have the infrastructure. Spend the money on them. Spend other money lobbying those politicians and pressure them profusely to protect our skies (open skies rewards no one except the public and long term will be a constant cycle of death especially in Aus where certain costs are higher than other countries) and demand the pollies hold to account the other crims/corporations who run the airports of Aus.. Then we may see the playing field levelled back in everyones favour… These accounting tactics just further my hatred for that irish smoker and his mates.. Run the airline. put the calculator and formulas away FFS |
A write down of assets now is only possibly due to over-valuing of assets in the previous financials. Asset write downs should in theory reflect their true value at each reporting point. $A has been where it is or higher for a while.
The value of a company's assets is part of the value of a business. So an increase in cash position, while the value of your assets has declined by more than a $billion is still a big loss. No point having $1000 more in the bank if the value of your house declines by 25%. However it is spun as "clearing the decks", the value of QANTAS is now $2.8 less than it was. Heard Geoffrey Thomas on ABC this morning saying that he believes it is brilliant management strategy, and in particular Alan Joyce is a brilliant manager. His selective answering of questions was incredible...he is paid by QANTAS? Certainly seems to be their spokesman. |
Rural and Regional Affairs and Transport References Committee 14/03/2014
Senator XENOPHON: Can you just explain to me the contrast between the two. You are saying that there is a loss but you are now saying that Qantas international is cash flow positive. Mr Joyce : There is a difference, as you know, between the P&L and the cash flow position. I will let Gareth talk about that. Mr Evans : I think the difference that you are talking about is exactly that—the difference between the P&L and the cash flow. Our international business has about $800-$900 million worth of depreciation charge to it every year—the depreciation of the aircraft fleet primarily, and the other infrastructure that the international business uses. That is a non-cash charge because it relates to the depreciation of the assets. The businesses, the routes, do in the main generate cash. One route that has not been generating cash in the recent past is Perth-Singapore as an example. As a result of that, that is a route that we are terminating because we cannot afford to have routes where we actually do not even cover the cash costs of our business. The issue in the longer term for the international business is that it does need to spend some significant amounts of capital in the future to reinvest in its fleet. Today, we have a good fleet with great product, and in fact that fleet is moving into a simplification phase and part of the transformation is that it will need to reinvest at some points in the future. Mr Joyce : That is an important issue. You can generate cash, but if the cash is not sufficient enough to generate the renewal and the replacement of the fleet, then the businesses in turn will decline. That is the definition of terminal decline. If you cannot replace the assets eventually, then that business is not going to be able to renew, it is not going to be ongoing. The requirement for us to turn the business around so it covers the cost of the replacement of its aircraft is critical. That is how the business can renew itself and continue to operate and to grow. At the moment, when the business is not covering the depreciation of those assets, it is in a business that cannot afford to replace those assets into the future. Fleet Write-down The decision to create a separate holding structure and entity for Qantas International has triggered an accounting requirement to test the value of Qantas International assets on a stand-alone basis. The international fleet was purchased when the value of the Australian dollar averaged 68 cents against the US dollar, and in the case of the B747s, 57 cents. Today the Australian dollar is trading at 93 cents. The value of these aircraft on our books has therefore been written down by $2.6 billion to their current market value. As a result future Qantas International depreciation expenses will be lower by around $200 million per year. Importantly, this is a non-cash charge – a book write-down to the carrying value of aircraft that Qantas has no intention to sell, and will retain in its fleet. It will have no impact on the economics of the business or change cash flow forecasts. |
Yes but he is part of the Qantas Angel's and this morning I had the unfortunate experience of coming across his spin on both 7 and 2.
He is the go to man for media which says it all really. He did however struggle to justify his assertion it was in turn around mode, clearly the briefing he got was not complete or there is only so much you can absorb on a cross continent flight up the front. |
Well said Biggles84...... back to the basics and the KISS principle!!!
McHale.:D:D:D |
So is the aviation expert a Qantas angel?
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QF up 8% + on the ASX at 11am from yesterdays close.
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"To continue to realise the value in Qantas Loyalty, we will be innovating, investing, working closely with our partners, and rewarding the loyalty of our customers with even more ways to earn and redeem Qantas points."
I imagine "our partners" include those members of the OneWorld alliance; however, having just restructured the points and Status Credit value for flying with those partners (which you have to do if you want to go to various European cities (and not fly EK) or even SE Asia and the Americas), how is that "rewarding the loyalty of our customers"? Australopithicus: I had the same idea as you - the average punter will see in glaring headlines $2.84M loss and choose another airline. Why would you buy a QF ticket if you think you might get to LAX or LHR then the airline folds before you get home? It's all doublespeak. George Orwell would be envious. |
Joyce Qantas Announcement 2013
Alan Joyce - Qantas Group FY13 Results Announcement Then compare the full report to todays??? Summation: `Looking Forward Looking to the rest of FY14, we expect that trading conditions will remain challenging – despite a reduced level of capacity growth in the Australian domestic market. We have seen the Australian dollar record its second largest quarterly fall since the float. Over the long term, we view the lower dollar as a positive. It encourages inbound tourism. And it reduces the cost deficit between Qantas and our competitors. But in the short term a lower dollar is a challenge, resulting in higher fuel costs –when jet fuel is already a major headwind. At current market rates we expect underlying fuel costs to be $160 million higher in the first half than in the prior period. The global outlook is mixed. The US economy is improving and there are signs of recovery in Europe as well. At the same time, there is uncertainty over how fast and how sustainable the recovery will be. In this volatile market, we are focused on the elements we can control. We are strengthening our domestic business and holding our market share. The turnaround of Qantas International is on track as we grow its network and reduce its costs. We continue to build the Jetstar brand in Asia, positioning it for success across the region. And we are broadening Qantas Loyalty for our frequent flyers. As we move forward, we will continue to secure the Group’s future through prudent management of costs, capex and debt. And we will continue to deliver the Qantas Transformation program, making our business more productive and efficient. There are many challenges ahead, but we have an outstanding aviation business – and we have a clear strategy to build an even stronger Qantas Group. |
B772: QF up 8% on ASX at 11am for yesterdays close |
Geoffrey Thomas mightn't get it, but Ian Verrender of the ABC does:
National: Qantas loss now nearly $3b: What will it take for Joyce to go? "It is the question hovering on the lips of every Qantas shareholder and employee - what new atrocity would it take for Qantas chief executive Alan Joyce to be shown the door? In his five disastrous years at the helm of the national carrier, almost every decision taken by Joyce could be preceded by the rider "ill-fated". There is no denying the difficulties of running a global airline in a market flooded with capacity, much of it sponsored by foreign governments with bottomless pits of cash. But this morning's $2.8 billion loss – almost three times worse than the most pessimistic forecasts – is the crowning glory of an ignominious career that has seen Joyce not once take responsibility for the airline's appalling financial performance and its steady decline in the eyes of the travelling public. While most of the loss is the result of an accounting treatment due to restructuring costs, the underlying $646 million loss is a savage indictment on Joyce and the board led by chairman Leigh Clifford. Once again, fuel prices have featured prominently as a culprit, even though they have barely budged for years. The dollar rates a mention yet again, despite it too being relatively steady for most of the past year. But the overriding reason for the latest disaster is an incomprehensible decision last year to slug it out with rival Virgin Australia for domestic market share which has seen record numbers of seats thrown into Australian skies. Rather than focus on running a profitable business, Joyce and the Qantas board set their sights on market domination. Muscling up to a rejuvenated Virgin, Joyce vowed that for every extra seat his rival threw into the air, Qantas would put up two. The result? Fantastic deals for travellers, but a Flying Kangaroo that was swallowing cash faster than a pokie on steroids. From almost the day he assumed the top job in 2008, Joyce began an industrial relations war under the watchful and approving eye of his chairman. He complained long and loud about the lousy financial performance of Qantas International, essentially trash talking his own company, an unprecedented step for any chief executive. Presumably, it was a strategy designed to undermine the power of the pilots in upcoming industrial relations agreements. But the side-effects were toxic. Loyal customers went elsewhere. Long standing staff felt disillusioned. It culminated in a debacle. On the weekend before the 2011 Melbourne Cup, Joyce and Clifford grounded the entire fleet, leaving stranded customers around the world bewildered and angry, in a move that undermined investor confidence and eliminated whatever allegiance staff had for their employer. Further fiascos followed. Who could forget Joyce's plan, in the midst of all this, to establish a new "premium" airline in Asia? It was a plan that left most experts scratching their heads. Wasn't Qantas supposed to be a premium airline? And where was this new airline to be based? Joyce blurted out the plan even before he had negotiated a deal. It could be Singapore. But maybe it would be Kuala Lumpur. Unsurprisingly, the whole fanciful dream was canned before it went anywhere, although there were negotiations around a merger with Malaysian Airlines. Given recent events, the failure to pull that one off would have to count as perhaps Joyce's standout achievement. While he was busy trashing Qantas International, Joyce's great international expansion plan centred on establishing Jetstar operations in Asia. It is a strategy that not only has bled the company of cash but has managed to infuriate rival and partner airlines alike. The Singapore-based Jetstar Asia steeled the resolve of Singapore Airlines to cripple Qantas, partly explaining its decision to take a key stake in Virgin Australia. Joyce this morning confessed the airline lost $40 million last year. Then there is Jetstar Japan. It too has been a disaster. But that hasn't stopped Joyce pouring ever more cash in. It lost $70 million last year. Both of those pale into insignificance, however, when compared with Jetstar Hong Kong. A joint venture with China Eastern Airlines, the operation literally has never got off the ground. An enraged Cathay Pacific – Qantas's code-share partner – has effectively blocked the move. Announced with huge fanfare in 2012, the joint venture has yet to receive approval from Hong Kong regulators, has required further capital injections and its nine aircraft have been idle with six now sold off. Joyce's attempts to resuscitate the company have come too late. His alliance with Emirates was negotiated from a position of defeat after Qantas had abandoned many of its European destinations. It was a great deal for Emirates. Meanwhile, the hugely remunerated Joyce continues to hack away at staff numbers, with more than half the 5,000 planned redundancies now out the door. So far, that's cost $428 million in termination payments. The immediate reaction from financial markets to this morning's loss was positive. Qantas stock rose 5 per cent, mostly because it has decided to split its international and domestic arms as a prelude to attracting greater foreign investment. Clifford and Joyce now seek salvation from a plan that aims to attract foreign investors into Qantas International, the very division they've been trash talking for years. Foreign investors won't save Qantas because the company's woes are not the result of its capital structure, or the Qantas Sale Act. The problems are down to poor performance, strategic errors and appalling execution in a hugely distorted global aviation market that requires sheer brilliance just to survive." |
[quoteThe problems are down to poor performance, strategic errors and appalling execution in a hugely distorted global aviation market that requires sheer brilliance just to survive.][/quote]
The above article sums it all very succinctly. Couple the disastrous decision to support the `R' campaign (Reconcillation) has seen Qantas again upset many, many of its customers. BHP Billiton, CRA and Bank executives including Board members saw their positions terminated for losses such as this surely it is way past time Joyce and the Qantas Board were frog marched out the door. ps>> who won the night(s) with Livvie? |
Greens View
In The Australian this morning GREENS Senator Brandt blamed our Prime Minister for the current debacle at QANTAS. :ugh:
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The importance of him getting his name in the paper outweighs that what he says makes him look an idiot. Par for the course for the Greens,
especially "Two dads, I can't ell the difference between reality and fiction on TV" :rolleyes: |
Joyce, yet again.
QF results finally released this AM: 2.8 Billion loss. Joyce is frantically re-arranging the deckchairs, proposing to separate QF International Mainline from both domestic and Jetstar.
Not hard to see where that one will head. 1. Load all the group corporate debt into Qantas International Mainline, render it unviable, and then collapse/sell it. (this is probably illegal, after the `Bottom of the Harbour schemes of the late 1970s, famous for being an exceptional case where legislation was made retrospective. An ex-Girlfriend’s father, who was a senior accountant involved, was quietly advised (by the Cops) that rapidly going on an extended overseas holiday was in order. Due to the ` Heavy Names’ involved [Senior Politicians, Lawyers, Govt. Bureaucrats etc,] and the likelihood of jail time, should he survive as far as testifying and naming the names . He spent the next 15 years in Mexico before being given the wink that interest in him had waned sufficiently for him to return). However the best accountants can normally find a way around the best of laws. 2. Joyce’s baby, Jetstar International, takes over the routes and aircraft. Say goodbye to Skippy Internationally, with a stripped down Jetstar `Low Cost’ model competing against Emirates, Etihad, Singapore Airlines and Cathay Pacific. His battle cry seems to be `Government Subsidies’, however, though there may be some truth in this regarding the first three, I was with Cathay Pacific for 15 years and as far as I know it is still privately owned with no Government support, and competes directly with China backed China Southern, China Eastern and Air China, not to mention the Taiwanese Flag Carrier, China Airlines. I am very concerned with Joyce’s machinations, and particularly his repeated use of the term `Optionality’ (sic) with regards to mergers available for Qantas International. He barely mentioned Customer Satisfaction or the fine reputation of QF, built up over decades, except in a dispassionate cost-benefit manner. As has been said so many times in these posts, it's all about cost-cutting, nothing about money making, route development and recovering the hitherto loyal passengers gifted to the competition (Perth heading North anybody?). If I hadn't just heard it I would not have believed it. When I joined CX in the 1980s the fight for the top spot in the World Airline Awards was hotly contested every year by the big 3; Qantas, Singapore Airlines and Cathay Pacific Airways, with BA lurking. In 2014, Cathay are at #1, followed by Qatar, Singapore and Emirates. Qantas came in at 11, down from 10 last year, behind Turkish, Garuda, Asiana and Etihad. According to friends in QF, they are doing their best, but morale is at an epic low, and the cuts have largely been in low profile, but operationally essential areas, whilst the legions of PR spin doctors and consultants continue to bloom. After 15 years of fierce competition with QF, I am surprised to be supporting them, but they are a Fine Airline, indeed Iconic worldwide, and their hard won reputation, built up over decades, should not be squandered by an Irish barrow boy with a `Low-Cost’ dream. The sooner his head is on a spike on Sydney Harbour Bridge the better! Rant over. :ugh: |
A lot of people here misunderstand how QF's strategy will play out. In the medium term QF will be fine, todays write downs were merely "throwing out the trash", lumping all sorts of losses into one big event. Now its time to get down to business.
Yes QF is in for massive change and its needed but soon there will be dozens of QF painted 787's returning to the destinations of yester year. And profitably too. Watch this space, the share price reflected the markets approval of the startegy. |
What ever the board and Joyce are smoking I wouldn't mind some of it. I feel guilty as I posted here some weeks ago $1.5 to $2.0 billion and I was wrong. The board have nailed their collective backsides to the Captain of the Titanic believing that he can get them thru the ice field without hitting an iceberg and sinking. The only problem of course is if he doesn't we will all drown. Monday will be interesting as the July traffic figures will be posted and we can compare them to July 2013. If there isn't a big improvement in yields and load factors then it will be interesting to here his spin.
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Next financial year we will make profit.i m not sure profit or sacking.which come first
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Quote: The cash position went from +2.4B at the half year to +3B now If you have the time can you please explain how that has happened and what exactly it means? I have no accounting experience whatsoever and struggle a bit with this sort of announcement. That said, I think I understand the write down that has occurred. |
Cash does not include undrawn loans - that would be undrawn debt (which is a liability not an asset)....
But the Qantas cash does include a lot of airfare prepayments (ie. customer pays for fare, Qantas still owes them a flight, which will become revenue when the fly) and unredeemed points (eg. Amex pays Qantas $xxx so customer can get yyy points) -- so there is a future liability attached to a bunch of that cash --==-- One thing that stood out as a positive in the result. Operating cash flow was above $1bn -- i.e. net cash in the door was positive And basically this was spent on aircraft $1bn, so no change in the net cash position, and no dividend. Given all the doom and gloom - that was a massive plus. Secondly they have really set International up to be in much better shape going forward. The right down of $2.5bn asset value will have two effects. Very likely to paint Hickey as the saviour of QFi and put him in prime position - Even if next year is identical to this year the reported result will be $200m better-off (as less depreciation) - If the Aussie dollar drops again - these planes become more valuable in $A and I assume (though not certain) that as they retire/sell these aircraft (and obviously QFi will be retiring a bunch of 747s and 767s over the next few years) they will be able to recognise a profit on sale. |
What are the writedown specifics? $2.5b is a lot and it seems to be all the international fleet!
How much of this is the B744? B767? I would have thought they would be fully depreciated by now anyway? A380? Are they writing them down for potential sale? Perhaps a few A330's? What about the B737? Appears the shorthaul fleet unaffected, but some of these aircraft are approaching 15yrs old. I hope this is clearing the books for future investment in the business, but I also think it could be to avoid future big write downs if International was wound up! |
Qantas congratulations
A very big congrats to the QF management for such a fine job well done. ONLY a cool $2.8 Billion dollars down the tube. Can anyone tell me another company in the world who pays it's big Honsho a cool $5.1 million dollars a year for such a fine job.? I'm really looking forward to Air Bangladesh taking over the joint and flying our friendly skies.!!! :D
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Cash does not include undrawn loans - that would be undrawn debt (which is a liability not an asset).... See following link..... Qantas records $235m loss on falling revenue | Australian Aviation The overall financial position of the airline remains strong, with liquidity of $3 billion comprising $2.4 billion in cash and $630 million in undrawn debt facilities as at December 31, and no major unsecured debt due to mature before April 2015. |
Tomorrow's news will take QF off the front page for a bit.....
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Tomorrow's news will take QF off the front page for a bit..... |
Quote:
Tomorrow's news will take QF off the front page for a bit..... Lara Bingle on holidays again? |
A croc on Mitchell Street?
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