The Great Turnaround
 

Another Qantas PR scoop from Ticky Fullerton in today’s Australian.

Hark! Everyone. Alan Joyce at Qantas has driven the turnaround of the decade.
He had to ground an airline globally to do it, for which he could have been fired.
Instead backed by his board, his strategy reset the airline on a path to profit and he led the legalisation of same-sex marriage, so important for many of his employees:a true captain of industry.

Gee, I miss The Truth newspaper!

Wonder were Ticky sits when she travels on Qantas?

Wouldn't be towards the back. Don't recall seeing her in the Oz before?

Isn't there some kind of cleanout er talent realignment going on at the Eye Bee Cee.

CC

Ticky is marrying the Australian Financial Review's Editor in Chief:
Michael Stutchbury and Ticky Fullerton to wed

'Transformation' equaled

Fuel down AUD$597 million
Depreciation down AUD$326 million

Deep diving investigative journalists are a thing of the past, Chairman's lounge and upgrades are nothing more than 'comfort for comment' As Leigh says, who is in the club is secret, most bribes are in paper bags..

As for the Australian its subscription base equals its quality: You can't give them away in boarding lounges these days

How can depreciation be down? Don't they mean it's just being amortized over a longer period? Or have they fully depreciated what should be an aging fleet or have they disposed of a about a billion bucks worth of assets? Accountants....

Just spending the inheritance kids. The only difference is, in the financial world, they call it a turnaround.

Different airlines use different schedules, mostly straight line with varied terms. Cathay Pacific use 20 years from memory and 25 for freighters, Singapore 15 years, both to 10% residual value.

Qantas are the same 10-20 years between the various aircraft.

Amazingly a write down is subject to management timing and discretion: A little nudge to auditors and 'oh the book value is too high compared to the second hard market' and the write down gets done...

Ever wonder why Mr. Joyce predicted exactly when Qantas mainline was to be profitable again? Not only did his bonus depend on it, the timing was his to start with...

Exactly...will be good for share price in the interim and the CEO gets
paid or bonuses upon...the creation of share holder value and you don't see them complaining since the shares were at rock bottom do you?

I would beg to differ on whether a changed book value is equivalent to shareholder value creation.

'Rock bottom' may in fact relate to an industrial campaign, grounding lockout and 'transformation' i didn't ever say they weren't audacious, but revenue has declined in real terms and even after 10 years Qantas still lags its peers in most metrics of financial performance; with the exception of executive remuneration.

Rated de. I actually welcome your perspective. Across numerous threads you keep it civil and factual and encourage intellectual thought and input, no matter what respective positions we take.
Without being a protagonist, would QF have survived in its current form without the CEO?
Aviation and publicly listed companies can't please everyone, but without shareholders and investors, what would be left?

Without customers, what would be left.

Qantas has survived despite its CEO not because of it.

In fact, that could be said for the previous CEO as well.

Corporate parasites the lot of them.

I suspect had the APA buyout proceeded, fees would have been extracted, the Frequent Flyer business ( Dixon segmented this in 2004 from memory...wonder why?) spun off to reduce the debt load and the various (including 'management') parasites would have jumped well before the short term debt load was refinanced at significantly higher rates. My best guess is the business would have not had sufficient remaining cash flow to carry the higher debt burden.

In real terms since the little fella got to play in the sand box, Qantas revenue have declined in real terms.The group revenue in FY10 was $13.7 billion, in FY17 was $16.1 billion. Adjusted for inflation this a real decline. Other peer airlines over the corresponding period have not exhibited the same 'amazing' performance.

• Turnaround achieved with same fleet, same contracts.
• JQ fleet grew from 36 aircraft to around 120 now
• Substantial decline in Qantas tailed flying, net reduction in hulls.
• One 787

Most of the 'transformation' is a decrease in fuel expense, which given the fleet metrics (lots of 747, A380) means a corresponding drop is a larger order of magnitude reduction for Qantas than say Air New Zealand (who gave up B747 a number of years ago) The other big contributor was a reduced depreciation non cash charge. The biggest loss overseen by Qantas of $2.8 billion was mostly the fleet write down, This write down panicked labour unions to sign pay freezes. Amazingly as soon as that ink was dry the business spectacularly recovered...







Whilst Mr Joyce is a very wealthy man and lacks no audacity, my personal opinion is that someone of his humble origins could have embarked on a different path, he chose the adversarial model, something many voices in his ear tell him is necessary. Airlines are people business. I say it having worked for them and analysed them for many years. To airline management, the people are reduced to units of cost.

There are exceptions to this model, I chuckle when Qantas conveniently ignores an airline of far better performance just a few hours away in New Zealand.Led by capable people and also a cornerstone of its management under Rob Fyfe was a genuine affinity for staff, such that he personally would spend a day a month out there, working in various areas.

My suspicion is Mr Joyce would likely go no where without his security detail, whisked into an underground car park and home to his security laden building. Sad really.

Massive Accounting write down of fleet.
Close to zero new aircraft introduced or actually flown in the Qantas fleet.
Massive drop in global fuel prices giving advantage to the airlines that had older fleets and spent less CAPEX(No new planes purchased or operating).

What a stunning transformation.
Steve Bradbury won gold. Doesn't make him a fine ice Skater.

It always amazed me that not one journalist ever read financial statements and asked any probing questions. It is from publicly available information that any half competent financial journalist would see that not only did fuel save them but management discretion on depreciation juiced the numbers...

I suspect that most journalists are upgraded with their family and in some instances, perhaps like Ms Fullerton invited into the Chairman's lounge with an opacity that even hard core criminals would applaud, so that they quietly sings the praises of an audacious IR campaign with many losers, but ultimately very few winners.

You will need to get a new chairman if you want a new leader without Alan’s blood. The next chief will be orchestrated by the man himself and Alan will no doubt stay on board as a ‘advisor’ to make sure the ship sails how he wants it to when he leaves it.

One of the worst leaders a business could have. Not one to look up to by the employees which is paramount.

Leigh Clifford is the apex of the problem. A self proclaimed industrial warrior, he took personal delight in the Rio Tinto dispute, guard dogs lock out and all. As connections of mine have listened to him at numerous corporate functions, he is neither a a high intellect nor a leader. A CEO friend was not complimentary when explaining his language, grammar nor manners.

The picture painted had me thinking of this guy...

https://s14-eu5.ixquick.com/cgi-bin/...b24f8b50533eb5

Bit rough, for sure he wasn't a favourite, but he still had to make the olympic final in the first place.

Steve Bradbury
 

Kiwiconehead is correct. Steve Bradbury had several bad accidents and took 12 years of training and Competitions before he won that race, it wasn't all a walk in the Park to get in the finals in the first place.
Sure the rest fell but that was his good luck to be upright and manage to win the race.