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Had a interesting conversation with the Qantas CFO a few years ago.
He admitted that Qantas International had indeed shrunk as we all know. What he did say is that it had shrunk to the smallest size it could be as it was needed to feed Frequemt Flyer, QF Domestic, and the favourite children Jetstar Domestic and the Pan Asian Jetstar’s. The CFO made the point that if Qantas International was to be any smaller, then all the other entities were at massive risk. Qantas would not and could not outsource the international flying any more than it had already been. Tony Webber the ex Qantas economist said that pilot costs were 1-2% of the operation. IATA also make mention of this. Even the 30% pay cut on the 787 flying long haul makes 0.3% difference. What did any executive sacrifice to help the business case? If the numbers are that tight then don’t buy the jets. It was Ideology more than economics. You can get more to fly a 737 in China. Seeing as fuel is 40% plus of the cost and that’s rising then Rated D is correct. Qantas International has bought only 8 new aircraft. Bonuses and Share Price are high due lack of spending on renewal,however the next poor CEO will have to do something once the CEO leaves with his $100 million in remuneration. Moody’s and Bloomberg reported exactly the same thing. I don’t personally believe Qantas will ever grow substantially. They will have to replace the fleet at some point as every other global airline has done. |
Tony Webber the ex Qantas economist said that pilot costs were 1-2% of the operation. IATA also make mention of this. Even the 30% pay cut on the 787 flying long haul makes 0.3% difference fuel is 40% plus of the cost fuel is 40% plus of the cost fuel is 40% plus of the cost fuel is 40% plus of the cost fuel is 40% plus of the cost Grumpy pilots ‘self manage’ their rosters with sick days more often than happy satisfied pilots. The above statements might not reflect well on the professionalism of pilots, but they are the realities of human nature. Human nature won’t/can’t be bent by rules or ideology, (see communism) it just is. There will be exceptions to the rule but overall it is the case. So with pilot costs being substantially lower than fuel costs, it is cost effective to ensure the grumpy/happy ratio is maintained at an economically viable level. |
To framer above, you get and I get it, why can’t they?
As to the fleet renewal one day someone will do a comprehensive report on the house of cards (my opinion) that is Qantas financially and realise that they need to spend tens of billions of $$$ in the next 5 to 10 years on new aircraft. It is unavoidable. Then they will start to short the shares ala Blue Sky Alternative Investments which have been belted. |
You can get more to fly a 737 in China |
Some of those not employed in mainline are! That decreases the pool of pilots available to mainline. Double whammy!
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Originally Posted by framer
(Post 10120779)
Grumpy pilots load more fuel than satisfied happy pilots while almost hoping a management pilot queries them on it.
Grumpy pilots make less effort to investigate and obtain more efficient flight levels. Grumpy tired pilots configure earlier on approach than satisfied happy pilots. Grumpy tired pilots utilise less single engine taxi. Grumpy pilots don’t wait at the aircraft for the ground staff to hook up ground power before giving up and leaving the aircraft with the APU running as happy satisfied pilots. Grumpy pilots are less likely to extend duties. Grumpy pilots ‘self manage’ their rosters with sick days more often than happy satisfied pilots. The above statements might not reflect well on the professionalism of pilots, but they are the realities of human nature. Human nature won’t/can’t be bent by rules or ideology, (see communism) it just is. There will be exceptions to the rule but overall it is the case. So with pilot costs being substantially lower than fuel costs, it is cost effective to ensure the grumpy/happy ratio is maintained at an economically viable level. it is relied upon that pilots accept and seek responsibility. Pilots in airlines of our experience, no matter what tail they fly, tend to hold lots of loose ends together. Pilots are proactive, whether it be simply ordering a flight plan or intervening to circumvent a cascade of events. Pilots save far more than they cost by their simple proactive behaviour. With this in mind, imagine for a moment that your employment involves assessing labour cost. The models you use have lots of fixed and incremental variable costs for crew. These models ignore noise as it is not defined nor understood. These models make no assumptions regarding compliance, for it is not a consideration: It is an Achilles heel. The only way it becomes visible is by the absence of compliance. Pilots are a cost, it is right that management focus on labour unit cost control. it is however precarious to cut too far, for disgruntled pilots can very rapidly cause strife by simply withdrawing co-operation. Simply put, want to see how much pilots 'cost', treat them poorly. Qantas will as Mr O'leary did apply more of the same. Qantas unit cost is not the biggest problem, the lack of disciplined capital expenditure re-equipping the company for higher fuel prices is negligent. If Qantas continue to push their pilots attempting to lower labour unit cost, they may well see that higher fuel prices are amplified by an individual response to an adversarial IR/HR employee model. Qantas need a new fleet |
Originally Posted by Rated De
(Post 10121057)
Qantas need a new fleet |
I spent an interesting short contract at a carrier that abused its MD-11 pilots sorely. They didn't just take a couple of tonnes extra...they took 20 tonnes and then ran it out the dumps. That was being grumpy. It was fun to watch.
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they took 20 tonnes and then ran it out the dumps |
It's a futile protest and ultimately, self-harm.
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Originally Posted by Australopithecus
(Post 10121114)
I spent an interesting short contract at a carrier that abused its MD-11 pilots sorely. They didn't just take a couple of tonnes extra...they took 20 tonnes and then ran it out the dumps. That was being grumpy. It was fun to watch.
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Originally Posted by Ken Borough
(Post 10121135)
Understandable that people can be disgruntled but isn't this kind of practice extremely irresponsible?
I am an Army of One (or 2, or 300, ...) I am an army of One - A Captain in the Continental Airlines army. For years I was a loyal soldier in Gordon's army. Now I fight my own war. I used to feel valued and respected. Now I know I am mere fodder. They (CAL) used to exhibit labor leadership. Now they exploit legal loopholes. They used to enjoy my maximum. Now they will suffer my minimum. I am an army of One. I used to save CAL a thousand pounds of fuel per leg; finding the best FL, getting direct routing, throttling back when on-time was made, skimping during ground ops, adjusting for winds, being smart and giving the company every effort I could conjure. Now, it's "burn baby, burn". I used to call maintenance while airborne, so the part would be ready at the gate. Now, they'll find the write-up when they look in the book. I used to try to fix problems in the system, now I sit and watch as the miscues pile up. I used to fly sick. Now I use my sick days, on short notice, on the worst day of the month. I am an army of One. I used to start the APU at the last possible moment. Now my customers enjoy extreme comfort. I used to let the price of fuel at out-stations affect my fuel orders. I still do. I used to cover mistakes by operations. Now I watch them unfold. I used to hustle to ensure an on-time arrival, to make us the best. Now I do it for the rampers and agents who need the bonus money….but this too may change. I used to call dispatch for rerouting, to head off ground delays for bad weather. Now I collect overs, number 35 in line for takeoff. I am on a new mission - to demonstrate that misguided leadership of indifference and disrespect has a cost. It's about character, not contracts. It's about leading by taking care of your people instead of leadership by bean counters (an oxymoron). With acts of omission, not commission, I am a one-man wrecking crew - an army of One. My mission used to be to make CAL rich. Now it's to make CAL pay. When they furlough more pilots than the rest, pilots that cost them 60 cents on the dollar - I will make them pay. When they under-staff bases and over-work reserves to keep pilots downgraded, down-flowed, or downtrodden - I will make them pay. When over-booked customers are denied boarding system wide, while jets are parked in the desert - I will make them pay. When they force pilots, who have waited 12 years to become captains, to be FOs again - I will make them pay. When they ask CAL pilots to show leadership at Express, and then deny them longevity - I will make them pay. When they recall F/As for the summer, just to furlough them again in the fall like migrant workers - I will make them pay. When they constantly violate the letter and spirit of our contract - a contract that's a bargain by any measure, and force us to fight lengthy grievances - I will make them pay. My negotiating committee speaks for me, but I act on my own. I am a walking nightmare to the bean counters that made me. Are you listening? This mercenary has a lot of years left with this company; how long can you afford to keep me bitter? I'm not looking for clauses in a contract, I'm looking for a culture of commitment and caring. When I see it, I'll be a soldier for CAL again. Until then, I am an Army of One…And I'm not alone! |
“Army of one” was very disliked by Geoff Dixon, I doubt if Joyce gives a ****, yet! ;)
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It's a futile protest and ultimately, self-harm. At the end of the day, the worse your relationship with the pilot group the lower your fuel efficiency. When fuel makes up 40% of your overheads and you run around in four engine jets, the cost of adversarial IR tactics is high. Simple. |
Tick tock...Qantas still need a new fleet.
Rest assured Coward street warriors are busy looking for another industrial distraction. Ever while the fuel included CASK increases. http://www.iata.org/publications/eco...ges/ChartB.png http://style.gq.com.au//media/images...3077-1_lp.jpg? Little Napoleon in a pensive moment, silently hoping the Seattle junkets and Chairman's lounge access with unlimited upgrades ensures that people don't notice; Qantas need a new fleet |
The place is rooted, just spoke to an FO doing command training on the 737, he has need given 2 months off on full pay. Not holidays, two months off , no simulator time. What a joke.
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Originally Posted by dragon man
(Post 10128497)
The place is rooted, just spoke to an FO doing command training on the 737, he has need given 2 months off on full pay. Not holidays, two months off , no simulator time. What a joke.
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Originally Posted by FYSTI
(Post 10128518)
Believe it or not, this is probably saving them mone, "time off" avoids out of base training allowances. The current record for that would make you jaw drop...
No no, he’s on full allowances. |
Originally Posted by dragon man
No no, he’s on full allowances.
Originally Posted by dragon man
The place is rooted
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Training and recruitment should have started 2&1/2 years before it actually did, but QF management had to ensure their KPI's where achieved.
Article about the Banking Royal Commission by Ross Gittins in today's SMH: https://www.smh.com.au/business/the-...24-p4zbbj.html Could have been written about QF..management lining their own pockets at the expense of Long Term Strategy and Shareholder Return. |
Originally Posted by Street garbage
(Post 10128587)
Training and recruitment should have started 2&1/2 years before it actually did, but QF management had to ensure their KPI's where achieved.
Article about the Banking Royal Commission by Ross Gittins in today's SMH: https://www.smh.com.au/business/the-...24-p4zbbj.html Could have been written about QF..management lining their own pockets at the expense of Long Term Strategy and Shareholder Return. |
Originally Posted by Street garbage
(Post 10128587)
Training and recruitment should have started 2&1/2 years before it actually did, but QF management had to ensure their KPI's where achieved.
Article about the Banking Royal Commission by Ross Gittins in today's SMH: https://www.smh.com.au/business/the-...24-p4zbbj.html Could have been written about QF..management lining their own pockets at the expense of Long Term Strategy and Shareholder Return. My first thought on seeing the article |
Vividly recall a conversation with a very well connected source who stated that Australia's corporate governance was indeed second best: Second best to the rest of the industrialised world.
It is a very pertinent nexus. The gaps in Corporate Governance have grown. It was a decade or so ago that the Sarbanes-Oxley Act, in the USA arose from extreme examples of what Australia is witnessing in a self regulated banking model: Back self interest every time. Lack of regulation has done nothing. The new ASIC Chair inherits a mess, ASIC's prosecution mix is low risk, mostly civil and obvious is the lack of any action against what would be classed as enviable opposition. Low risk and look the other way. Mr Shipton's pedigree no better than the former, another insider, this time of Goldman Sachs no less. In the UK and the USA the Company code now requires the Executive remuneration to be referenced to the average wage level in the firm. One can appreciate the 'business type lobby groups' are donating furiously to ensure such reference is not a statutory requirement in Australia. A whisper suggests that this may be extended to reference key performance metrics which are less suspected to manipulation by effervescent CFOs. Australia will enact a raft of penalties after Australia's Enron moment too! By any measure, Qantas executive management have been focused internally on a war with the staff and short term sugar hits to performance that share buy backs are known for. They have been enboldened by short term incentives and lack of regulatory oversight. That ASIC never blinked when a 'terminal' Qantas was 'transformed' and executives reaped rivers of well timed Option bonuses is testament that the regulator has no appetite for investigation. In the intervening period, other airlines with strategic management a focus and not self embellishment have re-equipped with fuel efficient twin engine Long range aircraft. Doing so,lowers the CASK and and preserves operating margin for when fuel gets more expensive or demand (and consequently yield) falls. Qantas got lucky with a fuel price decline. Qantas still need a new fleet. |
In 2005 Qantas ordered the first B787s in the World. 45 at $4.1 billion(serious discount) and 20 options at $25 million each and 50 options(free). How many have they taken delivery of? 14 to Jetstar(low yielding low cost carrier) and 8 to mainline. Remember Qantas earns 2.65 times the earnings that Jetstar does! Talk about taking the eye off the ball! Remember they have sold all the Assets to help the bottom line and AJ is the highest paid Airlines Executive in the World. The Airline HAS NOT BEEN TRANSFORMED and whoever comes next faces a huge hurdle of Capex. Maybe it is time to short the QF stock! Corporations in Australia have had it too good for too long. It is not only the Banks and AMP that need looking at. When it looks too good to be true it probably is.
Qantas desperately need a new fleet. |
Originally Posted by busdriver007
(Post 10129373)
The Airline HAS NOT BEEN TRANSFORMED and whoever comes next faces a huge hurdle of Capex. Maybe it is time to short the QF stock! .
From the Qantas Annual Report 2017 , pages 39 & 40 The performance measures for each of the 2015–2017 LTIP (tested at 30 June 2017), 2016–2018 LTIP (to be tested as at 30 June 2018) and 2017–2019 LTIP (to be tested as at 30 June 2019) are: —The relative TSR of Qantas compared to companies with ordinary shares included in the ASX100 —The relative TSR of Qantas compared to Global Listed Airlines These Rights will only vest in full if Qantas’ TSR performance ranks at or above the 75th percentile compared to both the ASX100 and the Global Listed Airlines peer groups. At the end of the performance period, the TSR performance of Qantas and each comparator company will be determined based on the average closing shares price over the final 6 months of the performance period. Qantas’ Financial Framework also targets top quartile TSR performance relative to ASX100 companies and global airline peers and therefore relative TSR performance against these peer groups has been chosen as the performance measure for the LTIP. The peer groups selected provide a comparison of relative shareholder returns relevant to most Qantas investors: —The ASX100 peer group was chosen for relevance to investors with a primary interest in the equity market for major Australian listed companies, of which Qantas is one —The Global Listed Airlines peer group was chosen for relevance to investors, including investors based outside Australia, whose focus is on the aviation industry sector and measuring returns from listed companies impacted by comparable external factors Up to 50% of the total number of Rights granted may vest based on the relative TSR performance of Qantas in comparison to the ASX100 and up to 50% of the total number of Rights granted may vest based on the relative TSR performance of Qantas in comparison to the Global Listed Airlines peer group. The vesting scale for both the ASX100 and the Global Listed Airlines peer groups is as follows: Qantas TSR Performance Relative to Each Peer Group Vesting Scale Below 50th percentile Nil vesting Between 50th and 75th percentile Linear scale: 50% to 99% vesting At or above 75th percentile 100% vesting The ASX100 peer group comprises those companies that make up the S&P/ASX100 Index at the commencement of the performance period. The Global Listed Airlines peer group has been selected with regard to its representation of Qantas’ key markets, full-service and value-based airlines and the level of government involvement. For the 2015–2017 LTIP, the Global Listed Airlines peer group includes: Air Asia, Air France/KLM, Air New Zealand, All Nippon Airways, International Consolidated Airlines Group, Cathay Pacific, Delta Airlines, easyJet, Japan Airlines, LATAM Airlines Group, Deutsche Lufthansa, Ryanair, Singapore Airlines, Southwest Airlines, Tiger Airways and Virgin Australia. The 2016– 2018 LTIP and 2017–2019 LTIP also include American Airlines and United Continental. Tiger Airways was excluded from the 2017–2019 LTIP ASX short report (updated daily) QANTAS AIRWAYS ORDINARY QAN 5,959,936 1,729,665,867 0.34 [% short] |
This is not [yet] time to short! It is indicative that the key metrics necessary to indicate a move in sentiment were not yet being readily observed. Most analysts 'analyse' airlines as part of the transport sector. Naturally given a company like Qantas' Share Market Capitalisation, Qantas remains heavily represented in most portfolios. Point in fact, it is the rising fuel price that beings to show the inherent weakness of the 'transformation' narrative. The same driver is demand induced revenue slowing; yield begins to cascade downwards. Qantas were very lucky with the fuel price decline. Mr Clifford's missive about the problems facing the company are disingenuous: It is their own waste of shareholder capital, largely rewarding themselves for an industry wide fuel price decline that saved the day. There is no doubt in our minds, that the impairment charge was well overdue (writing off the International fleet in FY15). The $597 million dollar fuel saving was due the fact that carrying each RPK (at least across the Pacific) Qantas burn 64% more fuel. Therefore any price reduction on this input would have magnified the benefit as Qantas run a fuel inefficient fleet. |
Remember Qantas earns 2.65 times the earnings that Jetstar does! Mr Buchanan desperately tried to avoid expansion into long haul low fare as most of the purported advantages of Low Far Airlines were readily eroded. It is known that he personally stated numerous times that no way would JQ International ever be able to achieve unit cost needed for such a low yield business. The transfer of the original 14 788 (which became 11) was part of his last effort to eradicate the unit cost over run. When he demonstrated his concern to the lightweight board, his tenure was subsequently short lived: Little Napoleon does not tolerate insolence. Presently it is impossible to see how poorly JQ International do. Despite having more aircraft than the Qantas segment, management do not dis-aggregate into Domestic and International. Something Qantas management did in 2012 to show how 'poorly' Qantas International was faring. Given every cost Qantas ever incurred from ticketing to uniforms is replicated, JQ now fly 48% of the ASK Qantas fly. For all their efforts, it is obvious: JQ "group" generate 22% of the Revenue of Qantas. No 'unit cost advantage' that we ever have observed would cover that gap. Fortunately Qantas domestic has sufficient dominance to stem the losses. Simple factor productivty like this indicates that JQ is likely overscale (has grown too big) To those who suggest that this is anti JQ, it isn't. It is however a critique of the lengths to which Little Napoleon will go to ensure the 'myth' of his airline acumen is maintained. The problem is AJ still has capital to burn the shorts through buy backs. Executive renumeration is now tied to ASX & global peer relative return performance, thus the buy backs will continue to ensure the hurdles are exceeded, at the expense of CAPEX no matter the long term damage to the business. The wastage of shareholder funds on personal glorification , social engineering and image management is staggering. Fortunately for them the tide hasn't gone out yet. Qantas need a new fleet |
You fail to understand the true value of Qantas' ownership of Jetstar and the size of its operation in Australia.
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Originally Posted by RealityCzech
(Post 10129650)
You fail to understand the true value of Qantas' ownership of Jetstar and the size of its operation in Australia.
Most of the honchos at Qantas should know a fair bit about it. They were there and are responsible for its failure. Qantas staff just hope that maybe they have learned something but it appears they have only learned how to stuff cash in their pockets. |
At the end of the day it’s nothing more than Leprechaun inspired Financial alchemy. Is that why JetConnect has been absorbed back into the fold due to the fact the Financial wizards of Coward St can no longer leverage off the tax minimisation benefits of Price Transference due to the new IFRS accounting rules coming into effect. Is the tide going out at long last ? |
Originally Posted by blow.n.gasket
(Post 10131351)
At the end of the day it’s nothing more than Leprechaun inspired Financial alchemy. Is that why JetConnect has been absorbed back into the fold due to the fact the Financial wizards of Coward St can no longer leverage off the tax minimisation benefits of Price Transference due to the new IFRS accounting rules coming into effect. Is the tide going out at long last ? |
Originally Posted by RealityCzech
(Post 10131418)
No. No one cares except the chat forum conspiracy theorists. The analysts and the majors have already factored this in. The problem is that pilots reading you write about this stuff might think you're actually on to something, when you aren't.
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Why do you presume they need to do anything? Did Qantas need to keep flying to FRA? Did it need to keep flying to CDG/EZE or anywhere else or did it need to keep flying SYD/LAX 3-4 times a day as it used to? Clearly not.
The assumptions many pilots make that Qantas will inevitably need to do things are simply wrong. Especially when they then take the next step in the assumption and presume it means massive gains in terms and conditions. There is a point where the fares able to be charged cannot justify the investment in new aircraft/more pilots/more expensive pilots. No one who posts on this chat site knows that point. I see plenty from the likes of Rated De about the evils of HR, IR, politicians, 457 visas, unions etc. I see very little discussion and analysis of the economics of the international aviation market. The latter is a much, much bigger factor regarding new fleet than the former. |
tax minimisation benefits of Price Transference i keep an open mind so please explain to me how it’s a conspiracy that Qantas have a massive fleet renewal due and how it doesn’t need to happen. Qantas mainline meanwhile need a new fleet, irrespective of protest and threats, they either buy aircraft or as fuel price rises run the risk of 'De-transforming' the airline! Qantas need a new fleet |
There is a point where the fares able to be charged cannot justify the investment in new aircraft/more pilots/more expensive pilots |
Here’s some international economics. Supply and demand. The endless global supply of gluttonous executives behaving badly and the increasing demand for executive accountability. Bank’s first, and a different metoo movement will follow. Meanwhile the real supply and demand problem facing international aviation will conform to economics. Innovation and flexibility will be part of the solution to keep the masses flying. So will better pilot conditions which recognise the role pilots play in an airline. |
I see very little discussion and analysis of the economics of the international aviation market. The latter is a much, much bigger factor regarding new fleet than the former. Qantas 'worst major airline' for fuel efficiency on trans-Pacific flights, study suggests - ABC News (Australian Broadcasting Corporation) In summary the cost to deliver the RPK is 64% higher than competitors, that is 'aviation economics'. Qantas still need a new fleet |
Originally Posted by Rated De
(Post 10131627)
The economics of the International Aviation market are simple. Don't believe us, and as you seem to have a little trouble with research;
Qantas 'worst major airline' for fuel efficiency on trans-Pacific flights, study suggests - ABC News (Australian Broadcasting Corporation) In summary the cost to deliver the RPK is 64% higher than competitors, that is 'aviation economics'. Qantas still need a new fleet |
Originally Posted by RealityCzech
(Post 10131687)
There are alternatives to a new fleet, including outsourcing flying to other carriers or simply doing less flying - as evidenced by withdrawals and reductions on some routes - as affected and determined by the market and competitors and therefore influencing the revenue able to be earned to pay for the new fleet.
What a load of rubbish. What actually is QANTAS? An Airline or a Travel Agent? There is no point in an airline to outsource the majority of it's flying. Why not just shut it down and pocket what's left over. Why the hell would you run a so-called airline then outsource your product and lose complete control over product and safety? |
Originally Posted by RealityCzech
(Post 10131687)
This has almost zero to do with whether or not Qantas needs a new fleet. If your argument is that the cashflow position of individual routes would be improved with a new fleet (forgetting acquisition costs), then you are absolutely correct, however that doesn't mean a new fleet is needed. There are alternatives to a new fleet, including outsourcing flying to other carriers or simply doing less flying - as evidenced by withdrawals and reductions on some routes - as affected and determined by the market and competitors and therefore influencing the revenue able to be earned to pay for the new fleet.
Think of the money we could have saved if we follow your philosophy. Brainless dolt. |
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