A nice summation.

With a robust regulator, the great Australian swindle would have at least been investigated.

Bonuses
 

Hmmm,happy to mention the amount of money put 'aside' for non exec bonuses,NO mention of how much of it is still sitting 'aside' whilst they try to coerce employees into signing up for their next EA.
Someone mentioned they now believe their own BS,just shows how out of touch they really are & living in a world of their own.😠

First quarter of FY20 released. Everything up. https://www.qantasnewsroom.com.au/me...-quarter-fy20/

Hi all,

Busy week the last one and finally I find some time to jump on here and respond to a few of the comments, mostly the ones from T-Vasis.

There was a query about what type of profit (net, underlying, before tax) I was referring to when the piece was written. I was referring to net profit, it says that in the article. Net profit is the one commonly used by all financial commentators in relation to any company and it is the one that makes most sense. It is after the tax is paid, the real amount left to distribute to investors or......Executives.

Another of the comments was to make sure you are comparing the average fleet age with an airline with a similar number of aircraft. I do not accept that premise because this is an "average" fleet age. All airlines pretty much have a different number of planes, you cannot excuse the non replacement of aircraft because another airline who is replacing aircraft regularly only has half the aircraft. As I originally said, Qantas was bragging about its fleet age in their annual reports 8 years ago, now they are not.

Like the mouthpiece from Qantas who tried to debunk my article, assumptions are being made that aren't true. I did not include the FIFO/Network aircraft in the average fleet age. It was Jetstar (Aus)/Qantas and Qantaslink. I didn't include Jetstar franchises overseas because Qantas does not fully own them. I didn't include Network, I didn't need to in order to show that Qantas were neglecting fleet age and they weren't part of the group 8 years ago. I genuinely wanted to compare apples with apples.

I think the long term future of Qantas is in jeopardy with the way the airline is currently being managed.

Not exactly. Net Profit includes non-cash expenses e.g. depreciation, impairments which, as you saw in 2014 for QF and FY19 for VA, can be significant. Free cash flow is a better metric to understand what is ‘left over’ that can be reinvested into the business, buy back shares, pay distributions or pay down debt. A better indicator of company health when assessing.

It is mathematical and the ’snapshot' methodology isn’t precise to enable fair fleet comparisons or strategy. I did already say though that I was in agreement QF needs to update the fleet.

MEL-LAX loads in the premium classes are pretty good and have been for a while; not so flash down the back but it's up the front that really counts.
LAX-MEL has been well over 400 pax regularly for a while.

When oil goes back to USD $145 a barrel, the party will be over, and the big lady will sing.

Mr Purvinas,

Fund manager Roger Montgomery Montgomery Investment Management(Located in Sydney, Australia), in an article in the Australian in mid 2018, described eloquently the horrible fleet metrics to which you refer.

The era of the fossil Leigh Clifford and Little Napoleon has placed the airline in a difficult position. That the next guy faces a huge capital expenditure bill is a big concern. That the new Chair Goyder seems unconcerned ought concern all.

Remember when the industry used to say "the only replacement for a DC3 is a DC3"?

Most of you are probably too young...

Well the only replacement for a 747 is probably a 747-8i

Nah ya can't make money on the 380 over ten hours

My mates a 777 captain. Told me

Monopoly helps :D

Steve might have been on to something with regards to the aging frames: https://www.theage.com.au/business/c...30-p535xo.html

Translation: The wing won't fall off.....yet. Safety is our number one priority, after executive remuneration.

Not sure how Steve’s comments to ground the ENTIRE 737 fleet over the pickle fork issue is going to help the engineers and pilots who will sitting around doing nothing with no overtime, bills to pay, etc. Seems a little flippant following his level headed article this thread discusses. The FAA directive allows them 7 months to inspect. But then again the FAA lacks credibility right now so how can you trust them?

But its OK to ground the entire QANTAS fleet because of difficult market conditions?

Poor article by the biggest own goal kicker in Australian industrial relations history.

Agree that no one is really worth $24m/year remuneration. Thats a solid starting point.

However the selective choice of facts damages the credibility of his subsequent arguments.

Fair comparison on fleet age would be British Airways - big legacy airline, full service, covering domestic and international flying, similar tax environment. Their average fleet age is 13.7 years. Bang - that point is lost Mr Purvinas, case dismissed.

Did Senior Management also have a pay freeze. Yes. Bang - point lost again - case dismissed.

Mr Purvinas does not seem to understand the difference between cashflow and accounting or is choosing to mislead the reader. If Qantas was to spend $1bn on new aircraft this year, it would not take $1bn off the bottom line. The new aircraft are depreciated over 20 years so in simple profit and loss figures, the impact would be around $50m increase in depreciation (keeping it simple). This would be partly offset by lower operating costs and lower maintenance costs if its replacing an old aircraft or by increased revenue/margin if its an addition to the fleet. So the exact impact is not obvious but worst case its a $50m cost per year.

The underlying issue is that current accounting/tax rules essentially force an Australian airline to keep aircraft for 20 years otherwise they take a financial hit from retiring the aircraft early.

It could be argued that by not purchasing more new aircraft now, Joyce is doing future management a very big favour by not lumbering them with ongoing depreciation costs for aircraft that may become obsolete/inefficient in less that the required 20 year life of the aircraft. He is allowing future management the flexibility to purchase the most efficient and suitable aircraft at that time.

Lets not start that the "own goal kicker" appears to be advocating that QF should be replacing the current 737 fleet faster? That would have worked out real well if they had gone for the Max.

I have to wonder who the own goal kicker is really representing?. New aircraft = less maintenance whilst older aircraft = more maintenance = more work for the people he represents.

Keep the first two paragraphs and keep the last sentence.

The last sentence is a fair point:
"Even if Qantas was well run, I do not believe any one person deserves a yearly salary package that an average person couldn't spend in a lifetime."

Not quite. Their bonus was still paid as expected. Now if asking the staff to 'agree' to a pay freeze then surely accepting a bonus, in some cases a significantly increased bonus, is a little contradictory and does little for staff engagement.

“I have to wonder who the own goal kicker is really representing?. New aircraft = less maintenance whilst older aircraft = more maintenance = more work for the people he represents.”
It is a pathetic attempted payback for having his a*se well and truly kicked in 2011 and the subsequent loss of in the order of 5000 engineering jobs.

The problem with that argument is that how long is to long? Depending on what happens with the 737, if you wipe out a portion of your fleet with some AD then should have you waited 20 years to find a replacement?

By delaying purchasing new aircraft management also benefit from some supercharged bonuses in the meantime with their resignation occurring just in time for fleet replacement.

$54m of bonuses were paid to non management staff who accepted the pay freeze. Another convenient missing fact!

The other aspect of this is the constant bleating about safety... when something really serious comes along no one will listen because safety has been raised over and over again for industrial reasons.

As for those saying that Joyce grounded the fleet for industrial reasons, yeh, he also grounded the A380 until it was absolutely certain that the engine failure could not happen again... many other airlines - and some that are lauded as the best - did quick inspections and kept flying them... some said at the time they couldn't possibly have completed the inspections in the time. Don't get me wrong, I agree no one is worth $24M.

I think he lost me when he heaped Germany and Hong Kong in with the third world.
Media is also selective. Qantas does some maintenance off shore and as for the A380, the 747 was maintained by UA in SFO for the first 3-4 years Qantas had them as they only had 4 aircraft, yet VA does ALL its maintenance off shore and never a peep about that.

The fact is though that while new aircraft orders make for big headlines... "airline xx commits to $3BN order for new aircraft"... reality is they're not spending $3 billion in one hit, the aircraft are most likely leased, for an amount surely more than the cost of maintaining the older aircraft, at least initially and then the increased costs are offset by reduce maintenance and fuel costs as the lease continues.
Qantas is not going to 'spend' $15 billion or similar replacing aircraft, it will spend an incremental amount to lease the aircraft each year until it either owns them or disposes of them.

The legend tells lies and is a distorter of the facts. From tonight’s news quoting him
” as the FAA says this could cause loss of control and Qantas shouldn’t be flying them” unquote