QF: The Virgin distraction
 

A recent $1b raising from the Roo had a couple of curious analysts asking questions.

I get the Virgin rhetoric. They are very vocal. Yes, the numbers are untidy and the previous bloke blew a lot of cash.

But what about its own house?

The USA and OZ Domestic markets will recover faster compared to some other markets. The below businesses are of concern financially during grounding, but more importantly for the following year after the vaccine, will continue to be heavily loss making. They also don’t have much say in the dramas in Singapore and Vietnam, they are at the mercy of the other shareholders due to previous issues.

QF International
Jetstar NZ
Jetstar Singapore 50%
Jetstar Japan 30%
Jetstar Vietnam 30%

Both Airline groups in this country are facing the same predicament. Balance Sheets are going to be wiped to zero. One can fund future loans against it 787s, the other can’t.

A $2-3 Billion Dollar Loss isn’t out of the question. A $1b loss post Vaccine also is not unreasonable. The bottom three on that list above face a very diminished near future, and will need large cash injections.

Is Airbus still wanting its cash this month and for the next three years for its narrow body fleet replacement? Because that was budgeted to be one of the largest financial commitments in the companies history. Those Bills start this month.

I think too many stones are being thrown.

I forgot about all the Jetstar Asia stuff wheels, and was unaware of the bus payments commencing. Perhaps Q will need that 4.2b to send overseas to prop up the Jetstar franchise. How ironic.......

Whilst I see what you are saying I can’t agree with the Jetstar NZ on the list. It is likely that this operation will be the 1st Qantas group entity to start flying domestically again. It has been profitable for years and will more than likely keep its small share of the domestic market. Domestically in Australia will recover however it has to be seen if there is a big enough market for Virgin, Qantas and Jetstar. Which product will be ramped up first, Qantas or Jetstar? Jetstar Japan may recover relatively well with China on the face of it moving out of lockdown and Japan managing to flatten their curve. Jetstar Singapore is stuffed I think, as is Qantas International at its current size. Also where does Jetconnect fit now? They only do Tasman flying and when we maybe get to opening the Tasman we may see a reduction in overall services and will Qantas International want that work? Having said that here may be less seats in the Tasman due to the likes of Emirates not having access due to international restrictions and the possible disappearance of Virgin.

Of course this is all pure speculation, if there is a treatment soon things could warm up quicker than expected, when restrictions ease there is a lot of travel credit in the system that people will want to use, businesses will want to get back to work ASAP and of course a vaccine could change everything in 12 months time. Also in NZ kiwis spend 4bn per year on overseas travel, will a good proportion of that be directed to domestic travel or holidays? Depends on the unemployment rate I guess.

at the end of the day no one knows, we don’t know what Joyce and Co are thinking, hey could be sharpening the blade to cut loose excess staff, they could be planning on an assault on the market to try and increase market share during the loss making times, they could be planning on shutting the whole thing down and starting a new entity with radically reduced EBA’s. time will tell, there is going to be a lot of careers ended or curtailed though.

For some; regrettably they have operated their last flight and do not know it.

The public will be eager to get away on a holiday I am leaning towards early June by way of the government lifting travel bans if not people will just do it anyway, they won’t put up living like this for the next 6 months and will need to start moving around. I would think QF domestic, JQ domestic will be back quickly along with JQ NZ even quicker now that VANZ are no longer. International travel will take a very long time to return, how long is any ones guess.

Exactly. Some of the younger generation, the ones under 35 have got no idea what a true recession, depression or economic crisis actually is. They have never seen one, studied one, or probably even understand what one is.

This is a 1:50 year event and it is here, right now! The hurt is only just beginning.

I'm not looking to start a fight, but isn't it a little presumptuous of you old timers to sit on your high horses looking down to us millennials about recessions etc? If you all knew what a true recession/depression was, then why are most old timers not prepared financially? Typical boomers.

Good luck ‘just doing it anyway’. $13,000 fine if you come to Qld and don’t self isolate. That’s if you can even come in, if they see you’re just coming up for a holiday, you’ll just be turned around.

Most states are the same.

Hi, I’m a ****wit who thinks I have a Nostradamus like ability to predict the future and also a million irrelevant opinions. This would seem like a great forum to share, no?

Cue the ad hominem attacks, stay classy people.

Made me laugh, Gin.

Its all good to say people will "just do it anyway". If we look at some states having their police meet all arrival and turning those away without credible reason to enter ie residents... its a nit naive to say people will do it anyway.

I’m not looking down on the millennials in the least. In my day pilots backed pilots, a brotherhood. I still see it that way today, hence some of my comments are aimed to help others, not belittle them. Often with age comes experience and wisdom. Sometimes not! Many ‘old’ people aren’t prepared financially because they too can’t read the economy. I ditched ‘paper’ 25 years ago - shares, bonds, cash and certificates and bought some property, metals and stones. All tucked away somewhere other than a bank vault which can be locked down by a grubby bank.

I apologize for the misunderstanding. I may not be part of that brotherhood, but it's nice to see the camaraderie among you all during these difficult times. Hopefully this pandemic will help others (young and old) to prepare their financial lives better should another global event like this occur again.

I don't doubt that, but how many families will be in a financial position to afford one once the lockdown is over?

Just start borrowing money again :ugh:.

That's one of the root causes of financial systems collapsing. Nothing to support the house.

well could you remind the QLD police to start issuing some of those $13,000 fines! Those Brisbane markets looked very busy on Saturday no one is self isolating or even staying home. Like I said Ppl will do what they want!

I am of the opinion that on the leisure front - you'll see a very slow return. Consumer confidence will be low. Many have been financially decimated by the current environment. Many will be leveraging debt to get by currently. Holidays won't be on the table for many, likely for a year or two, as they try to recover their financial position. Further to this - airlines will likely be a little different too. They're smaller I think, in response to demand. This will push up cASK. With higher cASK - yield is eroded. To counter - airlines will increase fares. With leisure mostly price elastic demand - we'll see fewer travellers. Not sure on a flood of 'bargain basement, loss-leading offers'. I could be wrong. I hope so.

Attitudes are different now. Mine is. Life will be different. Maybe that will fade over time, as the younger get older. Who knows. The world will be different. So will behaviour.

Qld residents aren’t required to self isolate on a normal basis. Read what I wrote. If you come to Qld, you must self isolate. What family is going to come for a holiday if they have to spend 2 weeks sitting in their accommodation before they can go out. And police are checking randomly people who are supposed to be self isolating.

TV, it remains to be seen, but it could go the other way also. In the way of more bods flying LCC on personal or business level, rather than shelling out the QF or VA experience. The large chunk of medium to high earning people who pay the extra for Virgin etc, these days could be gone in the medium term. I think we will see this play out in some Asian markets. Singapore might swap many premium routes over to Scoot. Qantas might push some to Jetstar.

In regards to some leisure only routes that carry very little self, small or large corporate traffic, like Cairns, Darwin, Gold Coast, these markets will be going backwards for a while if left to Aussie traffic only. The success in those markets will be left with the Chinese and how/if they start the mass travel migration soon after this ends. Cairns peak season isn’t far off, Jetstar normally Triples capacity and has half a dozen flights daily out of Melbourne and Sydney from April to September.

Leisure to Bali will bounce back almost instantly. I would even expect extra flights put on to Bali this Christmas. I reckon you could fill a Orange Liner out of Wagga full of Bogans for weeks once it’s over.

USA is going to be up the $hitter big time for the next 24 months.

Until a vaccine is found, I don’t think anything will be ‘ bouncing back’ anytime soon.

The Bali and traditional overseas hotspots for getaways, will be substituted by domestic travel.

International restrictions will be in place long after state border controls are relaxed.

Who in their right mind would travel to Indonesia or the USA for that matter, until a vaccine is available. Travel insurance will wipe its hands of any COVID-19 related claims.

Domestic Australia aviation will recover and in itself light the fire under the domestic travel economy and its related and reliant industries, together with business travel domestically.

That may be the savior for Australia.

Viruses come and go. Note the graphs about June 1. By the time you find a vaccine in 18 months, covid-20 will be out
then that will take another 18 months for a vaccine. So it goes.

Or the world could just demand that China close all of its wet markets.

Force them to stop eating weird sh1t.

Educate the mindless Chinese masses that powdered tiger’s penis does not put lead into your tiny pencil.

Problem solved!

IsDon01 totally agree. Can we skip the depression in the 20/30s and the war in the early 40s just go straight to the 50s
where we manufactured in this country and bought in this country.

No actually the problem won’t be just “solved”.

Some new research (don’t forget this disease is still only a few months old) has indicated the wet markets may not have been the source of the virus. And the developing Chinese wet markets (basically a farmer’s market) have quite low rates of microbial illness compared to other developing nations indicating higher hygiene standards.

It doesn’t matter really, because viruses will find a way to develop and replicate in any place.

H1N1 originated in Mexico
The 1918 epidemic originated in the US

Viruses and communicable diseases originate all over the world in a variety of ways, a new illness was always bound to originate from somewhere, a lot of documentation has been around for years warning another large pandemic event was bound to happen sooner or later, wet market or no wet market. As it was said in Jurassic Park “life (Or RNA wrapped in a protein) finds a way....”

The key will be for a better public health response, stockpiling of preventative equipment, sanitary products, testing kits en mass ala what some Asian nations like South Korea have done. Hopefully more western nations will follow suit now they have experience in a modern pandemic. Maybe we need to adjust our nation’s defences accordingly against the real threats we face.

The key will be for a better public health response, stockpiling of preventative equipment, sanitary products, testing kits en mass ala what some Asian nations like South Korea have done. Hopefully more western nations will follow suit now they have experience in a modern pandemic. Maybe we need to adjust our nation’s defences accordingly against the real threats we face.

Forgot one more thing. Western nations need to start eating properly, stop eating crap food or else your gut will give you any disease you like.

I would hope once they nail down a corona vaccine, producing the next would be more routine - similar to the annual flu shots perhaps.

Research sponsored by your friendly Chinese Government. :rolleyes:

The 1918 epidemic originated in the US[/QUOTE]


Thats one hypothesis but it is not established fact.

and frome the same open source encyclopedia

[QUOTE]

So you’re saying the 1918 influenza could’ve originated in the US, Spain, France or Austria?

Still makes my point valid, viruses can form in any country, even western ones.

Nope just someone who doesn’t have an axe to grind against China. Twiggy Forrest doesn’t either, he went to the Chinese consulate when the outbreak first occurred and recorded a statement of sympathy and support for the Chinese. In return he was able to source 3 A330’s worth of medical supplies for Australia ahead of other countries who were willing to pay more. That’s called good leadership. I guess you can get a good dopamine fix by calling the Chinese disease creating scum on the Internet, they probably won’t be as willing to help us out however.

And I’m sure any patients hooked up to the ventilators, medical workers using the masks, people aware of their status due to the testing kits will have no axe to grind against the Chinese as well.

No I am not saying anything of the sort, the online open source encyclopedia was.


No it doesn't because you simply stated that

I’ve just read that QF are now flying daily A330’s to Shanghai with belly freight only, taking 30T of fresh produce Northbound, and 30T of medical supplies Southbound. We need them and they need us.

I think Twiggy is one of the few billionaires with a heart of gold.

Few articles stating they are seeking to offload its Vietnam stake to Vietnam Airlines. Claims are Vietnam will then shrink or close it down.

Sell the Japanese offshoot to JAL so they can then integrate its newly formed long haul loco.

Singapore might be too much of a save face situation so could hold. Apparently it’s key in feeding QF Singapore traffic, regardless of it losing tens if millions a year.

Offload means give it away for nothing . If your a shareholder of a airline in another country what else can you do ?

Loss making ventures in Asia that lease small fleets of 10-20 aircraft are only worth the slots they own. Possibly some terminal gates and engineers if in short supply. Some used to take them just for Pilots also, but not at the moment.