How long before Qantas goes into VA
 

Qantas was supposed to have circa $2.00 B in cash and borrowed another circa $1.2 B against the B 787 fleet that they owned. Supposedly X 3 the size of Virgin who had $ 700 M in cash and debts now revealed of circa $6,8 B. Given the Government imposed recession/depression on airline activity because of the pandemic, how long can Qantas last before they are like VAH and will have to appoint an Administrator as potential insolvency looms? If the Government imposed recession/depression continues as distinct from the market drive version in the1930s it is indeed worrying times and QF could be under threat?

Never - Its the national carrier.

Our Federal Government has no problem supporting Rex - without a chairmans lounge and other perks, so QF has nothing to be worried about.

In an update call recently they said they have reduced cashflow to 1/12th of what it was 6 weeks ago, the freight part of the business is booming, they expect a return to domestic operations soon and have the option of another $3bn in debt raising should it be needed. Looks like they can get Jetstar domestic and Qantas domestic going with Tasman also expected shortly. They said the modelling is now better than what they initially thought and they would be bullish in trying to gain market share. They said well in excess of 12 months at this level of operation before they are in trouble with all flights that get up and running from here extending that timeline. So don’t expect VA anytime soon.

They will obviously exit with larger debt and reduced cash. The issue at hand is going to be International for the next 2 years, and fleet replacement bills. 110 Neo project is the largest finance project in the books. Those bills started last month.

Its clear they wont need that many Neos in the next 2-3 years. Airbus and Boeing are not overly friendly when it comes to pushing back or cancelling. Unless you buy more which they already did, to adjust timeframes.

Depends how many Neos are tied to leasing companies. If the contracts are signed they are going to be up the gutter.

Paying Airbus over a Billion bucks a year going forward is going to be tough.

What do you think that actually means?

Yes and no. More debt from the $1b cash raised. Lots of LSL/AL burned. Wiping the books of the liabilities.

I expect the postponed shareholder payout to be cancelled. $150m there.

The kicker will be how long international is out for.

Will be interesting to see come September once Jobkeeper finishes.

I wouldn’t put to much faith in the trans Tasman helping much
With no other viable International flying with in 18 months other than that you will have Air NZ operating 777s on every route, Qantas running 330s, Jetstar running 787s and Virgin....well who knows. If VA aren’t there, the alliance QA have with AirNZ will be torn up.
it will be an economic bloodbath 2nd to only a certain virus we are all aware of now.
I imagine Air NZ will operate direct Darwin, Cairns and a few others we never thought about too and they are government owned now.

30,000 staff at $750 per week for 26 weeks is 585 million in Jobkeeper paid to QANTAS.

Some of that will flow to the staff, a lot won’t. A third of staff haven’t been stood down so there’s roughly 200 million straight to the company.

Other staff are on full time paid leave, others are using a mix of paid leave and Jobkeeper so the true benefits will be somewhere north of 200 million. Not huge but significant in the current environment.

I wouldn’t mind seeing some of their freight statistics. I’ve read numerous business articles stating that although freight is down, it is really cycling at the moment. COVID has reduced capacity as aircraft are grounded, but due to everyone being stuck at home there is lots of online shopping taking place. As a result of the increase in freight but decrease in available aircraft, some freight transport costs have increased by 20 to 30% per kilogram. Qantas has a robust freight network and infrastructure so I would be curious to see what the current revenue dollars are from their freight division.

I highly doubt that would go down well with Canberra.

The lawyers in Canberra might like that one. The government will soon be forward thinking corona reimbursement, shelling out a few hundred million for QFs bottom line wouldn’t cut it.

Why? That’s exactly what it’s designed for.

everything that direct anywhere says is exactly correct and is the intent of the Jobkeeper scheme. its a wage subsidy to help businesses through COVID 19 and to ensure it’s workers wages don’t fall below $1500 a fortnight. everything QF is doing is completely legal.

the job keeper needs to passed onto the employee. The employer doesn’t get to keep it.

each eligible emolyee needed to register for it as an in dividing.

Last weeks dial in they gave the impression freight was supporting the business well and demand was increasing, shortly after that a LWOP email followed for 767 and 321 type rated Capt and FOs. Seems they need to get those express freighters up and running now with their 321P2F aircraft to keep up.

Yes they do.

Eligible employers (30 or 50% reduction in turnover depending on the size of the business) get $1500 per eligible employee. The employee has to fill out their own paperwork.

If the employee is stood down without pay the employee gets the full $1500 pre tax.

If the employee is still working but getting less than $1500 per fortnight the employer has to make up the difference using Jobkeeper and keeps the remainder. eg. a casual barista who has been employed for more than 12 months, who normally gets paid $1000 per fortnight will now earn $1500. The employer pays them their normal $1000, tops it up with 500 from Jobkeeper and keeps the remaining $1000. This is why the system is a windfall for some low paid employees who are getting a payrise funded by the government.

If the employee is still working or, importantly in QANTAS’s case, accessing paid leave while stood down at a rate of greater than $1500 per fortnight, the employer pays the employee as normal and banks the $1500. This is a real windfall for the employer. QANTAS is currently getting tens, it not hundreds, of millions of dollars in leave off the books, subsidised by the government.

QANTAS will get roughly 600 million from the federal government between now and September. It’s not possible to determine how much of that will go to the company and how much to employees. Back of the envelope, given 10,000 people are still working and the remainder are accessing a mix of Jobkeeper and their leave, I would expect QANTAS to keep perhaps half of that amount.

I hate to say it, and I don't agree with it, but Jobkeeper goes to the employee and employer.

Don't want your employer to get it? Simple, go on centerlink Jobseeker instead.

It's true if you are on LSL / AL then Qantas effectively get to keep your $1500. But according to the government, that is what it is designed for.

Quote:
Never - Its the national carrier.

So is VA, just as much as QF.

So when the administrators wipe the current shareholders from VA and Aussie Twiggy buys 100% of VA Mach 2, is QF still a national carrier just as much as VA Mach 2?

freight is booming out of China. Week ago had a yank who couldn't find a freighter to fly PPE from China to USA(typical yank, he'd only tried U.S. companies). Found one owned by a UK outfit that could do it at reasonable cost. It was a pax aircraft with all the seats ripped out. Sounds like lots of "freighters" going into China light or empty, coming out heavy. Wonder why Australian exporters aren't getting onto this.

Someone in China is making a lot of money out of PPE.

I think QF international will be closed and all made redundant, with a new startup by Qantas when it’s required to outsource the International flying at slave labour rates !

I would almost agree, QF will be using this opportunity to cut future operating cost in all parts of the business.

The Jobkeeper subsidy was brought in on projections for a six month lockdown.

The rapid reduction in COVID cases has far exceeded the early projections of a hibernation until September.

With most businesses expected to operate now at the three month point, the overspend could well be stopped earlier than six months.

You clearly do NOT know the trans-Tasman market. Air NZ are standing down their B777 fleet until LH picks up, once they have done the various repatriation and freight trips. The B777's also did the ULH to IAH, it and the proposed JFK are gone for some time.

The B787 and the A321 neos will do Trans-Tasman; not many Kiwi's have a need, nor desire to go to Darwin direct. The key trunk routes between AKL and MEL, SYD and BNE will continue, and if anything the smaller aircraft will allow greater flexibility for travellers. The WLG and CHC flights to Australia will also pick up and the QK B737's and Air NZ's 320's will be a good fit for that.

Cairns was only a couple of times per week pre Covid (as was OOL and Sunshine Coast), so can't see the frequencies being increased there.

I think there will be a gentleman's agreement to help each other out

Some good posts in here regarding freight. Qantas has the upper hand over VA without doubt. It certainly will be an area that the QF top tier will be exploring as to whether they can increase volume with new or expanded contracts. Now it’s not passenger uplift and it doesn’t keep all the flight crews and cabin crews employed, but if QF was able to source more freight it will at least keep the sheckles coming in, perhaps long enough to see the company through the worst of COVID. It really is times like these that a company needs to be innovative and look at areas or ideas that perhaps it hasn’t looked at in the past? VA don’t have a fallback source of income in their structure hence the fast demise of their financial viability.

I don't know how many times it has to be said but the NZ Government own 52% of Air NZ. It does not own the whole airline.

4 weeks to Hawaii
 

Its all good. Jetstar is now taking your money for flights to HNL from June. Please book now and pay in advance. Pay in Advance. Please pay now and keep us afloat. False hope but give us the cash


https://cimg4.ibsrv.net/gimg/pprune....d8db47728c.png

As others have said, I doubt QF is anywhere near VA. All those buybacks mean a capital raising would be a reasonable outcome if debt repayment issues arose.

However, the delayed 3rd quarter update may have a few surprises. It is after all a report on JAN-MAR but all eyes and ears will be on QF’s strategic response. One can speculate that the reason for the delay is restructure planning. After the tremendous expense the isolation measures have caused, the Australian government is not going to open the border to countries with widespread cases. Obviously, that rules out USA, Asia and Europe for quite a while. With Jobkeeper ending in September and more businesses open again in Australia it is an ideal time to reduce headcount in the Death Star. Likewise, the requirement for operational staff is reduced for the next 12 months at least. Fortunately, the stood down provisions and flexibility in the new EA’s should allow the pain to be shared. I hope so.

The problem with this is what?? JQ also have a full domestic schedule for sale June 1st. How else are they to gauge demand if they don't sell tickets?
Virgin are selling international flights via code share with Delta from June 2nd, Pay in Advance. Please pay now and keep us afloat. False hope but give us the cash
Qantas are selling international flights from June 1st cheaper than Virgin. Pay in Advance. Please pay now and keep us afloat. False hope but give us the cash

Any truth in the rumour QF are talking to KordaMentha now with regards to restructuring advice? I heard it from an internal QF mate yesterday not hearsay .

“I heard it from an internal QF mate yesterday” - what is your definition of hearsay?

Not pulling it out of my A..

That sort of discussion is an ongoing theme for any large business. COVID would be right up there in discussions at the moment, but it would be naive to think they aren’t always looking for ways to restructure.

I wish Qantas all the best. I hope they survive on their own merits. They are not a national carrier any more though. I hope they get the same consideration that the Federal Government gave to Virgin. it would be quite hyprocritical of Joyce to ask for a government handout after throwing such a tantrum over sugestions that the opposition was going to get one.

Not really, Virgin is a loss making business, Qantas makes money I wouldn't have a problem the government loaning money to QF. After all it is making a profit and they could pay it back.

Well allow me to retort
Air NZ are owned 52% by the government plus 900million Which odds on will become equity plus whatever else they need and will get in the near future....Are you really suggesting they are not effectively owned by the government now? Maybe we compromise on majority share holder plus some?
But line of the day is definitely gentleman’s agreement on the trans Tasman, the only funnier thing I’ve seen recently is the Virgin downfall video.
As for not knowing the Tasman, maybe SO, Only been flying over it for 25 years now. 777 or 787 we will see, but who cares? What was said last week will change next week anyway. Where else are the 777s going in the next two years? Sure Kiwis in the past may not have gone to Darwin direct but if you only have one other island you can travel to and lots of aircraft maybe you might give it a crack in something of an appropriate size.
Correction Ragnor, Qantas used to make money.

hmmmm.
also you:

QANTAS will never go into administration.
They have the world’s best CEO, survival of the fittest, blah, blah, blah..........

The $900M is a loan made available IF required. The company, very much to it's credit, has not yet drawn on it.

However it is election year here and already NZ First are murmuring about re-nationalising Air NZ.

SHVC wrote:

The cloak of Covid 19 has provided many businesses with an unscheduled restructuring opportunity and from what I am seeing, many are using the opportunity to reset terms and conditions.

If Qantas wanted to reset T&C they wouldn't have pushed ahead with the most recent EBA, which once voted up by the pilots, Qantas then submitted to fair work. The agreement was then approved only 2 weeks ago.

They actually are. When the government needs help they always flock to Qantas. It's majority Australian owned, and believe it or not they actually make money.