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Qantas Profit Jumps, Sees Growth,but Slow Death?  
User currently offlinechrisrad From Australia, joined Dec 2000, 1055 posts, RR: 8
Posted (3 years 2 months 2 days 16 hours ago) and read 7116 times:

Just last week QF were crying over the slow death of its QF mainline brand.... now this? Slightly hypocritical I think?
Thoughts

http://www.theaustralian.com.au/busi...rowth/story-e6frg95x-1226007370309


"QANTAS posted a big rise in first-half net profit today and said it still expected underlying earnings to be "materially higher" in the full year.

Net profit jumped to $241 million, from $58m a year earlier, as the aviation market continued to recover from the sharp downturn during the global financial crisis.

Revenue climbed 10 per cent to $7.59 billion."

"Qantas mainline more than doubled its profit from $60m to $165m, while Jetstar was up 18 per cent to $143m."

So which story to believe then?


Welcome aboard Malaysia Airlines! Winner of Best Cabin Staff 2001,2002,2003,2004,2007,2009,2012
30 replies: All unread, showing first 25:
 
User currently offlinecpd From Australia, joined Jun 2008, 4879 posts, RR: 39
Reply 1, posted (3 years 2 months 2 days 16 hours ago) and read 7085 times:

Wonder how the naysayers will explain that?

What with all that Sydney-centric strategy and guzzling B747s and old-fashioned, inefficient A380s?   Maybe they don't need to sell all B747s and A380s as some have suggested and immediately buy B777-338/ERs.  Smile

I believe the slow death story was aimed at governments and unions, rather than anyone else.

[Edited 2011-02-16 17:13:59]

User currently offlineEK413 From Australia, joined Nov 2003, 4684 posts, RR: 4
Reply 2, posted (3 years 2 months 2 days 16 hours ago) and read 7075 times:

Qantas corporate tactics crying wolf...
Profits are down, yields are down, competitive market...
Times are tough... guaranteed AJ will use these words just like GD...
Greed...
Qantas won't even give in to a 5% pay increase when staff sacrificed a pay increase during the 9/11 downtown...

EK413



Good evening, ladies and gentlemen. We are tonight’s entertainment!
User currently offlinecpd From Australia, joined Jun 2008, 4879 posts, RR: 39
Reply 3, posted (3 years 2 months 2 days 15 hours ago) and read 6943 times:

From the airline itself:

http://www.qantas.com.au/travel/airl...s-half-year-results-2010/global/en

So, 33 more B737s on order, from what I understand, 5 leased B737-800 planes, 10 F100s to be acquired along with 2 B717s.

That's quite impressive for an airline in "slow death" mode.


User currently offlinejetfuel From Australia, joined Jan 2005, 2195 posts, RR: 0
Reply 4, posted (3 years 2 months 2 days 15 hours ago) and read 6906 times:

Its a poor profit result, especially considering the huge investment Qantas has. NO dividend for shareholders. Things are far from rosey


Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
User currently offlineqfa787380 From , joined Dec 1969, posts, RR:
Reply 5, posted (3 years 2 months 2 days 15 hours ago) and read 6855 times:

Quoting jetfuel (Reply 4):
Its a poor profit result, especially considering the huge investment Qantas has. NO dividend for shareholders. Things are far from rosey

Correct jetfuel and just imagine what the profit numbers could have been like if certain "other" decisions were made over the last 10 years.
Don't look at what is but what could/should have been.


User currently offlinechrisrad From Australia, joined Dec 2000, 1055 posts, RR: 8
Reply 6, posted (3 years 2 months 2 days 15 hours ago) and read 6837 times:

Quoting jetfuel (Reply 4):
Its a poor profit result, especially considering the huge investment Qantas has. NO dividend for shareholders. Things are far from rosey

A profit is still a profit, considering Qantas mainline (the one slowly dying) posted a doubling of profit.



Welcome aboard Malaysia Airlines! Winner of Best Cabin Staff 2001,2002,2003,2004,2007,2009,2012
User currently offlineDLPMMM From United States of America, joined exactly 9 years ago today! , 3580 posts, RR: 10
Reply 7, posted (3 years 2 months 2 days 15 hours ago) and read 6805 times:

Quoting chrisrad (Reply 6):

Doubling from less than 1% is not that impressive.


User currently offlinecpd From Australia, joined Jun 2008, 4879 posts, RR: 39
Reply 8, posted (3 years 2 months 2 days 15 hours ago) and read 6806 times:

Quoting chrisrad (Reply 6):

A profit is still a profit, considering Qantas mainline (the one slowly dying) posted a doubling of profit.

Welcome to my respected users list!  

It just points out the stark contrast in announcements.


User currently offlinechrisrad From Australia, joined Dec 2000, 1055 posts, RR: 8
Reply 9, posted (3 years 2 months 2 days 14 hours ago) and read 6759 times:

Quoting DLPMMM (Reply 7):
Quoting chrisrad (Reply 6):

Doubling from less than 1% is not that impressive.

From the height of GFC? Considering nearly ever other airline was struggling to make any money?

It's not the point here, the point is they make sensationalist statements about the slow death of the brand, yet in reality it's far from the case. Compare them to some well known airlines from the USA.....



Welcome aboard Malaysia Airlines! Winner of Best Cabin Staff 2001,2002,2003,2004,2007,2009,2012
User currently offlinejetfuel From Australia, joined Jan 2005, 2195 posts, RR: 0
Reply 10, posted (3 years 2 months 2 days 14 hours ago) and read 6738 times:

The slow death is QF International, thats still on its death bed. Profits are all coming from domestic and JQ




Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
User currently offlineWeebie From Australia, joined Dec 2009, 202 posts, RR: 0
Reply 11, posted (3 years 2 months 2 days 12 hours ago) and read 6536 times:

The biggest issue with Qantas and it's an issue with Australia in general is the strong Aussie Dollar. Tourism from the States (which used to be 30% of revenue) and the reality is that Australia's economy has changed so much in the past 10-15 years that it's unlikely that the American dollar will ever be strong against the Aussie dollar like it was in 2000.

Qantas need to Approach new Markets. They need to fly into cities such as Guangzhou, Shenzhen and other major Chinese centres. Also Australia has experienced massive growth from South America in the last decade and Qantas failed to capitalize on this. Further flights to the strengthening Indonesia market need to also come in along with flights to Indian Cities re-established.

The simple fact is though when the world Economy recovers expect half a million Aussies to head back to Europe and America for work and this will result in a huge jump in profit for the airline.


User currently offlinechrisrad From Australia, joined Dec 2000, 1055 posts, RR: 8
Reply 12, posted (3 years 2 months 2 days 12 hours ago) and read 6532 times:

Quoting jetfuel (Reply 10):
The slow death is QF International, thats still on its death bed. Profits are all coming from domestic and JQ

Is there an actual breakdown of the figures available? It would be interesting to see their claims against the reality.

Ok I looked at their presentation on their website, whilst no breakup of domestic vs international

http://www.qantas.com.au/infodetail/about/investors/2010HYResults.pdf


A few quotes:
"Strong Growth in all Operating Segments
All operating segments have improved contributions to Underlying PBT, delivering strong growth compared to the prior corresponding period. Qantas and Qantas Freight achieved growth in excess of 100 percent. Both Jetstar and Qantas Frequent Flyer delivered record half-year results."

REVIEW OF OPERATIONS
Highlights of the half-year result include: ␣ Underlying Profit before Tax up 56 per cent and operating cash flows up by 54 per cent ␣ Strong growth across all operating segments ␣ Record results for Jetstar and Qantas Frequent Flyer ␣ Result achieved despite financial impact of A380 disruptions ␣ Strong revenue growth of 10 per cent achieved through expansion of capacity and continued improvement in yield

[Edited 2011-02-16 21:39:20]


Welcome aboard Malaysia Airlines! Winner of Best Cabin Staff 2001,2002,2003,2004,2007,2009,2012
User currently offlineFlyingsottsman From Australia, joined Oct 2010, 466 posts, RR: 0
Reply 13, posted (3 years 2 months 2 days 7 hours ago) and read 6200 times:

Ah good to see Alan Joyce following in Geoff Dixon's train of thought, eveything at Qantas is bleak and the end of the world for Qantas is comming. Even thow they made a profit. Thats real moral boosting Alan for all your employees.

User currently offlinejetfuel From Australia, joined Jan 2005, 2195 posts, RR: 0
Reply 14, posted (3 years 2 months 2 days 6 hours ago) and read 6145 times:

Quoting chrisrad (Reply 12):
Quoting jetfuel (Reply 10):
The slow death is QF International, thats still on its death bed. Profits are all coming from domestic and JQ

Is there an actual breakdown of the figures available? It would be interesting to see their claims against the reality.

QF International Revenue passenger kilometres (RPK) was up 25,821m from 25,733m A miserable 0.3% increase.
All other segments performed way better. Its def International that is really hurting. Fuel guzzling 744's and inefficient route network primarily to blame along with major competietion continuing to eat and steal QF's dwindling market share



Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
User currently offlineTruemanQLD From Australia, joined Feb 2007, 1470 posts, RR: 0
Reply 15, posted (3 years 2 months 2 days 6 hours ago) and read 6092 times:

Quoting Weebie (Reply 11):
The biggest issue with Qantas and it's an issue with Australia in general is the strong Aussie Dollar. Tourism from the States (which used to be 30% of revenue) and the reality is that Australia's economy has changed so much in the past 10-15 years that it's unlikely that the American dollar will ever be strong against the Aussie dollar like it was in 2000.

Qantas need to Approach new Markets. They need to fly into cities such as Guangzhou, Shenzhen and other major Chinese centres. Also Australia has experienced massive growth from South America in the last decade and Qantas failed to capitalize on this. Further flights to the strengthening Indonesia market need to also come in along with flights to Indian Cities re-established.

The simple fact is though when the world Economy recovers expect half a million Aussies to head back to Europe and America for work and this will result in a huge jump in profit for the airline.

I think its great to be an arm chair CEO. HOWEVER, Qantas would have many, many staff looking at new routes/markets etc (same as with the whole 777 issue) and they made the decision based on what will work best for QANTAS. Exploring new markets is risky, sure the payoff can be huge but can also be disastrous. QANTAS isnt stupid, they know what they are doing. Yes, they have made mistakes but to still make a profit (an an increasing one at that) is quite impressive.


User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 16, posted (3 years 2 months 2 days 6 hours ago) and read 6053 times:

Quoting qfa787380 (Reply 5):
Don't look at what is but what could/should have been.

So, in other words what you're saying is ignore actual reality and let's deal in fantasy of what might have been (might depending on one's own 'outlook' of course).......yep, sound very much typical a.net mantra these past few years.


User currently offlineTN486 From Australia, joined Jul 2008, 898 posts, RR: 2
Reply 17, posted (3 years 2 months 2 days 5 hours ago) and read 5983 times:

Quoting qfa787380 (Reply 5):
Don't look at what is but what could/should have been

What could have been? An interesting thought, seeing QF came very very close to being owned by an organisation/s that would have seen QF go down the gurgler during/after the GFC. Please, I am not being sarcastic, but that comment does not wash with me. This airline has continued to make profits (it doesnt matter how), when most others have lost money hand over fist. Yes, International is in trouble, but AJ admits as such, and I have every confidence it will be fixed, however I am not so sure that the strategies employed will make a lot of people very happy. I think we all know that had the 787 arrived when it was supposed to, QF International would be a roaring success today. Anyway "all good things come to those who wait".



remember the t shirt "I own an airline"on the front - "qantas" on the back
User currently offlineADDICT4QF From Australia, joined Feb 2011, 61 posts, RR: 0
Reply 18, posted (3 years 2 months 2 days 4 hours ago) and read 5863 times:

In my opinion...

The fact of the matter is that the return on investment is no where near good enough; for the amount of assets/investment/expenditure that are poured into the business, especially the international QA business (A380s, high labour labour spend), a return of $417M is not where the company would want to be.

You unfortunately have to keep shareholders with a decent return, to want them to invest more money in the company when needed; if you don't give them a decent return, there is no point in them supply you with more money as they can put it elsewhere and have a lower-risk return.

QF has a massive Capital Expenditure pipeline which needs to be paid, and profits like these, alone, will not cut it...

Can $417M even pay for one fitted A380? Or a profit like this for the next 10yrs cover the next 13 A380s on order, plus 50 787s, etc.?

So in terms of it being a major profit improvement, agree. Is it anywhere close to where it should be to sustain the needed investment in the company's assets, I don't believe so.

That's my 2cents worth for today!

[Edited 2011-02-17 04:58:44]

[Edited 2011-02-17 04:59:50]

User currently offlineDLPMMM From United States of America, joined exactly 9 years ago today! , 3580 posts, RR: 10
Reply 19, posted (3 years 2 months 2 days 4 hours ago) and read 5788 times:

Quoting ADDICT4QF (Reply 18):

Very well stated.

Some people don't seem to understand that companies compete for capital, and in a capital intensive industry a 1% or 2% net margin is a miserable return. Investors would get a better return from investing their capital in "risk free" government bonds!


User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 20, posted (3 years 2 months 2 days 1 hour ago) and read 5667 times:

Quoting DLPMMM (Reply 19):
Investors would get a better return from investing their capital in "risk free" government bonds!

And those same investors are quite free to choose at any time where to invest......no-one in this world is forcing them to choose QF or anything aviation. So that point is entirely moot.


User currently offlineDLPMMM From United States of America, joined exactly 9 years ago today! , 3580 posts, RR: 10
Reply 21, posted (3 years 2 months 2 days ago) and read 5617 times:

Quoting AirNZ (Reply 20):
And those same investors are quite free to choose at any time where to invest......no-one in this world is forcing them to choose QF or anything aviation. So that point is entirely moot.



No, the point is not moot, you have illustrated the exact point. If QF cannot generate a market return on capital in the long term, it will eventually cease to exist. When the pieces are worth more on the secondary market than the enterprise as a whole, the company will be LBO'd and pieced out like and old 742 at VCV.

I'm sure that there will be another airline that will fill the void, just as the void left by Ansett was eventually filled if QF can't get their financial act together.


User currently offlineTempestDriver From Australia, joined Nov 2010, 17 posts, RR: 0
Reply 22, posted (3 years 2 months 1 day 21 hours ago) and read 4571 times:

Just last week QF were crying over the slow death of its QF mainline brand.... now this? Slightly hypocritical I think?
Thoughts

I read the reports in the Australian press and on this site but failed to find any evidence of a complaint by Alan Joyce of slow death for QANTAS. Indeed the speech he made was quite upbeat but did mention difficulties that would be encountered in the future. From a shareholders point of view such mention is necessary to avoid charges of managerial malfeasance. However there was absolutely nothing in Joyce's speech that made me think that QANTAS' future was under threat.

QANTAS is a remarkably well managed airline, amongst the most profitable on the planet. Reports of its demise are, to say the very least, premature.


User currently offlineqfa787380 From , joined Dec 1969, posts, RR:
Reply 23, posted (3 years 2 months 1 day 20 hours ago) and read 4247 times:

Quoting AirNZ (Reply 16):
So, in other words what you're saying is ignore actual reality and let's deal in fantasy of what might have been (might depending on one's own 'outlook' of course).......yep, sound very much typical a.net mantra these past few years.

Would love to expand on the analysis I have seen if QF went about things a different way but can't. It's not fantasy.


User currently offlinechrisrad From Australia, joined Dec 2000, 1055 posts, RR: 8
Reply 24, posted (3 years 2 months 1 day 19 hours ago) and read 3961 times:

Quoting TempestDriver (Reply 22):
I read the reports in the Australian press and on this site but failed to find any evidence of a complaint by Alan Joyce of slow death for QANTAS. Indeed the speech he made was quite upbeat but did mention difficulties that would be encountered in the future. From a shareholders point of view such mention is necessary to avoid charges of managerial malfeasance. However there was absolutely nothing in Joyce's speech that made me think that QANTAS' future was under threat.
http://www.theaustralian.com.au/busi...blems/story-e6frg8zx-1225999794337

"Mr Joyce said yesterday he intended to arrest a long-term decline in Qantas International's market share from 42 per cent in 1977 to less than 20 per cent today."
How many airlines were serving Australia in 1977? There were no middle-eastern carriers, infact only the Euro carriers, LH, KL, AZ, JAT, BA, in addition to the standard SE Asian carriers were serving the Kangaroo routes. By the early late 80's early 90's most of the Euro carriers pulled out. Leaving only SQ, TG, MH, CX as the major players. With the influx of the middle eastern carriers in the last 10 years, naturally your market share will fall, this has happened to all the other airlines as well. You can't expect to retain your market share when there are more and more airlines flying to your destinations.



Welcome aboard Malaysia Airlines! Winner of Best Cabin Staff 2001,2002,2003,2004,2007,2009,2012
25 Lufthansa : And offering direct one stop service rather than 2 stop service!
26 TN486 : well stated, i certainly agree with you on that statement, even the leprachaun agrees with you
27 jetfuel : Some years ago QF came to me the shareholder asking/begging for more money based on fleet replacement and expansion. I gave generously. I have seen n
28 DLPMMM : If they want to arrest their long term decline in marketshare, I would suggest they start with their catering! While I have limited experience flying
29 ADDICT4QF : LOL. You can't be serious?
30 DLPMMM : Yup, I am. I have tried QF 4 times now LAX-SYD in F in the last 3 years, and have been woefully disappointed each and every time by the catering. A d
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