aussie_
Posts: 1600
Joined: Mon Dec 11, 2000 10:39 am

BA Sells 767s - What Does This Mean For Qf?

Tue Dec 11, 2001 7:29 am

According to news reports, BA is to sell 21 767's for £600 million for possible tanker conversion!!

The question is, how does this affect 767s currently leased to Qantas and rumours that QF was going to take a lot more (according to Brad, 2 more are a certainty to replace the 2 AWAS aircraft)??

BA is really struggling...

Any insight would be of interest

 
gkirk
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RE: BA Sells 767s - What Does This Mean For Qf?

Tue Dec 11, 2001 7:48 am

How does this affect the MAN-JFK route?? Possible upgrade to 777???
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ContinentalEWR
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RE: BA Sells 767s - What Does This Mean For Qf?

Tue Dec 11, 2001 7:54 am

BA's 767-300 fleet are getting long in the tooth. Most were delivered to British Airways between 1989 and the early 1990's and were heavily utilized (and probably still are) on short-haul flights to Continental Europe from Heathrow (Milan, Rome, Zurich, Madrid, Frankfurt, to name a few). A few also operate across the Atlantic, from Manchester to JFK and for a time, to CLT, BWI, and PIT (before PIT was axed).

ContinentalEWR
 
Guest

RE: BA Sells 767s - What Does This Mean For Qf?

Tue Dec 11, 2001 7:59 am

The sale won't happen for a long time - if ever (it requires the award of the tanker contract, not due until late next year); and when it does, you can bet that they won't go for £600m - that's equal to $50m per aircraft!

These are 'oddball' aircraft like the DC10-40; very few airlines operate 767s with RR engines. Their current market value is no more than US$10m each - and probably a lot less.
 
Guest

RE: BA Sells 767s - What Does This Mean For Qf?

Tue Dec 11, 2001 10:12 am

"BA's 767-300 fleet are getting long in the tooth. Most were delivered to British Airways between 1989 and the early 1990's and were heavily utilized (and probably still are) on short-haul flights to Continental Europe from Heathrow (Milan, Rome, Zurich, Madrid, Frankfurt, to name a few). A few also operate across the Atlantic, from Manchester to JFK and for a time, to CLT, BWI, and PIT (before PIT was axed)."

I would hardly call the BA B763ERs "long in the tooth", but remember that BA was receiving B763ERs until 1998 or 1999.

-Tom

 
GDB
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 2:17 am

My understanding is that some of the grounded BA 767's will go to Qantas in April, although all of them will first go the the US for storage.
 
manni
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 2:25 am

600 million for 21 aircraft. Ceilidh says that is 50 million an aircraft! Once again his reply does not make sense.
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David_itl
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 2:30 am

I guess they can finally pull the plug on the MAN-JFK route  Wink/being sarcastic Don't think it's very efficient to have just the one long-haul route out of MAN with one aircraft because when it goes tech (which has happened a few times this year), they have to ferry a 767 up for LHR/LGW to fly the service or cancel that day's service. In fact, on one occasion, the replacement 767 (think it was G-BNWV) for G-BNWH also went tech...so the flight had to be cancelled.

David/fogbound MAN
 
wirraway
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 2:34 am

Wed "Sydney Morning Herald":

Time to cut out the luxuries

Qantas is a great asset, but one British Airways can't afford, writes Elizabeth Knight.


That pesky rumour about British Airways selling its 22.5 per cent holding in Qantas just won't go away.

This time The Times in London reignited the story with quite a strong piece yesterday stating that British Airways was considering a £1 billion ($2.79 billion) rights issue to be unveiled in February.

It said that part of the BA restructuring would include selling its stake in Qantas.

The Qantas share price was slapped the second this story appeared on the wires. It closed down 12c at $3.88.

BA chief Rob Eddington earlier this week denied speculative reports in the weekend British press that there would be large job cuts associated with the airline's restructuring.

Qantas just hovers around repeating to analysts BA's official line that it would like to hold on to its Qantas stake.

And this is clearly true. It is one of the most valuable assets on the BA books. It earns money, which is more than can be said for most of the BA's other assets.

In a perfect world - or even in a normal world - this kind of investment is the perfect accessory to the partner relationship between the two airlines.

But Qantas is a luxury BA can ill afford. It's like holding onto the Cartier watch when the children are starving.

So it's no surprise BA is considering both a rights issue and selling its stake in Qantas.

The £400 million sale of the Qantas holding won't go near to getting BA out of its pickle but would help pay interest costs for a while.

Let's not forget, BA is £6.5 billion in debt and just lost $US75 million ($145.8 million) in the quarter.

While it might suit Qantas and BA to dismiss the latest reports as mere speculation, this scenario is entirely plausible.

Qantas doesn't like all this chat because it places an overhang on the stock which will clearly stay around until February when Eddington finishes his review and tells the investment community just how he is going to get BA out of its current mess.

In the meantime, Qantas continues to revel in the misfortunes of the rest of the Australian and overseas aviation industry.

Its information machine doesn't want to appear too cocky about how much money it is making from Ansett's demise but Qantas is probably the only airline in the world whose core profits will rise in the current year.

And moving into the future, Qantas has finally agreed on the launch of its budget airline, Australian Airlines, to start operating around September/October next year.

Ian Myles from Macquarie says Qantas is looking for a cost base 25 per cent below that of its existing airline.

Indeed, it's easier to start a Virgin than compete with one with the existing Qantas cost structure.

The first bit of saving will be increasing the number of seats on the plane. The next trick is to cut 20 per cent from staff costs.

Fuel costs should have fallen to a more comfortable level by late next year. Just the time to start a new airline. Of course the idea comes from the European low-cost airlines that have been so successful.

Myles says the Europeans achieve earnings before interest and tax of 25 per cent.

He contends that if one assumes a load factor of 80 to 90 per cent and yields 15 per cent below the normal level of Qantas, the Australian Airlines model could be looking at revenue of $80 million to $90 million. This would add $15 million to $25 million to the Qantas EBIT line.

Of course there would be some cannibalisation of the existing Qantas network, which has a higher yield. But the new airline should theoretically be more profitable because of its higher margin.

This is the time to experiment. Qantas has 90 per cent of the domestic aviation market and because the rest of the industry is in crisis can take advantage of cheaper aircraft and a potentially more flexible workforce.

The move by Chris Corrigan at Lang to take a position in Ansett is a play on reducing the airline's cost base by changing work practices. This was his modus operandi at the waterfront and it has been very profitable. Gaining Ansett assets through Virgin/Lang would be a threat to Qantas but would be less daunting if Qantas could counter the Virgin offer with its own low-cost airline.

Lang remains a long shot but is not yet out of the equation.

 
KWSea
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 2:43 am

I cannot understand why the UK media has it in for BA. There is no doubt that BA are in difficulty-but if BA are in trouble Virgin must be in a deeper mess. Constant reports about how they are too expensive, massive job layoffs, etc, etc. Not a word about Virgin who get 75% of their revenue from the North Atlantic and must be in just as bad shape if not worse.
 
gkirk
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RE: BA Sells 767s - What Does This Mean For Qf?

Wed Dec 12, 2001 3:39 am

If BA sell their stake in QF, could that pave the way for QF to re-start services to MAN???
When you hear the noise of the Tartan Army Boys, we'll be coming down the road!