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Qantas reports first half results, $780 million underlying profit before tax

Wed Feb 20, 2019 9:49 pm

Qantas has announced its half year results for 2018/2019

Highlights include

Underlying Profit Before Tax $780 million, down $179 million
Statutory Profit Before Tax, $735 million down $105 million
Fuel Cost $2 billion, up $416 million (27%)
Net Free Cash Flow $218 milliom
Higher Fuel costs for FY 18/19 to be fully recovered by end of year
QF and JQ Domestic profit of $659 million, up 1%
QF load factors up 1% to 79.6%
JQ load factors 87.8%
QF International EBIT down 60% to $90 million
Loyalty up 4% to $175 million
747 fleet to be reduced to 7 by end of 2018/2019
Project Sunrise remains on track
Announcement of major waste reduction program

https://www.qantasnewsroom.com.au/media ... fuel-bill/

https://www.qantasnewsroom.com.au/media ... o-remarks/

https://www.qantasnewsroom.com.au/media ... ntal-push/
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:02 am

qf789 wrote:
QF load factors up 1% to 79.6%

Just curious what goal QF has for LF?

Well, other than 100%, of course! :-)

How is that viewed relative to a realistic target?

It's hard to find comparables for QF, but here is an article I find interesting.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:34 am

Not a bad result really. Considering some of the next moves we are waiting on from QF - AA JV, more 789, project sunrise and potential 797. Glad to see them investing when the times are good, lounges, checkin etc!

Revelation wrote:
qf789 wrote:
QF load factors up 1% to 79.6%

Just curious what goal QF has for LF?

Well, other than 100%, of course! :-)

How is that viewed relative to a realistic target?

It's hard to find comparables for QF, but here is an article I find interesting.


I actually don’t think 100% loads are ideal, someone once explained it to me (can’t recall specifics) but it puts pressure on your ability to control yields. Ideally 80-85% if where most carriers aim.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:48 am

Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:53 am

qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21

Didn't he say that quite awhile ago?: viewtopic.php?t=1402161

Now where's PER-CDG...?! :D
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:58 am

FA9295 wrote:
qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21

Didn't he say that quite awhile ago?: viewtopic.php?t=1402161

Now where's PER-CDG...?! :D


Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 2:03 am

qf789 wrote:
FA9295 wrote:
qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21

Didn't he say that quite awhile ago?: viewtopic.php?t=1402161

Now where's PER-CDG...?! :D


Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years

Ah, sorry--I missed that part. Thanks for the clarification.

Back on topic; these seem like pretty good numbers for QF. I'm glad that they've finally found an efficient route to make LHR profitable. It's no surprise that it hadn't been profitable with stopovers in SIN and DXB in the past (although they still use SIN today).
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 2:15 am

FA9295 wrote:
qf789 wrote:
FA9295 wrote:
Didn't he say that quite awhile ago?: viewtopic.php?t=1402161

Now where's PER-CDG...?! :D


Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years

Ah, sorry--I missed that part. Thanks for the clarification.

Back on topic; these seem like pretty good numbers for QF. I'm glad that they've finally found an efficient route to make LHR profitable. It's no surprise that it hadn't been profitable with stopovers in SIN and DXB in the past (although they still use SIN today).


If PER-LHR is such a gold-mine, I don't understand why QF don't move an A380 onto it in lieu of the 789. The A380 has the legs to do the route.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 3:15 am

tullamarine wrote:
FA9295 wrote:
qf789 wrote:

Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years

Ah, sorry--I missed that part. Thanks for the clarification.

Back on topic; these seem like pretty good numbers for QF. I'm glad that they've finally found an efficient route to make LHR profitable. It's no surprise that it hadn't been profitable with stopovers in SIN and DXB in the past (although they still use SIN today).


If PER-LHR is such a gold-mine, I don't understand why QF don't move an A380 onto it in lieu of the 789. The A380 has the legs to do the route.



The A380 does not have the range to operate PER-LHR, at least not efficiently. The paper range of 8000nm is sufficient, but this flight is going east-west in one direction against the prevailing wind so paper range is all but meaningless. DFW-SYD is almost 400 nm shorter yet requires significant weight penalties on the westbound flight. PER-LHR would take even more of a hit.

Moreover, Alan Joyce has previously said that 2 787s have lower operating costs than 1 A380. Take those higher costs along with the loss of potential revenue from weight restrictions and you are all but making it impossible to break even.

Finally part of the new found profitability is forcing up yields by reducing capacity. Qantas have about 200 fewer seats per day to LHR than they did 12 months ago. Part of the yield improvement is caused by passengers in Perth paying a premium compared to the non-stop, but QF1/2 average fares also appear to have increased. Moving the route to SIN has had some impact, but the bigger factor is restricting capacity on a network-wide basis. This means that passengers who want to fly Qantas for whatever reason now have fewer seats available, and effectively have to pay a premium to stick with Qantas.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 6:53 am

qf789 wrote:
FA9295 wrote:
qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21

Didn't he say that quite awhile ago?: viewtopic.php?t=1402161

Now where's PER-CDG...?! :D


Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years


PER-CDG is waiting for Perth Airport to pull their head in and play nice with QF if they want it. ;-)

Also interesting that there were no aircraft orders today as I predicted. I'd say you will see them exercise more 787 options at the full year results because QF group will likely need some more widebodies at the end of 2020 / early 2021 when the 744's are retired and the next batch of 6 787's are finished being delivered,
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 7:08 am

tullamarine wrote:
FA9295 wrote:
qf789 wrote:

Not exactly, they have not mentioned previously that they have being losing money to London for the past 9 years

Ah, sorry--I missed that part. Thanks for the clarification.

Back on topic; these seem like pretty good numbers for QF. I'm glad that they've finally found an efficient route to make LHR profitable. It's no surprise that it hadn't been profitable with stopovers in SIN and DXB in the past (although they still use SIN today).


If PER-LHR is such a gold-mine, I don't understand why QF don't move an A380 onto it in lieu of the 789. The A380 has the legs to do the route.


Not without a huge payload penalty.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 7:25 am

qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21


So the question is, is LHR profitable because they moved the SYD-LHR A380 flight to make a stop in SIN instead of DXB or is it because they are making money on the low yielding pax that they are putting on EK's A380's after they downgraded to B787?
This doesn't tell us anything about how "profitable" the B787 flights are, it could just be a fortunate timing for the CEO who is staking his job on this project.

The domestic network looks great but it looks like they can't seem to turn a decent profit on long haul despite putting much more capacity into it than on the domestic network.
It's surprising that VA can't take advantage of this vulnerability. I.e., if they can win a decent market share on domestic routes, QF is going to have nothing left.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 8:08 am

Waterbomber2 wrote:
qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21


So the question is, is LHR profitable because they moved the SYD-LHR A380 flight to make a stop in SIN instead of DXB or is it because they are making money on the low yielding pax that they are putting on EK's A380's after they downgraded to B787?
This doesn't tell us anything about how "profitable" the B787 flights are, it could just be a fortunate timing for the CEO who is staking his job on this project.

The domestic network looks great but it looks like they can't seem to turn a decent profit on long haul despite putting much more capacity into it than on the domestic network.
It's surprising that VA can't take advantage of this vulnerability. I.e., if they can win a decent market share on domestic routes, QF is going to have nothing left.


AJ is already on the record as saying that PER-LHR was profitable from [basically] day one.

As to your other argument, VA's results almost perfectly mirror the trend at Qantas: a very profitable domestic network and a so-so international network (loss making at VA, small profit at QF). VA can realistically never close the gap with QF on the domestic front. They tried and QF fought fire with fire. The overcapacity and fare dumping hurt both airlines, but realistically QF came out the winner as through a combination of aggressive pricing and a renewed focus on customers they had previously taken for granted Qantas held on to the vast majority of lucrative corporate and HVC passengers.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 8:11 am

Waterbomber2 wrote:
qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21


So the question is, is LHR profitable because they moved the SYD-LHR A380 flight to make a stop in SIN instead of DXB or is it because they are making money on the low yielding pax that they are putting on EK's A380's after they downgraded to B787?
This doesn't tell us anything about how "profitable" the B787 flights are, it could just be a fortunate timing for the CEO who is staking his job on this project.

The domestic network looks great but it looks like they can't seem to turn a decent profit on long haul despite putting much more capacity into it than on the domestic network.
It's surprising that VA can't take advantage of this vulnerability. I.e., if they can win a decent market share on domestic routes, QF is going to have nothing left.


They moved to dubai in 2013 so regardless of which transit point they use they were losing money anyway.

I personally believe there just aren’t enough demand to support two 380s to LHR everyday from Sydney and Melbourne, given they aren’t very economical.

By starting PER direct fight to LHR they pretty much created a new market demand instead of taking over demand from Melbourne completely. In other word they cut it the seats available but with more demand than before.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 8:51 am

The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 9:23 am

QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


The rationale is that the Project Sunrise routes will attract a sizeable premium over QF's and other competitor's current 1 stop routes and will attract new passengers on these new non-stops that would've previously taken flights with QF's competitors. The theory is then that the combination of higher yielding premium traffic and higher loads will generate higher returns than the current international business. Of course, these longer non-stop routes have a higher cost base so it's not without risk. But QF has got the performance of PER-LHR to use as part of their overall analysis.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 9:41 am

SYDSpotter wrote:
QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


The rationale is that the Project Sunrise routes will attract a sizeable premium over QF's and other competitor's current 1 stop routes and will attract new passengers on these new non-stops that would've previously taken flights with QF's competitors. The theory is then that the combination of higher yielding premium traffic and higher loads will generate higher returns than the current international business. Of course, these longer non-stop routes have a higher cost base so it's not without risk. But QF has got the performance of PER-LHR to use as part of their overall analysis.


Kangaroo route is very competitive with every man and their dog offering options to get to London. Fares used to be $2000 but were now seeing $800. That’s crazy money for 48 hours of flying. No way Qantas makes money on that and I doubt anyone else is making money on those fares either.

The non stops allow premium pricing - essentially taking the cream. The non stops are about flying Australians, in particular Australian corporates and the QF faithful, to their destinations. These people are willing to pay a premium. There are always those who will stop somewhere with a 10 hour layover to save a few dollars and QF is clear it doesn’t want those pax. The people who do the routes often will pay the premium to save a few hours (and get more time st home with the kids or in the office at the other end).
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 9:47 am

QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


I suspect there were some abnormal operational costs in the last half associated with the introduction of the 787 into the fleet.

Crew training, changes to the route network, setting up of maintenance systems, cost of warehousing spare parts and operational issues associated with flying a new aircraft are all factors that could have affected QF International's bottom line.

For the last couple of years QF International has had a good run. I think this result could be a blip in the statistics.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 9:54 am

"Profit before tax"

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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 9:55 am

qf789 wrote:
Well this is interesting

Alan Joyce has told media that LHR is profitable for the first time since 2010 sine PER-LHR has been introduced

https://twitter.com/chamberlinchris/sta ... 07456?s=21

I don't get it. If you are flying MEL-LHR or SYD-LHR, what is the difference between connecting at DXB or connecting at PER?
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:02 am

All this talk about “profits” but I’ll love to know how much the sale of their catering division contributed to those “profits”.

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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:09 am

redroo wrote:
SYDSpotter wrote:
QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


The rationale is that the Project Sunrise routes will attract a sizeable premium over QF's and other competitor's current 1 stop routes and will attract new passengers on these new non-stops that would've previously taken flights with QF's competitors. The theory is then that the combination of higher yielding premium traffic and higher loads will generate higher returns than the current international business. Of course, these longer non-stop routes have a higher cost base so it's not without risk. But QF has got the performance of PER-LHR to use as part of their overall analysis.


Kangaroo route is very competitive with every man and their dog offering options to get to London. Fares used to be $2000 but were now seeing $800. That’s crazy money for 48 hours of flying. No way Qantas makes money on that and I doubt anyone else is making money on those fares either.

The non stops allow premium pricing - essentially taking the cream. The non stops are about flying Australians, in particular Australian corporates and the QF faithful, to their destinations. These people are willing to pay a premium. There are always those who will stop somewhere with a 10 hour layover to save a few dollars and QF is clear it doesn’t want those pax. The people who do the routes often will pay the premium to save a few hours (and get more time st home with the kids or in the office at the other end).


I should clarify my comment. I completely agree with the merit behind Project Sunrise on routes like SYD/MEL-LHR and SYD-JFK. What I meant was that many on this forum have spoken about dozens of ULH routes and QF ordering 30+ ULH aircraft.

I believe the core routes that are currently one stop will benefit with a ULH aircraft that can do the journey non stop. I just query whether the more fanciful suggestions that get thrown around from time to time could be anything more than just that, fanciful.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:26 am

EK413 wrote:
All this talk about “profits” but I’ll love to know how much the sale of their catering division contributed to those “profits”.

EK413


The net profit/gain on the sale of the catering business was $37m. Curious as to why you chose to put " " around the word profits. Do you believe that the profit is fake or some how inflated? :eyebrow:

KFLLCFII wrote:
"Profit before tax"


Yep statutory profit before tax of $735m and income tax expense of $237m to give a statutory profit (after tax) of $498m for the period. It's pretty straightforward...
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:33 am

QF742 wrote:

I should clarify my comment. I completely agree with the merit behind Project Sunrise on routes like SYD/MEL-LHR and SYD-JFK. What I meant was that many on this forum have spoken about dozens of ULH routes and QF ordering 30+ ULH aircraft.

I believe the core routes that are currently one stop will benefit with a ULH aircraft that can do the journey non stop. I just query whether the more fanciful suggestions that get thrown around from time to time could be anything more than just that, fanciful.


Well I certainly don't think they'll be ordering 30+ ULH aircraft. The only way 30+ ULH will be ordered is if QF order the same type (777X/A350) to one day replace the A380's and/or upgauge the A330's currently plying QF's international routes. The 777X/A350 may be a bit overkill performance wise for Asia/West Coast US, but post the A380, they will offer the highest capacity currently available from Boeing/Airbus.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 11:22 am

QF742 wrote:
This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


Tend to agree. They will mostly replace, maybe grow slightly (still a lot of International carriers with substantially lower cost bases than QF and this won't change)

The core QF International fleet is relatively small globally and in QF terms relatively young
12 A380s - to be refurbed so another 10yrs
8 747s - gone in 18 months
11 787s - 6 more in next 18 months
10 333s - 2003-05 deliveries with new J class. Another 3-5 years.
8 332s (assuming EBM/N get longhaul) - 2009-12 with new J class. Another 10yrs
2-3 737s (excluding NZ aircraft)

So in the next 5 years I'd see maybe
8 ULR aircraft with 6 380s cascaded to Asia to replace 333s and another 6 equivalent LR aircraft to replace the remaining 333s
A few 797s for Indonesian routes, with others for domestic 737 replacements.

In the 5-10 year period you then have another larger order to replace the A380s and 332s.

Domestic needs more Capex $s in the next 5 years.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 11:36 am

travelhound wrote:
QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


I suspect there were some abnormal operational costs in the last half associated with the introduction of the 787 into the fleet.

Crew training, changes to the route network, setting up of maintenance systems, cost of warehousing spare parts and operational issues associated with flying a new aircraft are all factors that could have affected QF International's bottom line.

For the last couple of years QF International has had a good run. I think this result could be a blip in the statistics.


I also wonder how much the 744s are starting to cost, as the fleet shrinks so does the economies of scale for every cost item. Not to mention fuel bill. And whilst they have saved the day several times they are also responsible for some of the disrupts - natural given their age. Not to mention brand impact of the mark 1 slyness. I’m terribly sad to see them go however.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 12:33 pm

SYDSpotter wrote:
QF742 wrote:

I should clarify my comment. I completely agree with the merit behind Project Sunrise on routes like SYD/MEL-LHR and SYD-JFK. What I meant was that many on this forum have spoken about dozens of ULH routes and QF ordering 30+ ULH aircraft.

I believe the core routes that are currently one stop will benefit with a ULH aircraft that can do the journey non stop. I just query whether the more fanciful suggestions that get thrown around from time to time could be anything more than just that, fanciful.


Well I certainly don't think they'll be ordering 30+ ULH aircraft. The only way 30+ ULH will be ordered is if QF order the same type (777X/A350) to one day replace the A380's and/or upgauge the A330's currently plying QF's international routes.


Net Free Cash Flow of $218 million doesn't give them a lot of flexibility to splash out big new aircraft orders. It shows they're already reinvesting most of what they make. How many big premium routes does anybody really think exist for Project Sunrise? LHR works, so they say. Do you think even three out of four on FCO/FRA/AMS/CDG?
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 12:40 pm

MIflyer12 wrote:
SYDSpotter wrote:
QF742 wrote:

I should clarify my comment. I completely agree with the merit behind Project Sunrise on routes like SYD/MEL-LHR and SYD-JFK. What I meant was that many on this forum have spoken about dozens of ULH routes and QF ordering 30+ ULH aircraft.

I believe the core routes that are currently one stop will benefit with a ULH aircraft that can do the journey non stop. I just query whether the more fanciful suggestions that get thrown around from time to time could be anything more than just that, fanciful.


Well I certainly don't think they'll be ordering 30+ ULH aircraft. The only way 30+ ULH will be ordered is if QF order the same type (777X/A350) to one day replace the A380's and/or upgauge the A330's currently plying QF's international routes.


Net Free Cash Flow of $218 million doesn't give them a lot of flexibility to splash out big new aircraft orders. It shows they're already reinvesting most of what they make. How many big premium routes does anybody really think exist for Project Sunrise? LHR works, so they say. Do you think even three out of four on FCO/FRA/AMS/CDG?


Project Sunrise is mainly for SYD/MEL to LHR and SYD-JFK. While there may be more frames order to cover the likes of DFW, ORD and QF has also indicated that PER-LHR could be upgraded to 777X/A350ULR by 2022. Other routes to Europe will be operated by 787-9 and it will more likely it will be only 2 of 4, both CDG and FRA only operating via PER, FCO will be codeshare via EK, while AMS will be codeshare via KL/EK
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 12:48 pm

moa999 wrote:
QF742 wrote:
This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


Tend to agree. They will mostly replace, maybe grow slightly (still a lot of International carriers with substantially lower cost bases than QF and this won't change)

The core QF International fleet is relatively small globally and in QF terms relatively young
12 A380s - to be refurbed so another 10yrs
8 747s - gone in 18 months
11 787s - 6 more in next 18 months
10 333s - 2003-05 deliveries with new J class. Another 3-5 years.
8 332s (assuming EBM/N get longhaul) - 2009-12 with new J class. Another 10yrs
2-3 737s (excluding NZ aircraft)

So in the next 5 years I'd see maybe
8 ULR aircraft with 6 380s cascaded to Asia to replace 333s and another 6 equivalent LR aircraft to replace the remaining 333s
A few 797s for Indonesian routes, with others for domestic 737 replacements.

In the 5-10 year period you then have another larger order to replace the A380s and 332s.

Domestic needs more Capex $s in the next 5 years.
Its last new aircraft was RetroRoo in 2014, and the earliest post 9/11 737s are rapidly heading to their 20th birthday.


There are only 8 789's in the fleet not 11, perhaps you are thinking of JQ instead

QF has previously indicated that the 787-10 may replace the A333's which would also provide a 10% capacity increase based on other airlines who have ordered it so far

Essentially once the Project Sunrise aircraft come online, it will free up only 2 A388's, both SYD and MEL to SIN will remain A388, those 2 A388's could be used to SFO from SYD or they could be used into Asia
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 12:52 pm

If the A380 isn't profitable from the East Coast to London via SIN/DXB, would the 787 be a better fit? Obviously a lot less seats but with a short layover I don't see how it's much different to SYD-PER-LHR. AJ has stated 2 787s are more economical than 1 A380.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 1:09 pm

SYDSpotter wrote:
QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


The rationale is that the Project Sunrise routes will attract a sizeable premium over QF's and other competitor's current 1 stop routes and will attract new passengers on these new non-stops that would've previously taken flights with QF's competitors. The theory is then that the combination of higher yielding premium traffic and higher loads will generate higher returns than the current international business. Of course, these longer non-stop routes have a higher cost base so it's not without risk. But QF has got the performance of PER-LHR to use as part of their overall analysis.

The part of attracting customers who would have taken QF's competition needs to be emphasized.

If one is doing a one stop to LHR or JFK, there is substantial competition. Just as flying to DFW helped yeilds, so will flying directly to JFK/LHR.

These results show long haul from Australia is very competitive and low profit. To thrive long term, QF must differentiate itself. I'm happy PER-LHR is such a success. I find connections stressful as I'm not a retired person who has spare time to miss a meeting or can return late back to work.

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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 2:17 pm

caaardiff wrote:
If the A380 isn't profitable from the East Coast to London via SIN/DXB, would the 787 be a better fit? Obviously a lot less seats but with a short layover I don't see how it's much different to SYD-PER-LHR. AJ has stated 2 787s are more economical than 1 A380.


Solely on operating costs.. I suspect that's right But I think the context of that statement was why doesn't QF order more A380s.

Post Sunrise order QF will in effect have a surplus of owned, mostly depreciated A380s. If they can fill them, all in the costs will be much lower on the A380 versus two new 787s.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:30 pm

caaardiff wrote:
If the A380 isn't profitable from the East Coast to London via SIN/DXB, would the 787 be a better fit? Obviously a lot less seats but with a short layover I don't see how it's much different to SYD-PER-LHR. AJ has stated 2 787s are more economical than 1 A380.


It seems one 380 SYD-SIN-LHR, and one 789 MEL-PER-LHR has now made LHR profitable. So we can’t say the 380 one stop isn’t profitable. It was the two 380s a day that was too much. I think it’s too complex with a hub in SIN and multiple fleets for us armchair CEOs to break down without the data.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 10:34 pm

qf789 wrote:
moa999 wrote:
QF742 wrote:
This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


Tend to agree. They will mostly replace, maybe grow slightly (still a lot of International carriers with substantially lower cost bases than QF and this won't change)

The core QF International fleet is relatively small globally and in QF terms relatively young
12 A380s - to be refurbed so another 10yrs
8 747s - gone in 18 months
11 787s - 6 more in next 18 months
10 333s - 2003-05 deliveries with new J class. Another 3-5 years.
8 332s (assuming EBM/N get longhaul) - 2009-12 with new J class. Another 10yrs
2-3 737s (excluding NZ aircraft)

So in the next 5 years I'd see maybe
8 ULR aircraft with 6 380s cascaded to Asia to replace 333s and another 6 equivalent LR aircraft to replace the remaining 333s
A few 797s for Indonesian routes, with others for domestic 737 replacements.

In the 5-10 year period you then have another larger order to replace the A380s and 332s.

Domestic needs more Capex $s in the next 5 years.
Its last new aircraft was RetroRoo in 2014, and the earliest post 9/11 737s are rapidly heading to their 20th birthday.


There are only 8 789's in the fleet not 11, perhaps you are thinking of JQ instead

QF has previously indicated that the 787-10 may replace the A333's which would also provide a 10% capacity increase based on other airlines who have ordered it so far

Essentially once the Project Sunrise aircraft come online, it will free up only 2 A388's, both SYD and MEL to SIN will remain A388, those 2 A388's could be used to SFO from SYD or they could be used into Asia


787-10 would make sense to replace the A333, and 797 to replace both international and domestic 332s. I feel QF need a widebody to maximise domestic ustilisation with quick turns.

I do hope we see QF go for the 350 combo personally. The 77X just seem too heavy when not being used for ULR into Asia or LAX.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Thu Feb 21, 2019 11:07 pm

lightsaber wrote:
SYDSpotter wrote:
QF742 wrote:
The most interesting aspect of QF’s results (and previous results) is that the international business profit margin must be quite tight. Costs to run long haul flights (which Australia is disproportionally exposed to) are expensive. This is why I feel people in this forum generally are being led astray with assertions about how Qantas are going to spend billions on project sunrise aircraft flying multiple city pairs. Yes they will order a few for a select few routes, but I don’t see how the airline could justify to shareholders splashing out on anything excessive for such little return that the international business provides. Happy to be corrected if my analysis here is wrong.


The rationale is that the Project Sunrise routes will attract a sizeable premium over QF's and other competitor's current 1 stop routes and will attract new passengers on these new non-stops that would've previously taken flights with QF's competitors. The theory is then that the combination of higher yielding premium traffic and higher loads will generate higher returns than the current international business. Of course, these longer non-stop routes have a higher cost base so it's not without risk. But QF has got the performance of PER-LHR to use as part of their overall analysis.

The part of attracting customers who would have taken QF's competition needs to be emphasized.

If one is doing a one stop to LHR or JFK, there is substantial competition. Just as flying to DFW helped yeilds, so will flying directly to JFK/LHR.

These results show long haul from Australia is very competitive and low profit. To thrive long term, QF must differentiate itself. I'm happy PER-LHR is such a success. I find connections stressful as I'm not a retired person who has spare time to miss a meeting or can return late back to work.

Lightsaber



Nicely put lightsaber.

The differentiator for QF will be the only airline to offer non stop service to Australia on the LHR and JFK routes. This will attracts all the corporates who will gladly pay more to leave later and spend less time travelling.

Connections are stressful and a waste of time. Everyone is different however I’ve done the kanagaroo loads of times. As soon as I land in DXB or SIN I’m wanting to get back on the plane and on my way. It’s just a waste of time.

A non stop to LHR would enable you to leave Sydney closer to 5 or 6pm instead of 3 or 4pm. Almost a full day at the office or more time with the kids on a Sunday. Don’t know what they’re going to do about the return as it already leaves at 10pm.
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Fri Feb 22, 2019 2:01 am

redroo wrote:

The differentiator for QF will be the only airline to offer non stop service to Australia on the LHR and JFK routes. This will attracts all the corporates who will gladly pay more to leave later and spend less time travelling.

Connections are stressful and a waste of time. Everyone is different however I’ve done the kanagaroo loads of times. As soon as I land in DXB or SIN I’m wanting to get back on the plane and on my way. It’s just a waste of time.

A non stop to LHR would enable you to leave Sydney closer to 5 or 6pm instead of 3 or 4pm. Almost a full day at the office or more time with the kids on a Sunday. Don’t know what they’re going to do about the return as it already leaves at 10pm.

QF still have two middle of the day slots at LHR [although at least one is leased out, I believe], that put you into SYD in the early evening with the SIN stop so non stop would get you there late afternoon or earlier evening. Pretty reasonable timings

Gemuser
 
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Re: Qantas reports first half results, $780 million underlying profit before tax

Fri Feb 22, 2019 2:19 am

Gemuser wrote:
redroo wrote:

The differentiator for QF will be the only airline to offer non stop service to Australia on the LHR and JFK routes. This will attracts all the corporates who will gladly pay more to leave later and spend less time travelling.

Connections are stressful and a waste of time. Everyone is different however I’ve done the kanagaroo loads of times. As soon as I land in DXB or SIN I’m wanting to get back on the plane and on my way. It’s just a waste of time.

A non stop to LHR would enable you to leave Sydney closer to 5 or 6pm instead of 3 or 4pm. Almost a full day at the office or more time with the kids on a Sunday. Don’t know what they’re going to do about the return as it already leaves at 10pm.

QF still have two middle of the day slots at LHR [although at least one is leased out, I believe], that put you into SYD in the early evening with the SIN stop so non stop would get you there late afternoon or earlier evening. Pretty reasonable timings

Gemuser


Sounds about right during the NW the current QF10 leaves LHR at around 1150 GMT and arrives at PER around 1200 AWST. If you account for about three extra hours flying time and three hours time difference during DST that gets you into SYD around 1800 AEDT. Not sure about the NS when LHR is on BST and SYD on AEST.
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Re: Qantas reports first half results, $780 million underlying profit before tax

Fri Feb 22, 2019 2:16 pm

MIflyer12 wrote:
Net Free Cash Flow of $218 million doesn't give them a lot of flexibility to splash out big new aircraft orders. It shows they're already reinvesting most of what they make. How many big premium routes does anybody really think exist for Project Sunrise? LHR works, so they say. Do you think even three out of four on FCO/FRA/AMS/CDG?


It is explained why that is so in the results. They took advantage of advantageous fuel prices to lock in hedging for most of the next financial year early, affecting this. Nothing to see here.
I do enjoy a spot of flying, especially when it's not in economy!

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