Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
DLNZ
Topic Author
Posts: 28
Joined: Sat Jul 02, 2011 10:58 am

QF FY2010/11 Profit Up 46% To AUD$552m

Tue Aug 23, 2011 11:35 pm

QF have released their year end results for FY2010/11, with an underlying PBT of AUD$552m

http://www.asx.com.au/asxpdf/20110824/pdf/420l5qt1tz8zyp.pdf

Confirmation of the route & fleet plans as announced last week.

Interesting that QF load factor finished higher than that of JQ for the year. A $200m loss on QF international is offset by an overall $228m profit for QF mainline. Full credit to the domestic operation.
 
AirNiugini
Posts: 277
Joined: Tue Mar 09, 2010 9:41 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 5:06 am

Not too shabby at all..

Question, if profit before tax is $552m, and the tax rate is something like 30% why is the overall profit $228m? What am I missing?

Cheers

Matt (non-accountant)
Its time to fly!
 
cloudyapple
Posts: 1261
Joined: Sun Jul 24, 2005 7:01 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 5:53 am

Quoting airniugini (Reply 1):
What am I missing?

Yes. You missed Page 12 of the media release.
A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
 
User avatar
Zkpilot
Posts: 4521
Joined: Wed Mar 08, 2006 8:21 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 2:00 pm

Quoting dlnz (Thread starter):
Interesting that QF load factor finished higher than that of JQ for the year. A $200m loss on QF international is offset by an overall $228m profit for QF mainline. Full credit to the domestic operation.

Interesting is the right word. Accurate is not the right word. That said domestic is doing a good job. It's a pity that international is not getting the recognition it deserves as a result of clever accounting. Hence why Senator Xenophon is launching an equiry.

[Edited 2011-08-24 07:00:44]
64 types. 45 countries. 24 airlines.
 
Panman
Posts: 603
Joined: Mon Aug 09, 1999 8:25 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 6:34 pm

They needed to justify the cuts to Qantas International, so of course they are going to blame losses on the international arm....

pAnmAn
 
DLNZ
Topic Author
Posts: 28
Joined: Sat Jul 02, 2011 10:58 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 8:50 pm

Quoting airniugini (Reply 1):
Question, if profit before tax is $552m, and the tax rate is something like 30% why is the overall profit $228m? What am I missing?

To clarify (from another non-accountant!), the EBIT (earnings before income tax) is expressed by company division, with the $552m figure the overall for the Qantas Group:

QF Mainline - $228m
Qantas Frequent Flyer - $342m
Jetstar - $169m
Qantas Freight - $62m

Financing and corporate costs are then deducted to make the underlying PBIT of $552m

These figures are then normalised and subjected to tax, giving a profit after tax for the group of $249m

Cheers.
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 10:01 pm

Did I see Mr Joyce on C9 news last night say something like this:

“we’ve a hole in our long haul fleet and leasing is a viable option to cover that”

What does that mean??? What is the significant hole in their long haul fleet? The 77W?
 
AirNiugini
Posts: 277
Joined: Tue Mar 09, 2010 9:41 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 10:43 pm

Quoting dlnz (Reply 5):

Arrgghh That makes more sense... Thanks mate.
Its time to fly!
 
DLNZ
Topic Author
Posts: 28
Joined: Sat Jul 02, 2011 10:58 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 10:43 pm

Quoting qfa787380 (Reply 6):
we’ve a hole in our long haul fleet and leasing is a viable option to cover that”

What does that mean??? What is the significant hole in their long haul fleet?

Without digressing into another 'why didn't QF order 777s' thread, quite clearly the carrier has and will continue to have a capacity gap between A333/787 and 744/A388 sized aircraft.

Many airlines have plugged that gap with A340s, and many more with 77Ws. But I digress....
 
Airvan00
Posts: 236
Joined: Thu Oct 30, 2008 1:06 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 11:03 pm

Quoting Zkpilot (Reply 3):

Interesting is the right word. Accurate is not the right word. That said domestic is doing a good job. It's a pity that international is not getting the recognition it deserves as a result of clever accounting.

Well, you then would be a supporter of breaking up the company into its component parts and then we would see the true picture.
http://www.smh.com.au/business/a-tak...just-might-fly-20110824-1jae5.html
 
aaexecplat
Posts: 511
Joined: Tue Sep 29, 2009 2:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 11:43 pm

It's funny that there is so much fuss made about QF intl losing millions when the aggregate company is making a half billion dollar fiscal year profit. Surely someone at QF understands that the intl flight carry feed for the domestic ops, right? So if I mess too much with the intl routes, I might make less money with QF Aus, right?
 
User avatar
Zkpilot
Posts: 4521
Joined: Wed Mar 08, 2006 8:21 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 11:56 pm

Quoting Airvan00 (Reply 9):
Well, you then would be a supporter of breaking up the company into its component parts and then we would see the true picture.

Quite the opposite if you are talking about selling parts of to private equity etc.
But I would like to see an end to JQ being subsidized by QF and for Qantas (company) to blame QF for having poor performance...
64 types. 45 countries. 24 airlines.
 
Airvan00
Posts: 236
Joined: Thu Oct 30, 2008 1:06 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Wed Aug 24, 2011 11:56 pm

Quoting AAExecPlat (Reply 10):
Surely someone at QF understands that the intl flight carry feed for the domestic ops, right?

Probably the other way around. Unlike in the competitive scene in the US, Qantas domestic is the dominant player and garners feed from many international carriers and alliances. Qantas International is in a completely different competitive environment.
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 12:02 am

Quoting Panman (Reply 4):
They needed to justify the cuts to Qantas International, so of course they are going to blame losses on the international arm....

I think that there is no doubt that QF International is losing money - they wouldn't be scaling back if it wasn't. Of course you're correct when you say that we cannot trust the figures that have been out though.

Quoting qfa787380 (Reply 6):
What does that mean??? What is the significant hole in their long haul fleet? The 77W?

No. I wouldn't put money on it happening, but if anything it would be 77Ls to hold the fort until the 789s arrive.

Quoting AAExecPlat (Reply 10):
So if I mess too much with the intl routes, I might make less money with QF Aus, right?

The impact would be a lot less than the supposedly $200 million losses that Intl are causing. Overall profits would rise (though they're never going to totally stop Intl.)
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 12:18 am

Quoting qf002 (Reply 13):
No. I wouldn't put money on it happening, but if anything it would be 77Ls to hold the fort until the 789s arrive.

I hope you are joking because it is ludicrous to suggest that QF would get 77Ls in place of 77Ws, if they ever got 777s.
They could get both but even that is highly unlikely. The 77W has trans-pacific range so why would they need the 77L?
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 1:17 am

Quoting qfa787380 (Reply 14):
I hope you are joking because it is ludicrous to suggest that QF would get 77Ls in place of 77Ws, if they ever got 777s.
They could get both but even that is highly unlikely. The 77W has trans-pacific range so why would they need the 77L?

The comment was that there is a 'hole' in the fleet as of today, and that they would consider plugging it with leases. The 77W doesn't fill any hole - that segment is handled by the 747 (albeit with a slightly lower range). The hole in the fleet is a mid-size long range aircraft (ie what the B789 will be in their fleet), and that is the 77L. A 77W would add nothing to the fleet, whereas a 77L would allow them to start expanding with smaller long range aircraft now, then massively improve efficiency (and hence profits) as the B789s arrive.

Of course I doubt that 777s are going to happen reegardless. A few A332 HGW would serve to allow limited expansion in the smaller segment for now, and they could also be considering A333s if they want to do more Australia - Asia flights. Are there any 788s going to leasing companies that are unaccounted for? If they're early-ish slots then QF might be looking to increase their 788 fleet beyond the initial 15 frames.
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 1:31 am

Quoting qf002 (Reply 15):
The comment was that there is a 'hole' in the fleet as of today, and that they would consider plugging it with leases. The 77W doesn't fill any hole - that segment is handled by the 747 (albeit with a slightly lower range). The hole in the fleet is a mid-size long range aircraft (ie what the B789 will be in their fleet), and that is the 77L. A 77W would add nothing to the fleet, whereas a 77L would allow them to start expanding with smaller long range aircraft now, then massively improve efficiency (and hence profits) as the B789s arrive.

Sorry but that is just plain wrong. The hole is caused by 744 retirements and 380 deferrals. This is 77W territory. The 332/333 are doing the job until the 787s arrive. I don't believe any 77Ls are up for lease at the moment but GECAS ordered 8 77Ws this year and there whereabouts are not known at this stage. GECAS has a history of ordering planes it already has homes for. I have no idea who these GECAS 77Ws are for but it is a thought. Additionally, they have 2 748Fs on order and QF have been rumoured to be sniffing around for some dedicated large freighters.
I will agree that even though it seems the case for the 777 at QF is strong, I still wouldn't be holding my breath for it to happen.
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 1:41 am

Quoting dlnz (Reply 5):
the EBIT (earnings before income tax) is

maybe it's different in new zealand, but in Australia EBIT means Earnings Before Interest and Tax,
soooo... that figure doesn't include your finance charges. And You have to pay your interest on
your loans, the bank calls them in very quickly if you don't (yes i know there are some forms where it can be deferred but the cost still needs to be taken into account)

Now a lot of you are going to think $500 million is a HUGE amazing massive result. Well I'm gonna rain on
your parade here and tell you it's actually a crap result by most companies standards.

Give me a second, i'm just gonna pull some figures, at a rather basic level to show you all way. BTW just for
the record I'm not an accountant, but I do hold a Bachelor of Economics so I can certainly play the role of
analyst. But we won't get too complicated on here now, lets just look at the basics, the way you would if
its a small business. We dont have the internal data anyway, so we are just gonna have to look at the general stuff.

To be continued in a minute when i pull up the figures!
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 1:53 am

Firstly, lets just look at the income statement. We won't worry about 'what' it took to earn this income,
rather just what the income itself looks like.

Our total revenue taken in from all groups including frieght and frequent flyer
comes to : $14 894 m, so to keep it easy lets just say $14.9 billion. The expenses,
come to $14.25 b leaving us with an EBIT 644 Million. Now one has to pay their
interest charges in order to stay in business... so just as if we were running a small restaurant
or hair dressers lets pay the bank our interest of 92 Million when were are looking at our
back of the envelope calculations. That leaves us with $552 Million.

So if we take $552 Million and divide it by $14.9 billion, that gives us a profit margin of Just
3.7%. In other words folks, if I have a 767-300 in domestic configuration of about 250 seats,
(assuming its full) just 9 of those seats deliver the profit!!!!! Think about that for a second!
In reality, since the frequent flyer program, through sales of the points to companies like
woolworths also brings in a big chunk of revenue its slightly less than that!
Of course, this is a system wide figure. if we were talking a domestic flight it would be higher, as there
is no doubt QF domestic is more profitable then QF international. How much so we can't say without
more information.

So that's income. A 3.7% margin doesnt give you much room for error.
Next we will look at what kind of return on investment it generated.

[Edited 2011-08-24 19:50:07]
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 2:45 am

Return on Investment:

Once again we're gonna look at it like a small business, for the purpose of making it
easy for everybody to understand and to give a 'general' idea of what is happening.
Back of the envelope stuff again.

If you go to page 11 of the Preliminary final report, you will find the Balance Sheet.

On it we see QF has a total Asset base of about $20.8 billion.
Now of that, part of it is cash reserves, we're gonna ignore that for a moment,
(it amounts to about 3.4 billion) but as any small business manager knows, Cash is King,
and without cash on hand to pay suppliers, even a profitable business can come unstuck simply
because it has a cash flow problem and cant pay its bills when they come in even if it would work
out to be a profitable business at the end of the year. So for that reason we will include it as part of the asset
base. (and it should be, as its a requirement of running a business )

Now lets remove the liabilities, all $14.7 billion ( stuff like aircraft leases, other leased equipment/buildings, prepaid flights, basically all you're debt/things you owe other parties) And that leaves us with an equity base, what the shareholders own, of just $6.15 billion. This figure is important because its the basis of everything. It will determine
how much the company can borrow, how many aircraft leases it can support etc. And ultimately the goal of being in business is to grow this figure.

So, to make our $552 million, we had to employ $20.8 Billion worth of Assets, of which we own $6.15 billion.
So our return on our total Asset base employed, is just 2.65%
If we look at the shareholders equity, that return is 8.98%. Which is significantly better, but it took a lot
of debt to boost it to that figure. THIS IS THE BIG POINT. Right now there are people going to be running
around the place saying "OMG they rolling in cash they made 500 million yada yada yada"

So just to give you all some stuff to go by, the National Australia Bank current rate of a 12 month
term deposit is 5.6%. If we go up to 60 months we can get 6% so lets just use 6% because its
a slightly easier number to work with.

If i took the entire QF asset base, and stuck it in the bank in a term deposit instead of flying, I would
have made a profit of $1.248 Billion dollars. Of course that is an over simplification, But it puts that $552
million back in perspective. If i were starting a business... any business... and it took x amount of assets
and you told me my return would be less then sticking my cash in a term deposit, my obvious thinking
would be "why bother do it? I can stick my cash in the bank and earn more for doing absolutely nothing".

There is however an upside. If things can be improved, and higher profit margins achieved, with the high level of debt
employed, profits can very quickly skyrocket and we saw this at United and American in the late 1990s during the dot.com era. (keep an eye on Delta Air Lines, with its strategy of snapping up MD90s etc, when the USA improves so Delta's shareprice bigtime) So to conclude, the 8.9% or so return the shareholders are getting on their equity base isn't bad, but its hardly impressive and takes a lot of debt to get it. The return on the overall asset base employed is very underwhelming, and the margins this business operates in are quite thin, meaning not much room for error.

If you wanna look at something more impressive look at BHP. A quick look at google finance shows its got a return on Assets of 22.8 % (Q4 '10) and because doesnt take anywhere near the debt to do it, A return on the shareholders equity of 40% (if they borrowed like QF did and assuming could expand to use it all you'ld be talking probably over 100%!!!) Let's not even look at a compnay like Apple or Google. And that concludes my 'small business 101' class on why QF's profit isn't impressive thing and why they're not all 'greedy capitalist pigs' just in it to make a forturne while everybody else suffers. Its a step in the right direction for sure. But its nothing to get overly excited about.

[Edited 2011-08-24 19:55:58]
 
QFA005
Posts: 1
Joined: Sat Jul 09, 2011 3:07 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 2:58 am

Quoting Zkpilot (Reply 3):

As a publicly listed company it's actually against the law for Qantas to mis-represent it's earnings and say that international is losing $200ml if it really isn't. That applies to any company in the ASX. If they are misrepresenting the figures management could all go to jail.

Looking at how much capacity has been flooded into the Australian market from international carriers I wouldn't be too surprised that QF international actually is losing bucket-loads, especially on the LHR routes, hence the cuts there.

[Edited 2011-08-24 20:46:36]
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 3:15 am

Quoting QFA005 (Reply 20):
Looking at how much capacity has been flooded into the Australian market from international carriers I wouldn't be too surprised that QF international actually is losing bucket-loads, especially on the LHR routes, hence the cuts there.

A lot of staff just see bum's on seats and think 'there is no way this could be losing money' seeing just about every seat full all the time. What they fail to realise is with a very fine profit margin you can have an aircraft 100% full and still lose money.
 
DLNZ
Topic Author
Posts: 28
Joined: Sat Jul 02, 2011 10:58 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 3:20 am

Quoting Lufthansa (Reply 17):
but in Australia EBIT means Earnings Before Interest and Tax,
soooo... that figure doesn't include your finance charges. And You have to pay your interest on
your loans,

Indeed, thanks for the correction, and no I don't believe it is different in NZL. I had included the financing costs in this statement:

Quoting dlnz (Reply 5):
Financing and corporate costs are then deducted to make the underlying PBIT of $552m

Thanks for the effort on the remainder of your posts, very interesting reading and much of it spot on. Certainly corroborates with general data showing the industry as a whole running some of the lowest margins of any industry. Perhaps the lowest?
 
User avatar
EK413
Posts: 5540
Joined: Sat Nov 29, 2003 3:11 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 3:24 am

Quoting qfa787380 (Reply 6):
What is the significant hole in their long haul fleet? The 77W?

Hit the nail in the head!

Quoting AAExecPlat (Reply 10):
It's funny that there is so much fuss made about QF intl losing millions when the aggregate company is making a half billion dollar fiscal year profit. Surely someone at QF understands that the intl flight carry feed for the domestic ops, right? So if I mess too much with the intl routes, I might make less money with QF Aus, right?

QF had this missile hitting there turf well over 8-9 years ago when the aggressive carrier EK commenced services followed by EY... The Asian carriers followed and Mr GD and the board sat back and didn't blink...
Now QF Int. is suffering operating an aged B744 fleet when QF could've been operating a fresh fleet of B77W's to complement the NEW A380 fleet...
My 0.02 cents worth but QF would be a greater position had they done something about Int. operations 10 years ago!

EK413
Good evening, ladies and gentlemen. We are tonight’s entertainment!
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 3:47 am

Quoting EK413 (Reply 23):
Now QF Int. is suffering operating an aged B744 fleet when QF could've been operating a fresh fleet of B77W's to complement the NEW A380 fleet...

Not quite so sure about that. BA seems to be able to compete with the 744.

I think a bigger mistake was not getting the 772 and allowing the likes of thai airways, Cathay Pacific and Singapore Air to expand heavily into european cities in the 1990s. EK would still pose a problem, but it was the mid to late 990s expansion of asian carriers that stuff up QF's early 90s plan to send everybody to LHR. That's been a problem for a very long time. EK has just made it siginficantly worse and allowed significantly more 1 stop options.
 
User avatar
Zkpilot
Posts: 4521
Joined: Wed Mar 08, 2006 8:21 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 3:58 am

Quoting QFA005 (Reply 20):
As a publicly listen company it's actually against the law for Qantas to mis-represent it's earnings and say that international is losing $200ml if it really isn't. That applies to any company in the ASX. If they are misrepresenting the figures management could all go to jail.

Which is exactly the reason why there is a LOT of interest in what management and the board are saying at the moment. It is also the reason why the likes of Senator Xenophon are looking into Qantas and why there is a good chance ASIC/ASX will be doing the same also.
64 types. 45 countries. 24 airlines.
 
Gemuser
Posts: 5083
Joined: Mon Nov 24, 2003 12:07 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 4:41 am

Quoting Zkpilot (Reply 25):
Which is exactly the reason why there is a LOT of interest in what management and the board are saying at the moment. It is also the reason why the likes of Senator Xenophon are looking into Qantas and why there is a good chance ASIC/ASX will be doing the same also.

Good luck to all of them, but I will be very surprised if QF can't prove, using their offical accounts and the Australian Accounting Standards, that all their statement are correct. Otherwise they've wasted some very high price help!

Doesn't mean it's the truth mind you, it just proves its legal.

Zkpilot, I know we have clashed over these matters before, but the allocations of costs (which, in the end, is what we are talking about) is basically up to the business, within the accounting standards. I'd be very, very surprised if QF and their internal and external auditors have signed off on these accounts without them complying with all relevant legislative standards. ASIC/ASX will NOT usually question to which division of a company a cost is charged, regarding it as an internal matter, unless there is evidence of illegality. JQ being wholly owned is consolidated within the company, I think.

Gemuser
DC23468910;B72172273373G73873H74374475275376377L77W;A319 320321332333343;BAe146;C402;DHC6;F27;L188;MD80MD85
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 5:13 am

Quoting qfa787380 (Reply 16):
The hole is caused by 744 retirements and 380 deferrals.
Quoting EK413 (Reply 23):
Hit the nail in the head!

That hole remains filled by the 9 744s that are being retained... There have been many breakdowns of where the 13 planes are likely to be used to, and there is no additional need for VLA's in the fleet as it stands...

Quoting EK413 (Reply 23):
Now QF Int. is suffering operating an aged B744 fleet when QF could've been operating a fresh fleet of B77W's to complement the NEW A380 fleet...

But they chose not to. The fact that these are leases shows that they are not a long term solution - they are designed to be a short term cover until additional aircraft arrive. 77W's in the QF fleet would be longer term, and the 'hole' that they would fill is already being filled!!

5 year leases on around 10 77Ls would do wonders for QF. 789s will be here in 2016 and can start replacing them on the routes that the 789s was bought for and improve profitability on them. QF has zero need for a 77W, but they could use a 77L to fill the hole that actually exists in their fleet today.
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 5:19 am

Quoting qf002 (Reply 27):
5 year leases on around 10 77Ls would do wonders for QF. 789s will be here in 2016 and can start replacing them on the routes that the 789s was bought for and improve profitability on them. QF has zero need for a 77W, but they could use a 77L to fill the hole that actually exists in their fleet today.

You do realise that the 77W can fly almost any route a 77L can as well as taking more payload both pax and F? It's an efficiency machine and will clearly outperform the 77L on most sectors. I can't believe you are writing this stuff. The 77W also isn't that much larger than the 77L, so how they have a need for the 77L and not the 77W is completely mystifying to me. If you don't need the range of the 77L(and who does on how many sectors) then clearly you choose the 77W.
 
Gemuser
Posts: 5083
Joined: Mon Nov 24, 2003 12:07 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 5:45 am

Quoting qfa787380 (Reply 28):
You do realise that the 77W can fly almost any route a 77L can as well as taking more payload both pax and F?

Not according to Boeing's web site: B77L=9395nm with 301 pax, B77W=7930nm with 365 pax. Nearly a 1500nm difference. Plus there have been a number of post over time saying that the B77L is more efficient than the B77W on sectors over about 5,000n, ie Trans Pacific.

Gemuser
DC23468910;B72172273373G73873H74374475275376377L77W;A319 320321332333343;BAe146;C402;DHC6;F27;L188;MD80MD85
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:06 am

Quoting gemuser (Reply 29):
Not according to Boeing's web site: B77L=9395nm with 301 pax, B77W=7930nm with 365 pax. Nearly a 1500nm difference. Plus there have been a number of post over time saying that the B77L is more efficient than the B77W on sectors over about 5,000n, ie Trans Pacific.

Please tell me what routes QF would use the 77L on that they couldn't use the 77W on more efficiently. I suspect you will find the 77L range is with extra fuel tanks and there would be a payload hit.
There is a very valid reason for the discrepancy b/w sales figures for the 77W v 77L.

[Edited 2011-08-24 23:22:55]
 
User avatar
zeke
Posts: 15104
Joined: Thu Dec 14, 2006 1:42 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:19 am

Quoting Panman (Reply 4):
They needed to justify the cuts to Qantas International, so of course they are going to blame losses on the international arm....

QF technically does not have an "international arm", all the flying is done by the operations group. Around 70% of the domestic flying is done using equipment and crew that also fly internationally. International operations make up around 20% of the passengers, and 50% of the revenue for Qantas Airways.

Quoting qfa787380 (Reply 6):

What does that mean??? What is the significant hole in their long haul fleet? The 77W?

I do not think so, I think QF will concentrate on expanding markets, meaning Asia.

Quoting Zkpilot (Reply 11):
But I would like to see an end to JQ being subsidized by QF and for Qantas (company) to blame QF for having poor performance...

I think it is the other way around, I think JQ is helping the QF bottom line nicely.

Quoting qf002 (Reply 13):

No. I wouldn't put money on it happening, but if anything it would be 77Ls to hold the fort until the 789s arrive.

I think it will be more A330s.

Quoting qf002 (Reply 15):
The comment was that there is a 'hole' in the fleet as of today, and that they would consider plugging it with leases. The 77W doesn't fill any hole - that segment is handled by the 747 (albeit with a slightly lower range). The hole in the fleet is a mid-size long range aircraft (ie what the B789 will be in their fleet), and that is the 77L. A 77W would add nothing to the fleet, whereas a 77L would allow them to start expanding with smaller long range aircraft now, then massively improve efficiency (and hence profits) as the B789s arrive.

I agree. The hole in the fleet is the replacement for the 767 and expansion of routes intra/inter Asia.

Quoting qfa787380 (Reply 16):

Sorry but that is just plain wrong. The hole is caused by 744 retirements and 380 deferrals.

I think it is due to a truckload of 787s not turning up. The capacity of the 6 A380 deferrals will be taken up with the 9 744s they plan to update.

Quoting QFA005 (Reply 20):
As a publicly listed company it's actually against the law for Qantas to mis-represent it's earnings and say that international is losing $200ml if it really isn't.

Need to keep that whole quote in context, they said they lost 200 million on a 5 billion investment, i.e. if they just put 5 billion into a term deposit they would have earned 200 million more. Often people on here forget the cost of finance when it comes to aircraft purchases. The announcement that they will defer 6 A380s and refurbish 9 744s to me is an indication that they are looking closely at the cost of ownership as a function of the total cost of operating a piece of equipment. The might get away with 100 million to refurbish the 9 744s and they already have a crews trained on type, and they have the spares, engineering training, operating crew trained and simulator facilities. So apart from the refurbishment costs, they have little else to do. Taking delivery of the additional 6 aircraft will cost them in my view another billion dollars, and then they have the additional costs of converting people over from the 744, and the cost of disposing of the 744s.

An airline can run "inefficient" 744s for a lot of years on paper for the cost difference between the purchase of new aircraft and refurbishing aircraft they are paid off. If you also put the 900 million dollar saving into a bank account, it might even cover the cost of the additional fuel burn and still make a little money, or even better use that money in another area of the group that is giving better returns than a bank deposit, hence the indication to obtain another 110 A320s.

People advocating adding a new type that they do not operate have not read the statement, they clearly said the will reduce investment in areas that are underperforming, and increase investment in growth areas.

Quoting Lufthansa (Reply 21):

A lot of staff just see bum's on seats and think 'there is no way this could be losing money' seeing just about every seat full all the time. What they fail to realise is with a very fine profit margin you can have an aircraft 100% full and still lose money.

I do not think QF is bleeding money on the international sectors, just the yields are not that fantastic if the total fixed and variable costs (include the cost of finance) are truly accounted for.

Quoting Lufthansa (Reply 24):

I think a bigger mistake was not getting the 772 and allowing the likes of thai airways, Cathay Pacific and Singapore Air to expand heavily into european cities in the 1990s. EK would still pose a problem, but it was the mid to late 990s expansion of asian carriers that stuff up QF's early 90s plan to send everybody to LHR. That's been a problem for a very long time. EK has just made it siginficantly worse and allowed significantly more 1 stop options.

I do not think that is accurate. Most of EKs expansion on the kangaroo route has been at the expense of SQ/MH/TG, SQ market share into Australia has been declining at almost 1% a year, the CX market share (in %) has almost remained constant (the market has grown). It is trans Tasman routes where EK have taken market share away from QF/NZ.

Quoting qf002 (Reply 27):
That hole remains filled by the 9 744s that are being retained... There have been many breakdowns of where the 13 planes are likely to be used to, and there is no additional need for VLA's in the fleet as it stands...

That also means no need for any 777s.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
User avatar
mariner
Posts: 19473
Joined: Fri Nov 23, 2001 7:29 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:22 am

Quoting zeke (Reply 31):
I think it will be more A330s.

I'd like to see more A330's.  

mariner
aeternum nauta
 
qfa787380
Posts: 178
Joined: Thu Oct 14, 2010 10:49 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:28 am

Quoting zeke (Reply 31):
I do not think so, I think QF will concentrate on expanding markets, meaning Asia.

I actually agree.
[quote=zeke,reply=31]Quoting qf002 (Reply 13):

No. I wouldn't put money on it happening, but if anything it would be 77Ls to hold the fort until the 789s arrive.

I think it will be more A330s.

Quite possibly.

Quoting zeke (Reply 31):
Quoting qfa787380 (Reply 16):

Sorry but that is just plain wrong. The hole is caused by 744 retirements and 380 deferrals.

I think it is due to a truckload of 787s not turning up. The capacity of the 6 A380 deferrals will be taken up with the 9 744s they plan to update.

But they were always keeping those 744s. The 3 newest 744s and the 6 744ERs were always being kept until decade's end.The deferral of the 6 380s is a loss of capacity for 5-6 years. They have also known about the painful 787 delays for a while now and extra 330s have covered partially for this.
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:39 am

I wouldn't mind seeing either more A332s or the 77L.
Although there has been problems with the A345 at current oil prices, mainly
due to the things weight, I wonder if the block fuel burn would really be all that different
to the weight and pax restricted 744 doing the flight, because if it came in at even 10%
less, it would probably be worth leasing just to cover DFW for a few years.

Doesn anybody know how full the 777 line's backlog is? What would be the earliest
if they were after new builds as some sort of deal from boeing for delays, could they get them?
I suspect it wouldn't be very soon.
 
TruemanQLD
Posts: 1346
Joined: Sat Feb 24, 2007 1:09 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:44 am

Quoting Zkpilot (Reply 3):
Interesting is the right word. Accurate is not the right word. That said domestic is doing a good job. It's a pity that international is not getting the recognition it deserves as a result of clever accounting. Hence why Senator Xenophon is launching an equiry.
Quoting Zkpilot (Reply 11):
But I would like to see an end to JQ being subsidized by QF and for Qantas (company) to blame QF for having poor performance...

Oh please, it is all one big conspiracy isnt it? That is ludicrous! I wont pretend that the figure is 100% accurate, but 99% at least. To suggest QF would be fudging the books is plain stupid, as QFA005 says well below:

Quoting QFA005 (Reply 20):
As a publicly listed company it's actually against the law for Qantas to mis-represent it's earnings and say that international is losing $200ml if it really isn't. That applies to any company in the ASX. If they are misrepresenting the figures management could all go to jail.

Looking at how much capacity has been flooded into the Australian market from international carriers I wouldn't be too surprised that QF international actually is losing bucket-loads, especially on the LHR routes, hence the cuts there.

Also, what is wrong with them not leaving JQ to fend for themselves? They have obviously seen a demand for JQ (which has proved to be well founded) and in order to take control of this market straight away, they have helped JQ along. They will make money on their investment in JQ, or else there would be no point. It isnt AJ's little pet hobby of running JQ, the QF board have seen the demand for JQ and have helped the airline grow to its current size. How much have they helped? We will probably never know, but what we do know is the JQ is profitable, as much as you would like to think otherwise. Excellent, Xenophon is launching an enquiry which is going to find very little but somehow the media will manage to turn that very little into a lot. Nonetheless, I would like to see some evidence that QF is majorly fudging its books before you make wild and inaccurate conspiracy theories.
 
User avatar
zeke
Posts: 15104
Joined: Thu Dec 14, 2006 1:42 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 6:52 am

Quoting qfa787380 (Reply 33):
But they were always keeping those 744s. The 3 newest 744s and the 6 744ERs were always being kept until decade's end.

No to my understanding, the announcement to upgrade 9 744s was done last year

http://www.asx.com.au/asxpdf/20100218/pdf/31nrmxw49wbjtm.pdf

The latest announcement changes the configuration again.

I was of the understanding that is also being reported in the media, the A380s were to replace the whole 744 fleet.

"The delivery of the remaining six A380s will coincide with the retirement of the airline's final six Boeing 747ER aircraft, the airline said."

from http://edition.cnn.com/2011/BUSINESS/08/15/qantas.plans/index.html
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
Lufthansa
Posts: 2638
Joined: Thu May 20, 1999 6:04 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 7:06 am

Quoting truemanQLD (Reply 35):
Nonetheless, I would like to see some evidence that QF is majorly fudging its books before you make wild and inaccurate conspiracy theories.

I don't think most people realise just how serious misleading the stockmarket is. And how basically despite going to jail (ask alan bond about that one!) you're prevented from ever running or serving on the board of a company ever again.
Plus any personal money made out of it can be conviscated because its the proceeds of crime. There isn't enough financial education in schools in Australia, and for that matter probably most of the western world, so it's easy to see how otherwise intelligent people can be 'mislead' by this kind of gossip. But the reality of it being true is extremely unlikely.

Quoting zeke (Reply 31):
Most of EKs expansion on the kangaroo route has been at the expense of SQ/MH/TG, SQ market share into Australia has been declining at almost 1% a year, the CX market share (in %) has almost remained constant (the market has grown).

This is of course very true. We know their goal is to grow at the expense of other carriers, this isnt' organic growth and never has been intended to be. But there was a time, before MAS/Thai etc developed their hubs to the present level, where QF could get away with sending 742s to places in europe with less than daily frequency. the move towards proper hub models in asia basically saw this end, but it was also QF management's refusal to buy the DC-10, and then the later 772 that would have served these kinds of cities perfectly. Of course, at the end of the day, the Arabs still would have come in and attempted to grow at EVEYBODY elses expense. But QF may have had more of a presence than it does now. How ever they didnt do it. And they have no hope in hell of serving these distinations unless they either build a hub in asia, or they merge with another company, like say MAS (although i suspect the politics on the malaysian side could be very very messy with this one).
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 7:32 am

Quoting qfa787380 (Reply 28):
You do realise that the 77W can fly almost any route a 77L can as well as taking more payload both pax and F? It's an efficiency machine and will clearly outperform the 77L on most sectors. I can't believe you are writing this stuff. The 77W also isn't that much larger than the 77L, so how they have a need for the 77L and not the 77W is completely mystifying to me. If you don't need the range of the 77L(and who does on how many sectors) then clearly you choose the 77W.

If you only need a plane to carry 250 people then why buy a 350 seat one? That has been the biggest issue for QF in the last 20 years -- the planes they have are too big to run efficiently and profitably on secondary routes. They're not going to go making that mistake again...

Quoting gemuser (Reply 29):
the B77L is more efficient than the B77W on sectors over about 5,000n, ie Trans Pacific.

   and why burn fuel for all that extra weight if you don't need it. Also the 77L would allow them to go DFW-SYD with the confidence that the plane is never going to have to divert because it is short of fuel...

Quoting qfa787380 (Reply 30):
Please tell me what routes QF would use the 77L on that they couldn't use the 77W on more efficiently.

DFW-SYD would be uncertain on a 77W. Also routes which are planned for the 789 but where 350 seats is just too many...

Quoting zeke (Reply 31):
I think it is due to a truckload of 787s not turning up. The capacity of the 6 A380 deferrals will be taken up with the 9 744s they plan to update.

That's actually an essential point I'd overlooked. If they needed VLA capacity then why suddenly deferring deliveries? Obviously they do not see the need for more than 23 large aircraft in their fleet for the next decade.

Quoting mariner (Reply 32):
I'd like to see more A330's.  

Here too! And in Europe as well please!!
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 7:37 am

Quoting gemuser (Reply 26):
Otherwise they've wasted some very high price help!

Doesn't mean it's the truth mind you, it just proves its legal.

Both could well be the case. It is much more difficult to shuffle profits these days. Back in the early 80s, BHP was able to declare a loss and mumble about this that and the other being uneconomic until the taxation department ruled and accounting rules changed. Transfer pricing tends to be frowned upon within companies.

Quoting mariner (Reply 32):
Quoting zeke (Reply 31):
I think it will be more A330s.

I'd like to see more A330's.

So would I. Not that much difference now for many of the QF routes to you know what!

Difficult to see the logic in putting off A380 purchases to conserve capital and then splurge on an aircraft (77W) that AFAIK costs more per seat to fill an hole! Please correct me if that is not the case.
 
United Airline
Posts: 8971
Joined: Wed Jan 10, 2001 5:24 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 8:14 am

See...........

Wonder why are people so worried?
 
CXB77L
Posts: 2613
Joined: Tue Feb 17, 2009 12:18 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 8:49 am

Quoting qfa787380 (Reply 30):
Please tell me what routes QF would use the 77L on that they couldn't use the 77W on more efficiently.

SYD-DFW-SYD. The 77L on paper should easily be able to make that route non-stop. The 77W might struggle. Now that they've committed to flying to DFW, they may as well use the right aircraft for the job.
Boeing 777 fanboy
 
Gemuser
Posts: 5083
Joined: Mon Nov 24, 2003 12:07 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 9:09 am

Quoting Baroque (Reply 39):
Transfer pricing tends to be frowned upon within companies.

Within companies? How does that work? Between companies, even wholly owned ones, I can see it, but within a company? How does that effect tax liability?

Gemuser
DC23468910;B72172273373G73873H74374475275376377L77W;A319 320321332333343;BAe146;C402;DHC6;F27;L188;MD80MD85
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 9:25 am

Quoting gemuser (Reply 42):
How does that effect tax liability?

It could if there were international divisions involved, though I agree that in the Qantas case it wouldn't.
 
Flyingsottsman
Posts: 799
Joined: Mon Oct 25, 2010 12:32 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 11:34 am

Once again another profit made, and still they want to cut costs and make people redundent.

Quoting EK413 (Reply 23):
QF would be a greater position had they done something about Int. operations 10 years ago!

So very true. Now the only words comming out of Mascot now is "oh no, guys what do we do now".
 
81819
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 11:47 am

Quoting zeke (Reply 31):
Quoting qfa787380 (Reply 16):

Sorry but that is just plain wrong. The hole is caused by 744 retirements and 380 deferrals.

I think it is due to a truckload of 787s not turning up. The capacity of the 6 A380 deferrals will be taken up with the 9 744s they plan to update.


I'm having problems trying to make sense of the QF fleet capacity rational.

With the early retirement of four 744's (due to the rationalisation of their route structure?) QF at the end of this year should have around 20-22 active 744's. This means between 2012 and 2018 11-13 744's will be retired. That is a lot capacity.

We know QF have 4 A380's coming so that covers 4-6 744's. They have a truck load of 787's coming, but you would think their main priority for these frames will be replacement of their 767's and expansion of Jetstar.

That leaves capacity of 7-9 744's that will need to be replaced. At a guess I'd suggest they are going to need to invest in new aircraft from the 2015 period forward to replace these 744's. the only other option I can see is a further rationalisation of their network.

... or maybe I am missing something.
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 12:51 pm

Quoting travelhound (Reply 45):
That leaves capacity of 7-9 744's that will need to be replaced. At a guess I'd suggest they are going to need to invest in new aircraft from the 2015 period forward to replace these 744's.

Route cuts. Once you take the 3 frame saving* that they are now making dropping 2 LHR flights, then potentially add destinations like NRT, HKG, DFW, PER, BKK to the list of 787 routes (or domestic A330 in the case of PER) the gap becomes significantly smaller.

If I was running the company I would probably want something bigger than a 789 and smaller than an A380 late this decade/early next once the 350 seat 747s have gone. Enter the A350/B77X for delivery from around 2020.

*Edit -- more actually, since MEL-HKG is going to A333. Probably about 5 frames more efficient now considering SYD-BKK retimings as well.

[Edited 2011-08-25 05:54:33]
 
User avatar
zeke
Posts: 15104
Joined: Thu Dec 14, 2006 1:42 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 12:53 pm

Quoting travelhound (Reply 45):
With the early retirement of four 744's (due to the rationalisation of their route structure?) QF at the end of this year should have around 20-22 active 744's.

I think the 744 fleet will further be reduced to just 9 as the upgrade is finished. I have heard rumours that Express Freight Australia maybe operating some 744 freighters. Wonder if it will be an all GE 744 passenger fleet.

Quoting travelhound (Reply 45):
They have a truck load of 787's coming, but you would think their main priority for these frames will be replacement of their 767's and expansion of Jetstar.

Agreed, still some more A330s for J* to come ?

Quoting travelhound (Reply 45):
the only other option I can see is a further rationalisation of their network.

I think that is the case, been hearing SYD-MNL, BKK-LHR, HKG-LHR, and SYD-EZE all to go as a start.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
qf002
Posts: 3669
Joined: Tue Jul 05, 2011 11:14 am

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 12:57 pm

Quoting zeke (Reply 47):
I think that is the case, been hearing SYD-MNL, BKK-LHR, HKG-LHR, and SYD-EZE all to go as a start.

?? QF already announced that BKK/HKG-LHR are being chopped as of March 25 2012, and EZE is switching to SCL by April next year... They've also said that there will be no further changes to the existing network for now...
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: QF FY2010/11 Profit Up 46% To AUD$552m

Thu Aug 25, 2011 2:13 pm

Quoting gemuser (Reply 42):
Quoting Baroque (Reply 39):
Transfer pricing tends to be frowned upon within companies.

Within companies? How does that work? Between companies, even wholly owned ones, I can see it, but within a company? How does that effect tax liability?

Whoever it was who owned Gove alumina were artists at that and yes, it is mainly of significance in relation to international operations where companies move profit from a high tax country to a low tax jurisdiction. Which is what QF might start to look like now you come to mention it.    But the ATO is alert to shuffling profits so they would keep a sharp lookout on QF even in its present form. It does have operations in a number of countries.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos