Milesdependent
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:17 am

The unions are already damaging the airline. The talk of strikes means I will book Virgin for some upcoming flights, when I would much rather go Qantas. Am sure I am not the only one...
 
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qfvhoqa
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:21 am

Quoting RyanairGuru (Reply 90):
I think NRT will become an A330 destination. While there is definitely volume there, I can see QF pushing more of the inbound leisure market onto the additional JQ services and then raising fares on the SYD-NRT route centred on the "premium" business market.

I'm not so sure - after the Tohoku earthquake/tsunami QF dropped to A330s. However the 744s came back not long after - there must be enough demand for it. Agreed that MEL-NRT will pick up some of the lower yielding Y/Y+ traffic, but is a daily A333 enough for SYD-NRT? Not to mention that it removes Y+ from a market with overnight flights in each direction.

SYD-NRT is ssing need to reduce capacity to NRT.

[Edited 2014-02-26 18:25:45]
 
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EK413
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:23 am

Quoting na (Reply 30):
(I thought the A380s were already deferred some time ago until around 2020 so I dont see that as news really).

I believe the A380's had been deferred until 2016-2017?

Quoting Zkpilot (Reply 49):
At what point does enough become enough and the CEO, upper management and the board get sacked?
During their tenure QF has pretty much not made a profit, it's share price has dropped massively and its competitors have all grown. On the very same day NZ has announced a large jump in profit.

The NZ announcement was perfectly timed wasn't it. Bet any money it was!

Quoting NZ107 (Reply 68):

http://www.ausbt.com.au/qantas-chase...sydney-melbourne-airport-terminals

QF chasing $650m for the SYD and MEL terminals

I'm left scratching my head trying understand how the sale of the terminal leases would bring any savings to QF? Unless QF plan to operate from the original LCC terminals wouldn't the sale existing leases leave QF wide open to an increase in expenses? Sorry for asking I'm trying to connect the dots....

Quoting Deutronium (Reply 74):

So for the QANTAS brand; the retirement of the 767s brought forward to early 2015 and the 6 oldest 747s to be retired by early 2016. The domestic fleet to comprise only 737s and A332 and the international fleet to be flown by A333, A380, and the remaining 747s.

Very neat fleet plan when you take into account QF is working with what they've got & cutting back on spending.

Quoting a36001 (Reply 96):
The Unions most notably Tony Sheldon are an embarrassment to our country. Do they not understand that by striking, it could very well be the end of the airline? Qantas is on a knife edge and there is a very real risk the airline could go under and they are out there banging on how it's all management faults and it's Joe Hockey's "wet dream".

I guess AJ accepting a 30% wage cut & freeze on all Executive bonus's / pay increases isn't enough.
Let's shut the airline down! What do we want pay increases, when do we want it, now... Is the company profitable no, what do we want a 15% pay increase.
Just bite the bullet guys and accept it QF isn't profitable & needs to make difficult decisions.


EK413
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NAV20
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:39 am

Quoting EK413 (Reply 102):
I'm left scratching my head trying understand how the sale of the terminal leases would bring any savings to QF? Unless QF plan to operate from the original LCC terminals wouldn't the sale existing leases leave QF wide open to an increase in expenses?

Only a guess, but I suspect that Qantas currently owns the buildings (in some cases anyway) and therefore only pays the airports concerned on a 'ground-rent' basis. If that's so, selling a given airport the actual buildings would bring in quite a lot of cash, but it would of course result in a much-increased 'per square foot' rent in future years.

[Edited 2014-02-26 18:40:21]
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tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:41 am

Quoting EK413 (Reply 102):
uoting na (Reply 30):
(I thought the A380s were already deferred some time ago until around 2020 so I dont see that as news really).

I believe the A380's had been deferred until 2016-2017?

It all matters fairly little. The A380 deferral means that any change to the A380 fleet remains years in the future if ever. Given the new higher weight A380s were Qf's best bet in solving their payload issues with the DFW route, it means this will remain as is with no obvious solution.

Quoting EK413 (Reply 102):
The NZ announcement was perfectly timed wasn't it. Bet any money it was!

The dates for results releases are scheduled months in advance and announced to the ASX. It's not as if the NZ board woke up this morning and decided to rub QF's nose in it because it could.

Quoting EK413 (Reply 102):
I'm left scratching my head trying understand how the sale of the terminal leases would bring any savings to QF? Unless QF plan to operate from the original LCC terminals wouldn't the sale existing leases leave QF wide open to an increase in expenses? Sorry for asking I'm trying to connect the dots....

It is more about receiving money today but accepting a greater opex amount into the future. Given both parties will have run their Internal Rate of Return models over the deal and QF is more desperate for a deal than the airports, I assume the net cost over the term of the new lease will be more than what QF receives upfront in current dollar terms.

Quoting EK413 (Reply 102):
Very neat fleet plan when you take into account QF is working with what they've got & cutting back on spending.

It's OK but I can't work out why it's any different from what we already knew. It is just some of the retirements have moved 6-12 months forward.

Quoting EK413 (Reply 102):
QF isn't profitable & needs to make difficult decisions.

I sense the market is losing patience with AJ and the Board and the Board needs to make one very obvious decision soon.
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qfa763
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:42 am

So, unless I've missed something, given that SYD-JNB appears to be staying, and with the imminent departure of the 6 non-refurbished 744's which mostly fly that route, what replaces them? Surely not the 332? There'd be problems with ETOPS right?
 
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RyanairGuru
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:46 am

Quoting qfvhoqa (Reply 101):
there must be enough demand for it

Oh there's definitely demand, but to address broader yield problems then it makes sense to take capacity out of the market.

Let's be clear, if I was being selfish then I don't want this to happen as I am not a "premium" traveller and therefore cannot justify flying Qantas if their prices are too high relative to other options. Qantas does, however, need to address how they are going to improve yield. As I said above I personally don't believe that revenue, per se, is too much of a problem for most of the longhaul network (NRT included) but there is only so much they can do on the cost side of the equation.

Quoting qfvhoqa (Reply 101):
overnight flights in each direction.

I'm not sure how much longer that will last. Regardless of whether the route is A330 or 747, both fleets will be stretched once the 767s and older 747s leave. I'm not sure that overnight in both directions would provide a sufficiently large revenue premium to justify leaving the aircraft park all day when it could be doing something more productive.

Quoting EK413 (Reply 102):
The NZ announcement was perfectly timed wasn't it

Oh absolutely, although looking at the results in a vacuum isn't necessarily conducive as NZ went through its gut wrenching cost cutting exercise in the last decade.

NZ is a very lean, very well run operation. Nobody can deny them that. But banal statements that "NZ is profitable and therefore the QF board should be sacked" aren't helpful (I wasn't suggesting that's what you said btw).
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RyanairGuru
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:50 am

Quoting qfa763 (Reply 105):
given that SYD-JNB appears to be staying, and with the imminent departure of the 6 non-refurbished 744's which mostly fly that route, what replaces them? Surely not the 332? There'd be problems with ETOPS right?

9 747s can cover the remaining 747 flying quite easily:

2x BNE-LAX
2x SYD-LAX(JFK)
3x SYD-NRT-SYD-JNB-SYD
1x SCL

+ 1 operational spare

And that supposes that NRT stays with a 747.

EDIT: I forgot DFW!!!

OK, so:

2x BNE-LAX
2x SYD-LAX(JFK)
2x SYD(BNE)-DFW
1x SCL
2x JNB

= No spares. OK, so there is a bit of an issue.

[Edited 2014-02-26 18:52:48]
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DeltaB717
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:51 am

Quoting tullamarine (Reply 104):
The dates for results releases are scheduled months in advance and announced to the ASX. It's not as if the NZ board woke up this morning and decided to rub QF's nose in it because it could.

True... but that doesn't mean they didn't let QF announce its date first and then magically come in the day before!?
 
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:54 am

Quoting RyanairGuru (Reply 107):
No spares. OK, so there is a bit of an issue.

Thinking about it, they probably don't need a spare frame because they can sub an A380 for QF107/8 (or cut QF11/12 some days) to cover 747 maintenance. One or two spares in the A380 fleet is probably sufficient to cover a combined fleet of 21 aircraft.
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qfa763
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 2:59 am

Quoting RyanairGuru (Reply 107):
2x BNE-LAX
2x SYD-LAX(JFK)
2x SYD(BNE)-DFW
1x SCL
2x JNB

= No spares. OK, so there is a bit of an issue.

Maybe SYD-NRT goes 332/333 permanently?
 
NAV20
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:02 am

Our radio news says Qantas shares are down 8% so far today.............
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
qfa763
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:02 am

Quoting RyanairGuru (Reply 109):
Thinking about it, they probably don't need a spare frame because they can sub an A380 for QF107/8 (or cut QF11/12 some days) to cover 747 maintenance. One or two spares in the A380 fleet is probably sufficient to cover a combined fleet of 21 aircraft.

I didn't think the A380's could do SYD-DFW or DFW-BNE without being weight restricted?
 
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eta unknown
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:04 am

Hold on guys- the press release says the non-refurbed 744's are staying until 2016.
 
aviasian
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:07 am

Nobody has mentioned a strike ... and there is no need for that.

For all you know, Alan Joyce might just shut down the airline with little or not advance notice. It is not without precedence.

KC Sim
 
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RyanairGuru
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:08 am

Quoting qfa763 (Reply 110):
Maybe SYD-NRT goes 332/333 permanently?

I think it will have to unless JNB or SCL are cut.

The nine, no spares, didn't include NRT.

Quoting qfa763 (Reply 112):
I didn't think the A380's could do SYD-DFW or DFW-BNE without being weight restricted?

That's why I specifically referred to SYD-LAX as the sub route  

QF107/8 has been operated by A380s this past January, so it isn't unheard of.
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tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:19 am

Quoting qfa763 (Reply 112):
I didn't think the A380's could do SYD-DFW or DFW-BNE without being weight restricted?

They can't but then again, neither can the 744ERs!!!

Quoting eta unknown (Reply 113):
Hold on guys- the press release says the non-refurbed 744's are staying until 2016.

Correct by which time QF will have had another 2 strategic reviews and it'll be all very different.   
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:22 am

Quoting EK413 (Reply 102):
I'm left scratching my head trying understand how the sale of the terminal leases would bring any savings to QF? Unless QF plan to operate from the original LCC terminals wouldn't the sale existing leases leave QF wide open to an increase in expenses? Sorry for asking I'm trying to connect the dots....

There is a lot more to the equation than a simple sale and lease back arrangement.

For example at Brisbane Airport there is a lot construction going on to accommodate future growth.

I'd suggest if QANTAS retained this asset they would be required to expand / refurbish their existing terminal to ensure it remained first class and subsequently viable into the future. This would take $$$$$.

Selling the lease back to the airport and negotiating a long term terminal agreement means construction costs ($250 million estimated) and planning costs would be taken over by a different entity freeing up cash for other parts of QANTAS.

Even though the sale price was only $100+ million, I'd suggest as the deal included access to the second runway, etc the real value of the deal could be $400+ million over ten years.
 
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:25 am

Quoting qfvhoqa (Reply 89):
I doubt QF would have A333/A380 service for SYD-HKG. Given this is the only F market outside DXB/LHR & LAX, they must have reasons for keeping it. I can see the increased utilisation of the A380s being used for SYD-HKG. They managed this over summer with the current LHR schedule, so if there is even more slack, maybe NRT too?
Quoting RyanairGuru (Reply 90):
The only market that really makes sense for the additional A380 service is SYD-SIN at one-daily flight.

On the contrary, the only place where it makes sense to have more A380 flying is to Los Angeles. So if QF wanted to keep the 744 to places like HKG and NRT, the obvious place to free one up is by swapping a 744 out of SYD-LAX and making some days a double daily A380.

In relation to HKG, I think it is a 50/50 toss up as to whether HKG goes daily with the A380 or whether the A330 takes over from the 744 on the days it operates.

Quoting aerohottie (Reply 92):
I didnt know where to look, but is there any indication of the Jetconnect contribution and performance?

There is no breakout of the performance of Jetconnect. The NZ revenue and expenses are consolidated within International. The performance of JQ in New Zealand is in the supplemental slides.  
Quoting Nav20 (Reply 103):
Only a guess, but I suspect that Qantas currently owns the buildings (in some cases anyway) and therefore only pays the airports concerned on a 'ground-rent' basis. If that's so, selling a given airport the actual buildings would bring in quite a lot of cash, but it would of course result in a much-increased 'per square foot' rent in future years.

Selling the terminals results in a quick injection of cash now. However you are right that the increased rent over future years will absorb this cash. So it's sugar now and pay later.

Quoting RyanairGuru (Reply 107):
= No spares. OK, so there is a bit of an issue.

Make one of those LAX flights an A380 and you get a spare. But, as I suspect, I believe SYD-NRT will eventually be downgraded to A333 to allow for loss of traffic to JQ on MEL-NRT. The 744 from there can then be retired.
 
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:26 am

Quoting eta unknown (Reply 113):
Hold on guys- the press release says the non-refurbed 744's are staying until 2016

Of course, but the only planed widebody deliveries in that time are the JQ A330s.

Ergo, for them to keep the current longhaul schedule all the regional flying is going to have to be A330 (or A380 in the case of HKG).

That said...

Quoting tullamarine (Reply 116):
by which time QF will have had another 2 strategic reviews and it'll be all very different

...this is the correct answer    
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Sydscott
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:28 am

Quoting RyanairGuru (Reply 115):
That's why I specifically referred to SYD-LAX as the sub route

QF107/8 has been operated by A380s this past January, so it isn't unheard of.

What I think you will see is the January A380 schedule rolled out permanently. Especially with LAX is makes sense because as North America recovers and our dollar drops, Australia becomes a much more attractive, (ie cheaper), destination for Americans. So it could make sense for QF to get in ahead of the curve and go double daily SYD-LAX on the A380. That then free's up 744's for spares, Charters and NRT.
 
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:42 am

[quote=aviasian,reply=114]Nobody has mentioned a strike ... and there is no need for that.

Actually they most definitely have. Mr Sheldon has threatened it already. Such a wise man!
Actually it is very lucky I am not running Qantas, because I would continue to run the 65% line in the sand, and I would stop taking 738's and keep the 767's, drop some frequency on the triangle and keep just wide body on them. So weird it just might work.
 
hh65man
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:46 am

......and now ladies and gentlemen, a major union is threatening with strike action......... Nothing like blowing your other foot off.   
 
AF185
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:49 am

Quoting allrite (Reply 25):
* Growth suspended for Jetstar Asia

Does it put an end to the Jetstar Hong Kong base plan?
 
aryonoco
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:54 am

Quoting tullamarine (Reply 91):
Assuming EK and QF are sharing costs and revenue and we think this is right, it would only be agreed direct costs. QF obviously has a major issue with its maintenance costs, its head office overhead etc.

You hit the nail with this one Tullamarine.

Assuming that QF is indeed losing money on LHR, considering the arrangement with EK and the fact that EK is certainly making money off the route, this only shows that QF's problem is its huge fixed cost base. It's not a revenue problem, it's not a fuel cost problem, it's mostly a labour cost problem.

If you can't make money off a metal neutral route with EK, you can't make money anywhere. Period. No network reduction or growth is going to fixed that. No alternative aircraft is going to fix that.

All the people who keep saying if only QF had grown, or if only QF had ordered 777s should take not of this.

PS: The mere fact that the unions are threatening strike is going affect forward bookings. Pax, especially business pax are not dumb. They will start booking elsewhere just in case... The unions deserve everything they are about to get...

[Edited 2014-02-26 19:56:53]
 
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:55 am

Quoting sydscott (Reply 118):
Make one of those LAX flights an A380 and you get a spare
Quoting sydscott (Reply 120):
What I think you will see is the January A380 schedule rolled out permanently

But where is that A380 coming from?

By simultaneously announcing both the expedited retirement of the 747 fleet and the deferment of the A380 fleet they've asked more questions than they're answered IMHO.

By my count they need 3 A380s for SYD-LHR, 2 for SYD-LAX, 2 for MEL-LAX, and 3 for MEL-LHR.

Even with the change to a later departure from MEL I don't see how that results in an additional A380 being available unless they run a morning departure ex-MEL for an evening arrival, before turning around for a 22:00 departure to DXB. If they were shifting SYD to a later departure then they could run an A380 to JNB, using 4 frames.

If they move QF107/8 permanently to A380 then and move HKG to 744, then I get 12 A380s (4xSYDLAX, 2x MELLAX, 3xSYDLHR, 3xMELLHR) and 8 747s (2xBNELAX, 2xSYDDFW, 2x SYDJNB, 1x SYDSCL, 1xSYDHKG). Maybe that is the route they plan to go down?

Quoting sydscott (Reply 118):
as I suspect, I believe SYD-NRT will eventually be downgraded to A333 to allow for loss of traffic to JQ on MEL-NRT. The 744 from there can then be retired.

I think that is probably inevitable, as there is no other way to make the fleet numbers add up.
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allrite
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 3:56 am

Quoting AF185 (Reply 123):
Does it put an end to the Jetstar Hong Kong base plan?

No, Jetstar Hong Kong is separate and still listed as proceeding, subject to regulatory approval. To say that they are pulling out now would reflect rather badly on management, don't you think?
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tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:03 am

Quoting allrite (Reply 126):
No, Jetstar Hong Kong is separate and still listed as proceeding, subject to regulatory approval. To say that they are pulling out now would reflect rather badly on management, don't you think?

Having said that the "restructure" of the A320 purchases means it is possible that Jetstar Hong Kong will never take to the air. Given all the issues the company is facing, surrender is probably not the worst idea. Management needs to keep their eye on the main game.
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allrite
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:05 am

Interesting interactive at the AFR:

For FY13 the Available Seat Kilometre/Headcount is

QF: 3.97M
VA: 4.96M

Qantas has been increasing in FY10, whereas Virgin Australia has been decreasing since the same date, with the exception of FY12.

Edited: spelling error

[Edited 2014-02-26 20:19:07]
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allrite
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:10 am

Quoting tullamarine (Reply 127):
Given all the issues the company is facing, surrender is probably not the worst idea. Management needs to keep their eye on the main game.

I think they may wait until some decision by HK leads to a statement being issued.

"Unfortunately, the protectionist barriers enacted by Hong Kong authorities means that our efforts to deliver affordable travel in the region can no longer proceed."

Hopefully by then they can fly international out of Japan.
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tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:12 am

Quoting allrite (Reply 128):
For FY13 the Available Seat Kilometre/Headcount is

QF: 3.97M
VA: 4.96M

It maybe tells us that VA has better productivity but also could tell us that VA outsources more of its stuff. Outsourcing is not free so how much is down to productivity is a matter for investigation.

This is similar to getting carried away with 5000 job cuts. Sure, some of this will translate to direct savings but some will be replaced by increased opex for services that were previously done in-house being outsourced.
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eta unknown
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:17 am

Agree most likely QF107/108 will probably operate as a mix 744/A380 service and NRT will become A333.

As for Jetstar MEL-NRT only a matter of time before it goes...
 
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allrite
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:21 am

Quoting eta unknown (Reply 131):
As for Jetstar MEL-NRT only a matter of time before it goes...

Flights don't start until April 29, so it hasn't even gone yet.

[Edited 2014-02-26 20:36:31]
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 4:50 am

Quoting NZ107 (Reply 58):
The question I was asking at the time of the lockout. He was incompetent then and he has continued to run QF into the ground.

Not everyone see the lockout in the same way that you do. He was the first CEO to take it right up to the unions, and in the end was applauded for it.

As far as today is concerned, sometimes when you run a large company, you need to take a step back and look at simple commonsense principles. If you are losing money and are constrained with little liquid capital, or expensive borrowing rates, plans for any experimental growth has to be pulled back until the bottom line has settled down. You also cannot carry excess staff, they just cost too much.

I think that today showed that these two simple steps will help Qantas to be able to compete a little better in the future.

There is one aspect that has not been discussed and that is of front line staff attitude. There are still too many who see their jobs as a right, and have a less than satisfactory interaction with the public. Virgin seems to have achieved a greater satisfaction level, even though pay conditions are generally less than Qantas. They need someone to help QF staff feel proud of their company once again. That goes a long way with the general public.
 
VA82
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:03 am

Quoting sydscott (Reply 86):
So that means PER, ADL, DRW and CNS have no QF International service

What about PER-AKL? (I know it's only seasonal, but there was no mention whether it would be operated this year?)
 
Sydscott
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:04 am

Quoting RyanairGuru (Reply 125):
If they move QF107/8 permanently to A380 then and move HKG to 744, then I get 12 A380s (4xSYDLAX, 2x MELLAX, 3xSYDLHR, 3xMELLHR) and 8 747s (2xBNELAX, 2xSYDDFW, 2x SYDJNB, 1x SYDSCL, 1xSYDHKG). Maybe that is the route they plan to go down?

Over the Christmas period QF operated QF107/108 as A380 2 days per week. I'd say they will make that permanent while HK can continue to be operated by the A380 5 days a week and the A330 twice a week. This, I believe, fully utilises the A380 fleet by having (3xSYDLAX, 2xMELLAX, 3xSYDLHR, 3xMEL-LHR, 1xSYDHKG). The 9 744's would be on the routes you have listed minus Hong Kong. (Their would be capacity to do SYD-HKG and SYD-NRT with the 744's if required. But as I said, I think NRT is being primed to go A333 once he JQ MEL-NRT starts)

Quoting allrite (Reply 129):
I think they may wait until some decision by HK leads to a statement being issued.

"Unfortunately, the protectionist barriers enacted by Hong Kong authorities means that our efforts to deliver affordable travel in the region can no longer proceed."

Hopefully by then they can fly international out of Japan.

Lets hope so. Japan has increasingly become an important JQ growth market so it's imperative to get that flying internationally and fast.

Interestingly enough, although they have suspended growth at 3K they're still adding services this year such as SIN-DRW and SIN-BKK-FUK. So I'd say we're still going to see selected growth at 3K to increase utilisation of the existing A320 fleet and to ensure route closures such as SIN-CAN don't effect aircraft usage.

I think we'll also see additional SIN-PER on 3K announced at some point in the future.

Quoting tullamarine (Reply 130):
It maybe tells us that VA has better productivity but also could tell us that VA outsources more of its stuff. Outsourcing is not free so how much is down to productivity is a matter for investigation.

I assume that when it says "Headcount" it actually means "Full Time Equivalent" so they're comparing apples with apples. the FTE count would included the outsourced staff. Either way VA is 25% more productive than QF.
 
tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:11 am

Quoting sydscott (Reply 135):
I assume that when it says "Headcount" it actually means "Full Time Equivalent" so they're comparing apples with apples. the FTE count would included the outsourced staff. Either way VA is 25% more productive than QF.

I doubt it. If, for example, you replace your in-house catering with an outsourcer, say Gate Gourmet who supplies a huge number of airlines, how do you imply an FTE on this? You pay for a service and have no idea and probably don't care how many staff they use.
717, 721/2, 732/3/4/5/7/8/9, 742/3/4, 752/3, 762/3, 772/E/W, 788/9, 300,310, 319,320/1, 332/3, 359, 388, DC9, DC10, F28, F100, 142,143, E75/90, CR2, D82/3/4, SF3, ATR
 
CBRboy
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:29 am

Quoting sydscott (Reply 86):
overall the group yield has declined 3.2% which is what I, and others, have been saying for quite some time. QF has a revenue and a yield problem that isn't going to be corrected entirely by cost cutting. They need more top line dollars to come in per pax, pure and simple

I agree. The yield problem is illustrated clearly in the second table on page 4 of the Investor Presentation slides. That table shows the causes of the change from a $220 million first half profit last year to a $252 million loss this year. The single biggest component is a $187 million loss in yield. For the record, and ignoring a 2013 one-off, the other significant factors were reduced load $112m, fuel price and foreign exchange $90m, and CPI (ie increased supplier costs, including wages) $138m. There was an offsetting $190 million benefit from so-called cost base improvement, meaning improvements from the earlier Qantas Transformation announcements and other 'efficiency improvements'.
 
AA94
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:35 am

I realize this may be a bit of a loaded question, and perhaps off-topic as well, bit I'm going to ask it anyway.

What series of events have led Qantas to find itself in this position? The global airline industry seems to be generally stable financially, so I'm just wondering what has led to these dire straits?

Sorry for the naiveté, but any insight would be appreciated.
 
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RyanairGuru
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:41 am

I've been thinking about this further, and ultimately what was announced today was a reaffirmation of the post-grounding 2011-2016 5 year plan. The end goal is still 2016, but due to a deteriorating yield situation (partly outside their control and partly self-inflicted) they have squandered the first 2-3 years of that plan which adds greater pressure now.

While they were - unfortunately - explicit about this, it appears that they have backed off the wholesale capacity increase of recent years, with rapid retirement of 767s (largely replaced by 737s) and deferring Asian A320 deliveries.

The fundamentals of the 2011 are, arguably, sound so hopefully this increased capacity discipline, coupled with previously announced and new cost cuts, means that the turnaround will prove successful.

2016-17 has got to be the end date, IMHO, as this is Joyce's last roll of the dice. By then he would have been CEO for almost a decade and he MUST have something to show for that. He will probably go at that point, either retire with his job done or be pushed out by insititutional investors if the situation has not improved. I do stand by my earlier prediction that the institutional investors will not move against him before that time, so further calls for him to stand down are pointless IMHO.
Worked Hard, Flew Right
 
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RyanairGuru
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:45 am

Quoting AA94 (Reply 138):

Ultimately, a failure to address changing market conditions sooner, both longhaul under the Strong-Dixon era and domestic more recently.

Big changes should have been made a decade ago when the entire industry was going through a painful adjustment process, and now the problems - especially high legacy costs - have compounded in a resurgent market place against lower cost competitors both at home and abroad.
Worked Hard, Flew Right
 
tullamarine
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 5:54 am

Quoting RyanairGuru (Reply 139):
2016-17 has got to be the end date, IMHO, as this is Joyce's last roll of the dice. By then he would have been CEO for almost a decade and he MUST have something to show for that. He will probably go at that point, either retire with his job done or be pushed out by insititutional investors if the situation has not improved. I do stand by my earlier prediction that the institutional investors will not move against him before that time, so further calls for him to stand down are pointless

I would think it highly unlikely that he would be given another 3 years to get results. I think he is probably on borrowed time now. The Board will need to get significant concessions from QF staff over the next year or so. AJ is probably seen as too toxic to be able to achieve this and will need to be the token sacrifice the Board makes to get some of these concessions through.

QF have to show measurable improvement over the next 12 months. They can't keep going to the market saying "Give us more time". They are running seriously low on goodwill. This time next year if the CEO, whoever he or she is, can't announce some real progress and provide real figures, not the platitudes we received today, remaining institutional holders will have to act.
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Sydscott
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 6:05 am

Quoting RyanairGuru (Reply 139):
I've been thinking about this further, and ultimately what was announced today was a reaffirmation of the post-grounding 2011-2016 5 year plan. The end goal is still 2016, but due to a deteriorating yield situation (partly outside their control and partly self-inflicted) they have squandered the first 2-3 years of that plan which adds greater pressure now.

Agree entirely. This strateg isn't new, it's a re-affirmation of the current one. What is new is the lack of comment about the 65%.

Quoting RyanairGuru (Reply 139):
While they were - unfortunately - explicit about this, it appears that they have backed off the wholesale capacity increase of recent years, with rapid retirement of 767s (largely replaced by 737s) and deferring Asian A320 deliveries.

I think A320 deliveries in general not just those to Asian subsidiaries. That is a good thing because the reality is that the QF group doesn't need more A320's right now. As said above, I hope they haven't deferred A320NEO's because the Jetstar Group, in particular Singapore and Japan but also Australia, can definitely use them.

Quoting RyanairGuru (Reply 139):
The fundamentals of the 2011 are, arguably, sound so hopefully this increased capacity discipline, coupled with previously announced and new cost cuts, means that the turnaround will prove successful.

Correct. This is more of the same.

Quoting AA94 (Reply 138):
What series of events have led Qantas to find itself in this position? The global airline industry seems to be generally stable financially, so I'm just wondering what has led to these dire straits?

To add to what RyanairGuru has said, the current financial situation at Qantas is not unique in the current circumstances in this part of the world. Virgin Australia reports results tomorrow that will also show a loss. AirAsiaX reported results yesterday that showed a loss, Tigerair Group is losing money but has too many A320's on order so is dumping capacity into Singapore while cutting back in Indonesia to reduce losses there. Malaysian Airlines has reported increased losses while Singapore Airlines has had a significant fall in its profits as well.

The bottom line is that currently, as a region, there is simply too much unprofitable capacity flying around in Southeast Asia and between Southeast Asia and Australia. International capacity between Australia and Southeast Asia was the fastest growing in the world last year led by significant increases in services from MH and AirAsiaX after the Australia-Malaysia treaty was relaxed. So that's the headwind in Qantas International.

However, the primary 4 problems with QF right now are:

1. Too much domestic capacity. They need to pull back and the indications from today are that they will. (Too bad it had to take this loss to make them do so)
2. Not enough top line revenue. The revenue decline is worrying and QF needs to address this.
3. Declining yield. Increased competitive pressure has forced yields down across the group. They need to re-build these especially domestically because this is the group engine that pays the bills.
4. Jetstar International. The decline in Jetstar International is worrying and needs to be addressed pronto. Jetstar International should be a growth engine for the group not in decline already!

There are cost pressures and all of that as well but at the end of the day cost cutting drives, redundancies, outsourcing and all of that is fluff. They need more cash coming in the door AND they need more cash that is higher margin coming in the door. That is the challenge!
 
DeltaB717
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 6:17 am

Quoting sydscott (Reply 142):
What is new is the lack of comment about the 65%.

Notably absent from the announcements, indeed!
 
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EK413
Posts: 5449
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 6:39 am

Quoting allrite (Reply 67):
Plans according to Gareth Evans is that the A332s do domestic, A330s do international. No mention of 789s.

I'll try remain positive but mark my words I'm afraid to say the B787 will never sport the QF scheme...

Quoting tullamarine (Reply 76):
Some of the announcements were major recycles; how many times can they announce the 734s are being retired?

What B734's?  
Quoting tullamarine (Reply 76):
I feel for the staff, 5000 jobs gone but no real information. I worked for AN in the early '90s and I remember the general despair generated by the ongoing restructures that never had an end and did nothing to inspire confidence. QF has been in the same cycle for years and it appears it is not going to change any time soon.

The vibe isn't pleasant & reminds me of those colds you struggle to get rid of but it will eventually go away... Eventually (hope so!)

Quoting qfvhoqa (Reply 89):
I doubt QF would have A333/A380 service for SYD-HKG. Given this is the only F market outside DXB/LHR & LAX, they must have reasons for keeping it. I can see the increased utilisation of the A380s being used for SYD-HKG.
Quoting RyanairGuru (Reply 90):
The only market that really makes sense for the additional A380 service is SYD-SIN at one-daily flight

        

Quoting qfvhoqa (Reply 101):
QF dropped to A330s. However the 744s came back not long after - there must be enough demand for it.

Demand would be on the rise with JL operating the B77W on the route recently.

Quoting tullamarine (Reply 104):
It all matters fairly little. The A380 deferral means that any change to the A380 fleet remains years in the future if ever. Given the new higher weight A380s were Qf's best bet in solving their payload issues with the DFW route, it means this will remain as is with no obvious solution.

This will leave a great big hole in the SYD-DFW route. The route could use an A380 right now but the high gross variant to eliminate any weight restrictions.

Quoting tullamarine (Reply 104):
The dates for results releases are scheduled months in advance and announced to the ASX. It's not as if the NZ board woke up this morning and decided to rub QF's nose in it because it could.

Talk about rubbing it in QFs nose!

Quoting RyanairGuru (Reply 106):
NZ is a very lean, very well run operation. Nobody can deny them that. But banal statements that "NZ is profitable and therefore the QF board should be sacked" aren't helpful (I wasn't suggesting that's what you said btw).

I agree NZ is a very lean well run operation is because they operate aircraft & crew with ground handling, engineering, catering outsourced?

Quoting RyanairGuru (Reply 115):
I think it will have to unless JNB or SCL are cut.

Probably QF will test the waters once the SAA agreement ends...?

EK413

[Edited 2014-02-26 23:12:20]
Good evening, ladies and gentlemen. We are tonight’s entertainment!
 
ben175
Posts: 772
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 6:50 am

Reading this makes me regret booking QF PER-SYD-HNL this July. I don't want to give any more of my money to such a terribly managed company. It's time to give the board the boot - NOTHING has improved since AJ took over. It will be all too late unless action is taken now.

For QF to give up PER-SIN - which I believe is in the top 5 busiest international routes from Australia - is an absolute JOKE. It's now safe to say that Qantas obviously doesn't recognise WA as a part of Australia. All we've seen from our "national" carrier is routes being slashed one after the other, and now we have nothing. QF has handed over one of the fastest growing airports in the region on a silver platter to the growing number of airlines that recognise Perth as the prospering market it is. But no, we're left with sh*tty Jetstar. The least they could do is put a 332 on so atleast some sort of "premium" (ha) product is offered.

Qantas is an absolute joke to our country. Look back 15 years, and it was known as one of the top airlines in the world. Now, we are left with a shattered, inadequately run joke of a company that has a terrible, deteriorating reputation. Spirit of Australia? Pfft. I think they're handing that title over to Virgin!
 
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zkokq
Posts: 518
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RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 7:05 am

Quoting ben175 (Reply 145):
For QF to give up PER-SIN - which I believe is in the top 5 busiest international routes from Australia

I have said it once and ill say it aagin. Its a use it or loose it service.

While the route is busy, how many people would fly another carrier because it cheaper? Or what are the yeilds the manage to get with their cost base?
 
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EK413
Posts: 5449
Joined: Sat Nov 29, 2003 3:11 pm

RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 7:17 am

Quoting ben175 (Reply 145):
Reading this makes me regret booking QF PER-SYD-HNL this July. I don't want to give any more of my money to such a terribly managed company. It's time to give the board the boot - NOTHING has improved since AJ took over. It will be all too late unless action is taken now.

I take it you selected QF due to convenience of baggage being checked in from PER to HNL?
Hopefully you'll continue to fly QF, and I know PER-SIN route being dropped is a kick in the guts.

EK413
Good evening, ladies and gentlemen. We are tonight’s entertainment!
 
Sydscott
Posts: 3491
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 7:19 am

Quoting EK413 (Reply 144):
Quoting qfvhoqa (Reply 89):
I doubt QF would have A333/A380 service for SYD-HKG. Given this is the only F market outside DXB/LHR & LAX, they must have reasons for keeping it. I can see the increased utilisation of the A380s being used for SYD-HKG.
Quoting RyanairGuru (Reply 90):
The only market that really makes sense for the additional A380 service is SYD-SIN at one-daily flight


I hate to say it, but you know what makes sense to me for SYD-SIN & MEL-SIN? 1 peak flight each day by a QF mainline A332 and an afternoon or overnight flight from JQ. Keep both at twice daily but a very large drop in capacity on SYD-SIN. An A380 on SYD-SIN given the current state of capacity is, I think, a really bad idea. QF must be a money hole in QF International and without feed I doubt it warrants any sort of substantial premium capacity aircraft.

Quoting EK413 (Reply 144):
Demand would be on the rise with JL operating the B77W on the route recently.

Agreed. There would be a reason QF is re-starting MEL-NRT.  
Quoting EK413 (Reply 144):
Probably QF will test the waters once the SAA agreement ends...?

I'd say they will see how forward bookings are going later in the year and adjust as necessary. Canning the codeshare now before bookings have really gotten started for next year will give them a few months to see what it's going to look like.

Quoting ben175 (Reply 145):
For QF to give up PER-SIN - which I believe is in the top 5 busiest international routes from Australia - is an absolute JOKE

I don't agree with giving up PER-SIN but I do agree they should dump the A330 from the route. I think a better combination of 738's with PTV's and the red leather seats along with 3K A320's are more appropriate for QF on this route which would have allowed for better timings by QF, a more frequent combined schedule and therefore more potential patronage. But it's not going to happen and now Virgin, handily, with SQ, SA, EY and NZ now handily dominates PER outbound international traffic.

One thing I also didn't mention above, none of these slides gives us any real pax information about the EK deal. In fact any results from it have been absent from it except in a couple of by-lines. Hopefully some analysts can ask some hard questions of QF Management about exactly how many bookings and what earnings are coming from this because it's currently very unclear.
 
timtam
Posts: 262
Joined: Tue Nov 19, 2013 2:02 pm

RE: Qantas Half Year Announcements: Feb 27, 2014

Thu Feb 27, 2014 7:27 am

Quoting zkokq (Reply 146):
I have said it once and ill say it aagin. Its a use it or loose it service.

While the route is busy, how many people would fly another carrier because it cheaper? Or what are the yeilds the manage to get with their cost base?

Exactly. Perth cannot expect Qantas to keep flying international routes out of Perth if they dont fly the airline. Perth has no rights to Qantas International flights.

Qantas has high costs, higher than all its international competitors flying into Australia. It has to charge a premium for its flights. Consumers are choosing to take the lowest cost options. In those circumstances Qantas should use Jetstar out of Perth.

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