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tortugamon
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RE: Qantas Confirm 787-9 + $900 Million Profit

Fri Aug 21, 2015 5:26 pm

Quoting qfvhoqa (Reply 124):
I think the first routes for the 789 will replace less-than-daily 744 services. So while each flight will have less seats, QF should have a similar number of seats overall.

I know SFO is less than daily. What else?

Quoting qfvhoqa (Reply 124):
UA's 787 J seat is 2-2-2. With QF still introducing the 1-2-1 J seat I can't see them having yet another J seat in 2 years for the 787.
As it is, a 787-9 with 40J seats from a total 250 is 16% business class. QF's original A380 config had 16% J but was reduced to 13% J.

I agree it will be 1-2-1. I am not sure the 13%-16% calculation matters all that much in this case. They are used to selling X many J seats on these envisioned routes and if they think they can continue to sell that many then I think that will be the best approximation of how many they will have. Not the percentage of the plane but the real numbers and then let W/Y fill up the remaining area - taking into account the natural breaks/doors of the airplane of course.

250 seats generally means this will be premium heavy.

Quoting qf002 (Reply 127):
What it comes down to is that if they hadn't done the write-down last year, QFi would have had an additional $195m of expenses on the balance sheet, which would have reduced their EBIT result by $195m. The overall $570m net profit wouldn't have been impacted in a significant way (if anything it would have been higher due to a lower tax bill).

AJ made a strategic decision - last year was going to be really bad. Why not pile on the bad year with as much other bad stuff they can so they can show a bigger improvement the following year. It has paid off but a significant portion of this is accounting practices and not actual performance. Clearly things have improved but how could they not after firing so many people and selling long term lease assets.

Hope they continue on this trajectory.

tortugamon
 
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Fri Aug 21, 2015 7:55 pm

Quoting bunumuring (Reply 144):
Love to know what the Airbus counter-offer to the 787 was...

Bet John Leahy worked hard to do a deal with Qantas... Obviously unsuccessfully, for now!

I'd be surprised if it got as far as that, in anything other than very general terms. AJ knew that he was sitting on a great deal with Boeing - and Airbus knew that, too.

AJ has talked about the 787 - in glowing terms - for so long, it is almost impossible for me to imagine that he would have switched to the A350 at the last minute, no matter the merits of the aircraft, and given how Boeing has played ball with Qantas over these orders, it would have been a considerable kick in the teeth - to Boeing.

I don't think it was ever going to happen.

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RyanairGuru
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RE: Qantas Confirm 787-9 + $900 Million Profit

Fri Aug 21, 2015 9:26 pm

QF27/28, QF95/96 and (from December) QF17/18 are less than daily.

Quoting mariner (Reply 151):

I agree. I still don't believe Qantas made a "serious" look at the A350, but sure they ran the numbers on it. They would needlessly have burned a massive amount of goodwill with Boeing, who have been remarkably patient as Qantas continually whittled down their original order for 50 frames to the point they cancelled the 789s altogether. Ordering the A350 now would be giving them the finger.
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qf2220
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RE: Qantas Confirm 787-9 + $900 Million Profit

Fri Aug 21, 2015 9:45 pm

Quoting travelhound (Reply 141):
It's actually a little more complicated!

Of that I am very aware! I don't want to repeat a technical accounting paper here though as most people would switch off and not want to engage in the discussion! In addition to the component accounting you mention, there are the different depreciation methods, held for sale accounting, the inventory vs fixed assets distinction and a raft of other things to be considered when accounting for transport assets. And thats before you hedge the casfhlows on their purchase!

Quoting travelhound (Reply 141):
For the A380's QANTAS decided the aircraft were over valued based upon the fact they were purchased when the Australian dollar was lower. As such they probably used an economic valuation to re-value these aircraft. As there is no established secondary market for these aircraft it would have been difficult to use a market valuation.

The fleet was overvalued not because of when it was purchased, but because the value that they were held at was because

Quoting travelhound (Reply 141):
We also have to remember that re-valuing aircraft is not as easy as a flick of a pen! Often aircraft are encumbered or there are covenants based upon aircraft valuations.

Encumberance or covenants are not reasons to prevent a write down - write downs should proceed based on valuation only. Otherwise everyone would encumber their assets to prevent write downs!

Quoting travelhound (Reply 141):
To write down an aircraft can result in a airline being in breach of its financing covenant requirements.

Not quite. If the value goes down, you are in breach of the financing covenants. You just haven't recognised it in your accounting records yet.....

Quoting travelhound (Reply 141):
It was not until the maintenance facilities were closed, aircraft removed from the fleet and (I assume) spare part inventories sold off that QANTAS were able to write down the value of these assets.
Quoting travelhound (Reply 141):
I'd suggest just getting to a stage where QANTAS could write down the 747 assets was a very large undertaking in itself.

Making a write-off is not about getting things ready internally. Its only about value. Is the value (either through the exchange/sale of the asset or use of the asset to generate cashflows) lower than the book value?? Thats it. Nothing else. Doesn't matter about lease conditions, debt facilities etc etc. These are all things that need to be managed, but you make the write down calc based on value only.

Quoting travelhound (Reply 141):
Generally the markets do not like companies writing down the value of assets.

In Qantas' case the markets rewarded it with an uptick in the share price. This meant that the market had already realised the fleet was overvalued and factored that into the share price.

Quoting travelhound (Reply 141):
There are other international accounting rules as a result of the Enron scandal that need to be adhered to. For instance USA based lessors leasing aircraft to QANTAS would value their aircraft differently to that of QANTAS in Australia. As such valuations have to consider multiple factors. It is not a simple affair.

QF has to comply with the Australian Accounting Standards (which are based on the International Accounting Standards which are generally consistent wherever they are adopted) and thats it. Specific rules in the US, UK and other jurisdictions that are not in the AAS, are not relevant to QF. It doesn't matter to QF accounting how the lessors are accounting for things. Most of the time they are consistent, but there can be differences driven by different rules (or the interpretation of those rules)

Quoting travelhound (Reply 141):
n other words the $975 million profit was good, but we want to see you keep this up before we give you any more ticks!

On this, I 100% agree!
 
81819
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RE: Qantas Confirm 787-9 + $900 Million Profit

Fri Aug 21, 2015 10:06 pm

Quoting SYDSpotter (Reply 142):
I'm not sure where you're getting your values from? QF's market cap at the end of today was ~$7.7bn, QF had net assets of $3.5bn at 30 June 15.

Yes, sorry I was working on net assets of $6.5 billion (old numbers) and miscalculated the market capitalisation.

The net assets numbers do look a little low. Considering QANTAS had an underlying profit of $975 million and a statuary profit of $557 million, there is another $420 million in net assets not accounted for on the balance sheet!

When we look at asset values, we have to remember book values can often be very different to market values. The large write-off of assets last financial year was testament of this.

If we consider the Jetstar business as an independent entity, the markets may value this business in the $1.5-2.5 billion range. This equates to a price/earnings ratio in the region of 8.0 times of its 2015 profit of $230 million. The QANTAS books only account for Jetstar on an assets and liabilities basis.

If we consider the resent sale of the Sydney airport terminal (that will be accounted for in the 2016 financial year) we will probably find (at a guess) QANTAS will report a "gain on sale of asset". That is QANTAS sold the asset for more than the value the asset had on the companies books.

To give another perspective many of QANTAS's old 747's sitting in the Californian desert probably (at a guess) had book values in the region of $35-45 million each. It probably costs QANTAS $100,000.00+ / month to store each of these aircraft and as such these assets which still had relatively high book values had no economic value (no secondary market for 747's). As such QANTAS decided to write the value of these assets off.

Just say, for example with the freeing up of sanctions against Iran, the Iranian airlines sore these old QANTAS 747 assets as a good means of quickly bringing much needed aircraft into their fleets, the value of the assets could quickly change. The Iranians could reason the aircraft have been maintained very well, the interiors are only a generation old (refurbished in 2003), the aircraft have plenty of capacity (seats required to serve their markets), are relatively cheap and can be used as a stop gap until new aircraft arrive.

Again for argument sake, if QANTAS ended up selling twelve of these aircraft for $30 million each, a spares inventory for $150 million and a service agreement to help the Iranians maintain these planes, QANTAS could realise a whopping $500 million from the sale. These are assets that in all likelihood, at present will ultimately end up costing QANTAS money to scrap.

In summary there is a lot of value in QANTAS's assets, QANTAS still has a way to go before it can realise economic value from these assets and the market is still to fully price the value of these assets into the stock.

The structural separation of the different QANTAS business units will be a means of QANTAS realising the value in QANTAS.

Quoting ClassicLover (Reply 149):
I'm happy that the plans have come to fruition. It often requires a foreigner to be the head of a company to really clean out the cob webs. AJ has finally done this with Qantas making it really one airline, by removing all the redundant facilities all over the place, which has needed to be done since the merger with Australian Airlines back in 1993/4. Similar thing happened with Aer Lingus - a foreign head also turned that business around.

...and kudos to Alan Joyce for achieving what he has.

What I think is remarkable is that AJ is a numbers man. There was always a risk the finesse required to ensure the service part of the business remained market relevant and not lost in the numbers. Not only has QANTAS had a major turn around, it is also winning service awards. It actually increased its customer satisfaction levels delta over Virgin Australia in the last year. That's no easy feat!

In light of all of this I think we have to keep these profits in perspective. They were achieved in very favourable conditions, QANTAS still has many legacy issues to deal with, their international business operates in a very competitive and ever changing market and has almost immediate CAPEX requirements to update its fleet. As such QANTAS still has a way to go before we can truly say this airline has been turned around.
 
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qfvhoqa
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 3:41 am

Quoting tortugamon (Reply 150):

In addition to those mentioned by RyanairGuru SYD-JNB reduces to 6x weekly from February.
While the percentage of premium seating is not as important as the absolute number of seats, I used the A380 as a comparison. It flies some of the most premium heavy routes that QF has. The 787-9 will probably fly routes with slightly less premium demand.

Quoting RyanairGuru (Reply 152):

It would be prudent for QF to consider every aircraft that is available in the market so I'm sure they ran the numbers for the A350, just as they would have for CS100, E190, 77L/W and so on. QF would not want to piss off Boeing, but if the A350 was a better plane for them I don't think they would decide against it to keep Boeing on side.
 
United Airline
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 4:22 am

In the past Qantas had a lot more flights to Europe. SIN-FRA is gone now. And they had many more flights to LHR (double daily via SIN, single daily via HKG, single daily via BKK). So the double daily flights via DXB=a reduction.

Any plans to resume flights to LHR via HKG, SIN, BKK? Also any plans to open up more European destinations? I remember CDG, FCO were profitable.
 
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thekorean
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 4:29 am

Quoting United Airline (Reply 156):

They can't add any European flights not stopping at DXB.

And they can barely make LHR work. Might as well leave other European cities to EK.
 
Gemuser
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 7:50 am

Quoting United Airline (Reply 156):
Any plans to resume flights to LHR via HKG, SIN, BKK? Also any plans to open up more European destinations?.

AS ALREADY answered in reply 93:

Quoting gemuser (Reply 93):
Quoting United Airline (Reply 86):
Any chance of resuming SIN-LHR, HKG-LHR, BKK-LHR?

In aviation, never say never but it is most unlikely in the near/medium future. There is no need to do so. Just ask yourself "Why did QF operate SIN-LHR, HKG-LHR & BKK-LHR?" answer: to get from Australia to Europe (UK). Those route only existed to enable Australia-Europe, no other reason (for QF). Now that enabling is done by DXB so those routes are redundant. Unless "something" happens to make DXB less attractive than it is any other routing seems very unlikely.

Gemuser
Quoting United Airline (Reply 156):
I remember CDG, FCO were profitable

NO they were not! and for various reasons. Lets not bring outright fantasy into the discussion please. And please, please accept that the DXB option is better for QF in this and most likely future decades. It will NOT be resuming routes to Europe other than via DXB in the foreseeable future, unless something unforeseen happens, to do so would be an economic disaster for QF.


Gemuser
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TN486
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 11:09 am

Quoting ClassicLover (Reply 149):
Also as an Aussie expat, I couldn't agree with you more! I, like you, also had complete faith in Alan Joyce.

I'm happy that the plans have come to fruition. It often requires a foreigner to be the head of a company to really clean out the cob webs. AJ has finally done this with Qantas making it really one airline, by removing all the redundant facilities all over the place, which has needed to be done since the merger with Australian Airlines back in 1993/4. Similar thing happened with Aer Lingus - a foreign head also turned that business around.

Sometimes the locals are far too attached to the airline (and the country, and its politicians!) to be able to see clearly to do what is necessary.
Quoting cougar15 (Reply 128):
Having a bit of a giggle right now as an Aussie expat! Umpteen posters on this thread - now overjoyed- were ripping the hell outta AJ´s strategic decisions only a year or 2 back on multiple threads! thanks for your expertise! Sometimes we may all just not be as smart as we recon! 'AJ woz ere´and got it sorted. I always did believe in the little paddie and had flames & shitstorms thrown at me for it!
Great news for QF, I see mountains of opportunity if they play clever with the ´87!

Oh dear me. I cant let this go without a reply. Aussie expats, or just Aussies, there have been AJ detractors from "both" and there have been pro AJ from both. So gentleman, every one is entitled to an opinion, and those who have been "All the way... with AJ" should be very proud with the way QF has turned around, as all Aussies who love QF should be. Let us all be proud of where QF is right now (and will be), and one final thought, we cant ALL be right ALL the time can we.
remember the t shirt "I own an airline"on the front - "qantas" on the back
 
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cougar15
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 12:05 pm

Quoting TN486 (Reply 159):
Let us all be proud of where QF is right now (and will be), and one final thought, we cant ALL be right ALL the time can we.

I will definetly second that one! for me, being where I am, dropping FRA was devastating. However, maybe working with EK as they - obviously successfully do - it is the way forward! The 89 is a game changer on the economics front. With EK feed via DXB I hold hope that we might see a few red Roos on this side of the Pond to destinations that can be profitable in countries where EK themselves have simply run out of rights/slots!
really wrapped to see the successfull Turnaround, but as mentioned upthread (albight neccesary), let´s not forget a lot of old mates & colleagues who payed dearly for this turnaround!
some you lose, others you can´t win!
 
bwwt
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 2:29 pm

Quoting United Airline (Reply 156):

Any plans to resume flights to LHR via HKG, SIN, BKK? Also any plans to open up more European destinations? I remember CDG, FCO were profitable.

Why do you just keep repeating the same questions? Not going to happen with the EK partnership. You'll never see QF serve Europe again via HKG or BKK.
 
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sunrisevalley
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 2:35 pm

I have played around with a rotation between BNE/SYD/MEL/ADL/PER to some of MAN/LHR/AMS/FRA/MUN/ FCO via CMB ( maybe MAA) . I picked CMB because it is said to have quite good facilities and probably enough gates to handle the in and out wave over a 3 to 4 hour period. I envisaged a 789 or a A332 fleet , the longest leg is about 10hr 30 min. I am not sure which of these pairs would contravene the QF/EK agreement . I am sure someone will tell me   
 
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XAM2175
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 3:14 pm

All of those pairs are not presently permitted - QF cannot operate scheduled flights or ticket itineraries between Australia and Europe or vice-versa that do not transit in Dubai.

Given that QF's surrendering of traffic and access to the Australian domestic market is pretty much all that EK derive from the JBA, I can't see that provision going away anytime soon.

Remember that the QF-EK JBA is based entirely around QF's desire to create a virtual network covering Europe so that they don't actually have to cover it themselves. All manner of carriers like EY, QR, SQ, CX, and CA are all to some extent or another better to serve the Australia-Europe market better than QF can.

Previous QF European destinations - CDG, FRA, and FCO most recently - were all cut because they complicated the network and couldn't justify the continued investment. That doesn't mean that it wasn't nice to serve them or that people weren't interested in flying them - just that for a carrier with a high cost base, including a long-haul fleet comprised entirely at the time of 747-400s, continued service was too much for the bottom line to bear.

The economics of the 787 could change that picture. The realities of what the EK JBA offers QF make changes based on that changed picture unlikely though.
 
United Airline
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 6:25 pm

Then why on earth does QF want to lock itself in DXB? Back in 2005 they said they had no interest to fly to DXB. Now.....

Any new European destinations on the cards>? CDG? FRA?
 
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Stitch
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 8:09 pm



Quoting United Airline (Reply 164):
Then why on earth does QF want to lock itself in DXB?

Better to be friends with the 800 pound gorilla than enemies.


Quoting United Airline (Reply 164):
Any new European destinations on the cards>? CDG? FRA?

Via DXB? Maybe.

Non-Stop? Not allowed.

[Edited 2015-08-22 13:10:56]
 
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 8:43 pm

Quoting TN486 (Reply 159):
Oh dear me. I cant let this go without a reply. Aussie expats, or just Aussies, there have been AJ detractors from "both" and there have been pro AJ from both.

It was fairly lonely being an AJ supporter here a couple of years ago.

A.net is one thing, but what concerns me more is not what was said here but what was said in public - journalists, many of whom claimed to have expert aviation knowledge and who were calling for AJ's head:

http://www.smh.com.au/business/comme...yces-head-now-20150820-gj3j9d.html

"They aren't calling for Alan Joyce's head now"

It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong.

 

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RyanairGuru
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 9:36 pm

Quoting XAM2175 (Reply 163):

Yes to "can't operate", no to "can't ticket". Not only do QF still code share with AY (*) but there are no ticketing restrictions. You could ticket BA15 on 081 if you could figure out the plate.

(*) The AY code share was a concession by EK as it is a destination they don't serve, but it will be interesting to see what happens if/when EK launch HEL. Most people have no idea that this is a permissible routing but you could go AY LHR-HEL/AY*QF HEL-SIN/QF SIN-SYD if you conscientiously objected to going through DXB, and because SIN-HEL is ticketed with the QF code you earn full miles and status credits.

Quoting United Airline (Reply 164):

I was about to explain to you *again* the entire point of the EK JBA, but you ask the same questions in every.single.thread so clearly you have no interest in actually understanding. I will say just one thing: EK fly to 42 destinations in Europe. Think about that for a moment, and consider why that network might be valuable to an airline that only flies to one.
Worked Hard, Flew Right
 
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qf2220
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 10:35 pm

To add my 2c to the pro/against AJ point, I don't think it is until quite some time after a CEO/Exec team has left that you can really judge their performance. When Dixon et al brought down the $1.4(?)bn profit they were lauded as heroes. Now, we see them as quite tainted by trying to do (some would say fanciful) deals instead of running an airline. Im neutral tending to the support of AJ but I don't think I can properly conclude until its all come out in the wash. He has done a great turnaround and I see this continuing, but I'm not going to canonise nor crucify the guy (and his team) just yet
 
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XAM2175
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sat Aug 22, 2015 11:30 pm

Quoting RyanairGuru (Reply 167):
Yes to "can't operate", no to "can't ticket". Not only do QF still code share with AY (*) but there are no ticketing restrictions. You could ticket BA15 on 081 if you could figure out the plate.

Ah yes I always forget the AY codeshare.
As to ticketing - perhaps I should say "won't"? If you try to use the QF website to multi-city MEL-HKG-LHR, for example, you get told there are no flights. Try it through SIN and you get put on EK SIN-DXB. BA on the other hand, since BA kept their codes on many QF flights, will happily put you on QF metal to SIN or HKG and then their own flights to LHR.

I would imagine the terms of the JBA would have to have some provision against either party getting a bit creative with their other arrangements.
 
atal17
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 12:03 am

Does anyone have MIDT data numbers for a PER-LAX? Would that be possible (sometime in 10 years)?
 
81819
Posts: 2008
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:05 am

Quoting TN486 (Reply 159):
Quoting QF2220 (Reply 153):
QF has to comply with the Australian Accounting Standards (which are based on the International Accounting Standards which are generally consistent wherever they are adopted) and thats it. Specific rules in the US, UK and other jurisdictions that are not in the AAS, are not relevant to QF. It doesn't matter to QF accounting how the lessors are accounting for things. Most of the time they are consistent, but there can be differences driven by different rules (or the interpretation of those rules)

.....but tax laws can be very different!

My point is (or was) QFi still have a way to go before we can say that business has been turned around. For instance 1.4 million QANTAS passengers now fly on a QF coded flight to Europe each year. Prior to the EK alliance it was approximately 400,000 passengers. An additional million passengers each with a $100 booking fee would equate to $100 million in profits.

As such, even though the numbers look good (and they are) a back of the envelope analysis suggests there is still room for improvement! With new competitive threats just around the corner I wouldn't be sleeping easy on the QFi numbers!
 
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qf2220
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:18 am

Quoting travelhound (Reply 171):
.....but tax laws can be very different!

They have very little to do with the bigger financial reporting picture though. Different tax laws only impact the income tax expense and deferred tax balances.
 
coolian2
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:27 am

The A380 options are going to happen. I'd put the house on it.

I expect a lot more P2P in the future though.
Q300/ATR72-600/737-200/-300/-400/-700/-800/A320/767-200/-300/757-200/777-300ER/
747-200/-300/-400/ER/A340-300/A380-800/MD-83/-88/CRJ-700/-900
 
81819
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:28 am

Depreciation rates and subsequent book values are based upon tax law!

If we go back twenty years, Fosters Brewing had a balance sheet in the negative. This was dispite the fact the company was a stock market darling. It's value was all good will / marketing based.

[Edited 2015-08-22 18:36:34]
 
Planesmart
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:38 am

Quoting travelhound (Reply 141):
An aircraft is made up of many parts, all of which are valued and depreciated at different rates. For example after 12 years an engine on a 747 may have a depreciated value of 15% of its original cost. When that engine is overhauled the engine is re-valued and depreciated based upon the overhaul cost and the new life expectancy of the engine.

Most businesses produce at least three sets of accounts - for the tax department, for public reporting (if so required), and for internal purposes.
When an engine (or airframe) is overhauled, it may be re-valued, but not necessarily by the cost of the overhaul, as depending on the tax regime of the country, and the airline's financial position, a proportion (sometimes quite a significant amount), will be written off as an expense.
For example, the cost of transporting an engine to/from an overhaul facility, and removing it from/re-fitting to an aircraft is an expense. In addition, most airline's will treat a proportion of the actual overhaul cost an expense.

Quoting travelhound (Reply 141):
In this example the engine would only be written off once it was determined it was surplus to requirements and/or it had no value in secondary markets.

You can't write off an asset just because it's surplus to requirements. That can only occur on disposal, unless it truly has no value once surplus to the airline. In other words no value as scrap, parts, or for other users.

You don't generally see this on new aircraft leases, because leasors don't like the idea of an engine-less airframe at the end of a lease. But aircraft have been purchased with a mix of new and pre-owned engines (owned by the buyer airline), or a mix of new owned and new leased engines.

If you were writing a book on acquiring commercial aircraft, it wouldn't be 50 shades of grey. More like 1,000 covering all the funding options and treatments.
 
sq256
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 1:51 am

Quoting United Airline (Reply 164):
Then why on earth does QF want to lock itself in DXB? Back in 2005 they said they had no interest to fly to DXB. Now.....

It's called 'Change'. Things do not stay the same forever for a myriad of reasons.

Quoting United Airline (Reply 164):
Any new European destinations on the cards>? CDG? FRA?

As another poster said, maybe via DXB.

And as you were told 100000000+ times, a full plane does not automatically mean a profit.
 
jacobin777
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 2:40 am

Quoting mariner (Reply 166):
Quoting TN486 (Reply 159):
Oh dear me. I cant let this go without a reply. Aussie expats, or just Aussies, there have been AJ detractors from "both" and there have been pro AJ from both.

It was fairly lonely being an AJ supporter here a couple of years ago.

A.net is one thing, but what concerns me more is not what was said here but what was said in public - journalists, many of whom claimed to have expert aviation knowledge and who were calling for AJ's head:

http://www.smh.com.au/business/comme...yces-head-now-20150820-gj3j9d.html

"They aren't calling for Alan Joyce's head now"

It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong.

I'm not a journalist and while I also didn't post about AJ here on A.net (thanks to a self-imposed 3+ year ban), I was critical of his decisions.

While I must congratulate AJ on his/QF's achievements, IMHO QF isn't "out of the woods" yet. They still do have competitive issues to deal with as well as a global macro economy which isn't doing well. Add to the fact IMHO the local economy isn't doing as robust as it has in the past in might start affecting QF financially.

I also believe AJ could've take other "routes"/business decisions. Including, but not limited to working with OneWorld partners more.
"Up the Irons!"
 
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 3:01 am

Quoting Jacobin777 (Reply 177):
While I must congratulate AJ on his/QF's achievements, IMHO QF isn't "out of the woods" yet.

Who is claiming that they are?

AJ himself says that they are only half way through the restructure, and, as others have noted (some less than favourably), the new aircraft order is very conservative. All the recent decisions are conservative. The return to shareholders is conservative - he has given no hint of a more permanent dividend.

I prefer to give credit where credit is due and, as of now, Qantas is a very profitable airline. I have no idea what will happen in the future, but for me the glass is half full rather than half empty.

mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 3:31 am

Quoting Planesmart (Reply 175):
You can't write off an asset just because it's surplus to requirements. That can only occur on disposal, unless it truly has no value once surplus to the airline. In other words no value as scrap, parts, or for other users.

You can a corporate level.

I'd suggest for QANTAS's 747 assets they have been revalued on a corporate level rather than an operational level.

For instance training programs / flight simulators (including IT) / manuals at some time would of been held on QANTAS's books as assets. Even though QANTAS are still flying 747's, management could have decided the economic value of these "assets" was less than the book value and as such decided to write them down. This is despite the fact that from an operational level QANTAS still have a requirement to invest in these assets (update simulator programs).

If we use the 747 spares inventory as another example, the amount of inventory was once based upon a fleet size of 36 aircraft. Today the 747 fleet numbers eleven aircraft. In this instance management could have decided to write down the value of inventory based upon the economic value and not the book value. This is despite the fact some inventory may be retained (instead of sold) as it is operationally beneficial to do so.

There are many nuances that have to be accounted for. There are also many available mechanisms for the valuing of assets.

Quoting Jacobin777 (Reply 177):
(thanks to a self-imposed 3+ year ban)

...and welcome back. I did miss your posts!
 
Nouflyer
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 4:31 am

Quoting mariner (Reply 166):
It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong.

I certainly won't be apologising.

I can't believe that the market is so gullible as to swallow the creative accounting that went into both the absurd loss and now the equally absurd profit.

If and when Qantas comes clean about multiple aspects of its financials - including, for example, whether Qantas International is ever reimbursed for the fuel that it buys for Jetstar at Honolulu - then I might be able to arrive at a favourable conclusion.

But given that Qantas has only just had to gag a book which might have revealed its alleged lies in the 2011 "sudden, unplanned" shutdown, for now I just work on the conclusion that Qantas is an organisation that couldn't lie straight in bed.

The main thing that I have learned over the last two years is the frighteningly low intellectual calibre of many of the great and the good in corporate Australia. As with many of the contributors to this board, anti-employee dogma goes much further with these people than analysis of the facts.
 
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 4:47 am

Quoting Nouflyer (Reply 180):
I certainly won't be apologising.

I didn't - for one moment - imagine that you would.

mariner
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qf2220
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 8:39 am

Quoting travelhound (Reply 174):
Depreciation rates and subsequent book values are based upon tax law!

For the tax books (refer below), you are correct. But for financial reporting, it is the economic life that sets the depreciation charge. There are two different concepts at work (unfortunately).

Quoting Planesmart (Reply 175):
Most businesses produce at least three sets of accounts - for the tax department, for public reporting (if so required), and for internal purposes.

Yep. More and more you are seeing the public reporting and internal reporting being aligned such that there are only two sets of books required.

Quoting travelhound (Reply 179):
management could have decided the economic value of these "assets" was less than the book value and as such decided to write them down.

Only in 2 cases. 1, if the sale values seen for like assets are lower, or 2, the future value of cashflows expected to be generated from these assets are lower than the asset carrying values. Management cannot just write down an asset because they feel like it.
 
TN486
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 9:37 am

Quoting mariner (Reply 166):
t was fairly lonely being an AJ supporter here a couple of years ago.

I was with you mate, I have always been "all the way with AJ".

Quoting mariner (Reply 166):
It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong

Might I venture to say it was the unions and the press. I will never forget the arrogant "we will bake you slowly" coming from a particular union, however, you and I having lived as long as we have, would know what human nature can be like, it has its positives and weaknesses.

Quoting QF2220 (Reply 168):
To add my 2c to the pro/against AJ point, I don't think it is until quite some time after a CEO/Exec team has left that you can really judge their performance. When Dixon et al brought down the $1.4(?)bn profit they were lauded as heroes. Now, we see them as quite tainted by trying to do (some would say fanciful) deals instead of running an airline. Im neutral tending to the support of AJ but I don't think I can properly conclude until its all come out in the wash. He has done a great turnaround and I see this continuing, but I'm not going to canonise nor crucify the guy (and his team) just yet

I think the recent QF profit has a more solid base to it than the Dixon era, I suggest you could agree that we are looking at an airline reinvention here more so than a "monumental" profit.

Quoting mariner (Reply 178):
I prefer to give credit where credit is due and, as of now, Qantas is a very profitable airline. I have no idea what will happen in the future, but for me the glass is half full rather than half empt

As always Mariner, well said, totally agree. cheers
remember the t shirt "I own an airline"on the front - "qantas" on the back
 
qf002
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 10:05 am

Does it really matter who was on which side? The handful of posters who should be chowing down the humble pie right now are all going to be far too proud to ever admit that they were wrong, so the whole discussion is just pointless.

The important thing is that QF is getting back on track. Yes they still have some distance to go (including almost half of their annual transformation benefits to be realised in future years), but one only needs to take a quick look at VA's recent performance (and outlook) to realise that QF has played their cards particularly well.
 
bill142
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 10:35 am

Quoting Nouflyer (Reply 180):
If and when Qantas comes clean about multiple aspects of its financials - including, for example, whether Qantas International is ever reimbursed for the fuel that it buys for Jetstar at Honolulu - then I might be able to arrive at a favourable conclusion.

And I'm sure I'd you get someone to audit their books you'll find your claim is completely false. Maybe you should back up your accusations of book cooking with some evidence and submit that evidence to ASIC. Youre accusing Qantas management of fraud.
 
TN486
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 10:49 am

Quoting qf002 (Reply 184):
The important thing is that QF is getting back on track. Yes they still have some distance to go (including almost half of their annual transformation benefits to be realised in future years), but one only needs to take a quick look at VA's recent performance (and outlook) to realise that QF has played their cards particularly well.

Agree wholeheartedly      
remember the t shirt "I own an airline"on the front - "qantas" on the back
 
81819
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 11:30 am

Quoting QF2220 (Reply 182):
For the tax books (refer below), you are correct. But for financial reporting, it is the economic life that sets the depreciation charge. There are two different concepts at work (unfortunately).

I think we are going to keep going around in circles.

For clarity tax law in Australia requires an aircraft to be depreciated over it's economic life. If I remember correctly for QANTAS the economic life for a 747 is 20 years (22 years for BA). In addition to this heavy maintenance, upgrades to interiors and avionics are all capital expense items and as such depreciated at a defined rate. Individual parts of an aircraft (i.e. APU's, engines, interiors, flaps, landing gear, etc) are often depreciated separately to the airframe and at different rates and time frames.

In almost all instances "economic life" would be the defining principal for how an asset is depreciated.

As such an older aircraft (let's say fifteen years old) still might have a book value 50% or greater than its original purchase price, simply because it has been maintained and upgraded through out its life.

Where tax law can be advantages is where accelerated depreciation of assets is allowed. Typically, accelerated depreciation is not commonly used in the Australian aviation industry. Other countries (such as Singapore) have more favourable tax regimes and as such aircraft can be depreciated at rates less than the economic life (i.e. 10 years).

As such, whether the reporting be financial to the markets or statuary for the tax office, on the whole the same principals for depreciation apply. When Alan Joyce announced the $2.3 billion write down of assets in 2014 the write down applied equally just as much to the markets as it did for the tax office.

QANTAS were writing down the value of its assets and it applied across the board!

The point of my posts is not to discuss the intricacies of tax law and how aircraft are depreciated.

For a very long time I have been presenting the argument that the write down of QANTAS assets was not simply a flick of the pen or a few taps of the keyboard, but a major undertaking that took many years of planning.

To give greater perspective, if we consider in 2008 when Alan Joyce took over, the main stay of the QANTAS wide body fleet were 30 747's, 26 (from memory) 767's and 18 A330's we have a simple understanding of QANTAS's than fleet of aircraft.

If we consider in the last seven years QANTAS have retired 19 of the 30 747's, all of the 767's and closed down all of the maintenance facilities that supported these aircraft, we have a better understanding of what has actually occurred.

In essence from an assets and liabilities perspective (remove airports) QANTAS international a very different company to what it was seven years ago.

Considering QFi has had limited investment over the last seven years, its average fleet age will be 14.5 years in 2018 (when the 787's start coming) and over the following seven years it will have to replace thirty eight aircraft just to maintain its size, it will require a lot of investment before this company is truly turned around.

As such the restructure of this business group is by no means complete and will require years of restructuring and investment before it becomes stable.
 
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 11:42 am

Quoting qf002 (Reply 184):
Does it really matter who was on which side?

If we're talking about here, then it doesn't amount to a hill of beans.

It were are talking about supposedly informed and expert journalists - shapers of public opinion - then yes, I think it does matter. I expect those journalists (a) to have done their homework and (b) to be relatively impartial.

mariner
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RyanairGuru
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 9:18 pm

Just to momentarily divert our attention from Australian tax law to the profits announcement that started this discussion, Fairfax is reporting today that 'sources familiar' put the GK loss at approximately 8 Billion Yen, and improvement from 12 Billion last year.

Sorry, no link as I'm on my phone. Article is found on page 26 of today's SMH.
Worked Hard, Flew Right
 
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qf2220
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 11:03 pm

Quoting RyanairGuru (Reply 189):

For context a rough conversion using todays rate through OANDA puts that at A$89m. Not a great result. Perhaps AJ needs to turn some of his focus back to JQ for a little?

Quoting RyanairGuru (Reply 189):
Just to momentarily divert our attention from Australian tax law to the profits announcement that started this
Quoting travelhound (Reply 187):

Travelhound, I think I need to sit down with you and a beer and take you though what I know about corporate financial reporting and corporate tax!
 
Sydscott
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RE: Qantas Confirm 787-9 + $900 Million Profit

Sun Aug 23, 2015 11:19 pm

Quoting RyanairGuru (Reply 189):
Just to momentarily divert our attention from Australian tax law to the profits announcement that started this discussion, Fairfax is reporting today that 'sources familiar' put the GK loss at approximately 8 Billion Yen, and improvement from 12 Billion last year.

Sorry, no link as I'm on my phone. Article is found on page 26 of today's SMH.

This is the article you are talking about:

http://www.smh.com.au/business/aviat...jetstar-japan-20150821-gj4nmc.html

There a couple of inaccuracies in there as well:

1. GK does not have a secondary base at Nagoya. At present they have a maximum of 8 flights per day at NGO with 2 flights daily to each of FUK, CTS and KOJ and 1 to OKA and KMJ. The flight to KMJ is being suspended in October;
2. GK has also faced headwinds from its association with JAL. The present Japanese Govt is favouring the ANA Group over JAL to allow ANA to accrue benefits from JAL being held back to make up for JAL's bankruptcy re-structuring. Hence the higher portion of slots at HND going to ANA etc.

If anyone is interested in following what's happening in Japan I can thoroughly recommend ZipanguFlyers blog.

http://zipanguflyer.blogspot.com.au/

Most of his sources are in Japanese but he does a great job of writing up his summaries in English.
 
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allrite
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 12:28 am

Quoting Sydscott (Reply 191):
If anyone is interested in following what's happening in Japan I can thoroughly recommend ZipanguFlyers blog.

http://zipanguflyer.blogspot.com.au/

Most of his sources are in Japanese but he does a great job of writing up his summaries in English.

Thanks for the link, though I must profess that I would personally rather catch a train in Japan than fly.  
I like artificial banana essence!
 
timtam
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 1:22 am

Quoting mariner (Reply 166):

Ben Sandilands was one of those leading the charge of anti AJ rhetoric.

Egg on face for Ben.
 
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 2:05 am

Quoting QF2220 (Reply 190):
Perhaps AJ needs to turn some of his focus back to JQ for a little?

I think QF still needs attention for now - QFi has only just returned to profit so to ignore it risks sliding back into the red. After all he has Jayne Hrdlicka to attend to GK.

Quoting Sydscott (Reply 191):
GK has also faced headwinds from its association with JAL

Would this be the reason for the certification delays with GK starting international service?
 
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777Jet
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 2:24 am

Quoting mariner (Reply 166):
It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong.

Is that what you expect in every instance in which someone might have been wrong with their position?

You must find a lot of amusement on this site! I know I do  
Quoting qfvhoqa (Reply 194):
Quoting QF2220 (Reply 190):Perhaps AJ needs to turn some of his focus back to JQ for a little?

I think QF still needs attention for now - QFi has only just returned to profit so to ignore it risks sliding back into the red. After all he has Jayne Hrdlicka to attend to GK.

  
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Sydscott
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 2:49 am

Quoting qfvhoqa (Reply 194):
Would this be the reason for the certification delays with GK starting international service?

That's part of it. Japan is also highly beaurocratic in its approval processes and once GK stuffed up on their maintenance stuff early on they were always then going to attract additional scrutiny and a more lengthy approval process in just about everything they did.

The other thing with GK is that they are trying to avoid competing with JAL where possible. So International expansion was always going to be a bit slower than the others. Having said that, GK will now have to out compete Vanilla Air if it wants to expand to the most popular places in North Asia out of NRT so it's going to take even deeper pockets than it would have otherwise to establish a presence.

Finally, NGO is an ANA stronghold and out of the 3 large Japanese metroploises is the only 1 that doesn't have a dual airport system. (Yes I know Fuji Dream operates out of downtown but that operation will never threaten NGO) So I'm surprised that GK has not yet started a base there and significantly ramped up the capacity to places like OKA and CTS.
 
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 2:51 am

Quoting mariner (Reply 178):
I prefer to give credit where credit is due and, as of now, Qantas is a very profitable airline. I have no idea what will happen in the future, but for me the glass is half full rather than half empty.
Quoting 777Jet (Reply 195):
Is that what you expect in every instance in which someone might have been wrong with their position?

You must find a lot of amusement on this site! I know I do  

Me, I'm just happy that a math man (Joyce) is better than a marketing man (Dixon).  

I wonder how long we'll have a period of "comfortable" duopoly in the domestic market to allow both Qantas and Virgin to rebuild their profitability with skirmishes being confined to a little LCC action and peripherals like loyalty programs. The fact that domestic is such a big driver of Qantas' earning often seems ignored when they are compared to many top tier international airlines, primarily those operating out of city-state hubs.
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mariner
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 3:46 am

Quoting qfvhoqa (Reply 194):
I think QF still needs attention for now - QFi has only just returned to profit so to ignore it risks sliding back into the red.

AJ must pay attention to all of them. I've always understood that he is CEO of Qantas (the Group), ultimately responsible for all the subsidiaries, even if they have their own CEO's.

Quoting 777Jet (Reply 195):
Is that what you expect in every instance in which someone might have been wrong with their position?

Here is different, what was once called "a walled garden" - or a hot house of enthusiasm with varying levels of knowledge and interests. I've always assumed that some of the plane spotters couldn't give a zak for corporate issues.

Realistically, I don't expect it in the public media, either., these days when opinions seem to trump facts.

mariner
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DeltaB717
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RE: Qantas Confirm 787-9 + $900 Million Profit

Mon Aug 24, 2015 4:02 am

Quoting mariner (Reply 166):
It was fairly lonely being an AJ supporter here a couple of years ago.
Quoting mariner (Reply 166):
It amuses me that I haven't seen one of the "Joyce Must Go" crowd who's had the grace to apologise or even admit that perhaps they might - just might - have been wrong.
Quoting timtam (Reply 193):
Ben Sandilands was one of those leading the charge of anti AJ rhetoric. Egg on face for Ben.

Hang on one cotton-picking second... while I wouldn't necessarily call myself an AJ supporter, I certainly was on the side of "give the man a chance". But I'm also not rushing out proclaiming that he's now God's gift because there was a profit for one financial year. I'll think about proclaiming that when he consistently delivers solid results (not necessarily always profits, just solid results).

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