Australian (ASX) Stock Market Forum

QAN - Qantas Airways

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hoggy said:
I'm considering investing substantially in Qantas this week. It's risky but if they resolve the industrial disputes this week and expand into Asia over the coming years it might be the perfect time to jump in. What are the chances that Qantas will return to $2+ in the coming months?
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When the dust clears the damage to the Qantas brand, by Joyce, will live on in everyones memory for a long time to come. The people that have had to make alternative flight arrangements with alternative carriers will probably be extremely greatful to the alternative carriers and most of them will never fly Qantas again.

It will also impact on Jetstar, which is after all a division of Qantas. If I was looking to make a long term investment in an Australian based Airline now I would look a lot closer at Virgin.
 
You are focusing on the small issues.
With a new government or the next government, we need economic growth.
If there is not a rate drop on Tuesday, we need to turf every one of the RBA officials out on the sidewalk.
Abbott has said that he will not bring back work choices.

Gillard has just proved she cannot run the country.
Labor was advised with 3 hrs. notice with what was happening with Qantas.
They did not respond. Fair work Australia needs savlon cream and bandages.

Gillard has been caught out big time by throwing it at Abbott.

If fair work Australia sides with the unions, then international Qantas is finished.
joea
 
Why cant the Qantas workers work for the same rate of pay as the Virgin workers do??????????????, they are surving ok. If they are not happy with the job they are doing why not quit, and work in a job that they like. Good on Qantas, BRING IT ON, its time to get rid of the Unions if we want our air line to succeed.
 
pilots said:
Why cant the Qantas workers work for the same rate of pay as the Virgin workers do??????????????, they are surving ok. If they are not happy with the job they are doing why not quit, and work in a job that they like. Good on Qantas, BRING IT ON, its time to get rid of the Unions if we want our air line to succeed.
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Quite agree actually. I don't think they deserve a pay rise at all, unsustainable and just plain selfish considering they're the highest paid already in Australia and these economic conditions. Then again Mr Joyce just topped that by getting a pay rise so he's just lost his case right there. Messed up situation for sure.
 
prawn_86 said:
Dont bet on it, especially for international tourists with more options than our domestic routes. 'Brand' is a valuable (if undefinable) asset for a business and somehting like this will always be in the back of people mind, or even sub-conscious when booking for years to come
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Qantas brand was already being trashed due to industrial action. As shareholders would you prefer for continued strike action for another year? It seems there was no end in sight and I understand that the Qantas brand was already suffering.

At least, this is hopefully the last inconvenience for passengers with industrial action. If I were a share holder, I would think Joyce has done the right thing to bring this to a head and get the passengers travelling without the constant threat of delayed and cancelled flights due to union strikes which have already been upsetting passengers.

Without Joyce's action, I think the Qantas brand would eventually be entirely trashed by the very people who work for them.
 
If a few once-a-year flyers are inconvenienced on a weekend that's no biggy, they usually can be lured back with cheap flights. Look at Tiger, suspended because of safety and their load factor only fell 9 points. Qantas did it on a Saturday afternoon so that business travellers, the guys who actually keep Qantas flying, would suffer the least inconvenience.
 
notting said:
It was a great move by Joyce I reckon. Union rubbish in an impossible industry. He earns his pay this guy. Long QAN short VBA.
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Yepp same here. The only reason he was getting slagged off was because the media tried to highlight Joyce's pay rise. Union pressure for unsustainable wage demands, it's like they deliberately don't want to have jobs in the future!
 
snsdmonkey said:
Yepp same here. The only reason he was getting slagged off was because the media tried to highlight Joyce's pay rise. Union pressure for unsustainable wage demands, it's like they deliberately don't want to have jobs in the future!
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Yeah, it's no wonder the workers want job security...:D
 
For the last couple of weeks Ive been working at the airport on the gold coast (doing some renovation type work)

One thing has really struck out to me in the last few days, the plane turnaround time for Jetstar, in comparison to Virgin and Air Asia and Tiger is outstandingly slow. In most cases if Virgin or Air Asia are taking 30 mins or 1 hour to turn around a plane, Jetsar are taking 1 hour or 2. Considering there operating within the same business plan (ie:low cost carrier, making low margins on higher volumes of passengers) it sticks out to me as being a very considerable disadvantage to have your planes sitting on the ground longer then competing airlines.

The A330's for Jetsar seem to be the worst offenders, the 2 they have flying out of the Gold Coast seem to spend about 1/2 the day on the tarmac going nowhere.
 
Anyone contemplating investing in QAN might want to first read this article by Stephen Batholomeusz.

"Politicians and union leaders searching for a context in which to place the damaging confrontation with Qantas could do a lot worse than looking at the latest International Air Transport Association forecasts for the airline industry and some of the comments of its chief executive, Tony Tyler, in particular.

At the moment IATA, which tends to be consistently over-optimistic, is keeping to its forecast of a $US6.9 billion profit for the industry in 2011 and has only modestly revised down its 2012 forecast, from $US4.9 billion of profit to $US3.5 billion. At that level the industry would be generating a profit margin of only 0.6 per cent.


Should the eurozone crisis deepen, a banking crisis develop and Europe fall into recession, however, IATA would expect all regions to fall into losses and the industry overall to lose about $US8.3 billion. As it stands, that looks the more likely scenario than the more benign outcome in the eurozone that underpins the central forecast.

The Qantas group, of course, is profitable. Even after absorbing around $100 million of losses as a result of the disputes with three of its unions that led to the grounding of its fleet, it still expects to generate underlying earnings before tax of between $140 million and $190 million in the December half.

That profit, however, is based on the strength of its domestic franchise, its frequent flyer business, its Jetstar brand and its other non-aviation operations. Its international operations, it has said, are losing $200 million a year.

If IATA’s view of what 2012 might look like in the event that the eurozone authorities can’t finesse a positive and stabilising outcome imminently, the outlook for Qantas’ international business – in which it has $5 billion of capital tied up – would look even less palatable.

Even on IATA’s more sanguine outlook for 2012, the industry would have lost more than $US26 billion over the past decade despite generating revenue of $US5.5 trillion. It is a terrible industry, not helped by the interventions of government or the lack of comprehension of its inherent vulnerability by unions.

‘’You might say that the normal state of aviation is crisis and once in a while we have a few consecutive months of benign conditions – the danger of which is that everyone from suppliers to unions to governments think that airlines are fat cash cows ready for milking in one way or another,’’ Tyler said.

It is the denial of the reality of the international aviation industry and its impact on Qantas’ business that underpins union attempts to freeze those operations in a 1960s status quo and the government’s inability to comprehend why Alan Joyce took that very difficult and financially painful decision to ground the fleet.

If IATA’s fears about the eurozone were borne out, the Asia-Pacific region, generally the most profitable in the globe, would, with the rest of the world, lose money – more than $US1 billion – rather than the $US2.1 billion profit IATA’s central forecast anticipates.

For Qantas, flying point-to-point long haul routes against Asian and Middle Eastern hub carriers with far more modern and efficient products, even the less threatening outcome isn’t going to materially reduce the tide of red ink flowing through its international business. A European meltdown would be very unpleasant.

International aviation isn’t, and never has been, a good business. Over the past 40 years, according to Tyler, the industry has actually made money – but generated an abysmal profit margin of only 0.3 per cent.

In the past decade the emergence of new carriers out of the Middle East and Asia has meant that despite relatively strong growth in passenger numbers, yields have been squashed by the torrent of new capacity pouring into the industry.

Qantas’ international operations need to be radically restructured, their cost base lowered and its configuration re-shaped. Joyce’s strategy of launching a new premium carrier within Asia alongside the rapidly-growing Jetstar business – one of the reasons for the union hostility – might be risky but the status quo isn’t an option.

Even if Qantas could wear the losses, while there is no prospect of generating a return from those operations it isn’t possible for the Qantas board to justify the massive investment required to completely overhaul and upgrade the international product to make it more competitive. That’s why the timetable for the fleet renewal program has been continually pushed out into the future.

Whether or not IATA’s more pessimistic outlook for 2012 is confirmed, the actions taken by Joyce and his board this year to try to do something about the uneconomic structure of their international business are validated by the continuing sub-economic state of the international industry. "
 
Had a short on QAN which I closed YESTERDAY :banghead:

If I had a spare $2.5B lying around, I would buy QAN, spin out the international arm and move most of the debt into it (but retain the Qantas name to fool the fools), sell the freq flyer program to recoup most of my outlay, and keep Jetstar and Domestic for free.

Failing the international spin out, I will just threaten to cease operation... the government will freak out and may be even take it over...

*Checking bank account - nope, don't have spare $2.5B.
 
skc said:
Had a short on QAN which I closed YESTERDAY :banghead:

If I had a spare $2.5B lying around, I would buy QAN, spin out the international arm and move most of the debt into it (but retain the Qantas name to fool the fools), sell the freq flyer program to recoup most of my outlay, and keep Jetstar and Domestic for free.

Failing the international spin out, I will just threaten to cease operation... the government will freak out and may be even take it over...

*Checking bank account - nope, don't have spare $2.5B.
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You've got quite the business brain sk. What did you do as a job before trading>?
 
The problem with airlines is that they have such large fixed and ongoing costs and such competition that it is very hard to make money at all.

There is some statistic often trotted out that since Orville and Wilbur Wright invented the flying machine in 1903 all airline companies taken as a whole have lost money. That is pretty incredible wealth destruction for a technology that the modern world could not do without.

Qantas is actually the one airline company that has been consistently profitable for a significant period of time - purely because of competition restrictions in Australia.
 
Who flies Qantas internationally? that's what I'd like to know! The service is OK but it's soooo overpriced. I have a flight to Europe at the end of the month, booked on Asiana $3500 one way in business (with a free hotel in Seoul for the night), Qantas was $7k. China Southern is about to start competing on the Kangaroo route and are asking the government in Guangdong to allow visa free transiting through Guangzhou, as currently happens in Shanghai.

I can see how they make money on the FF program, it must be the only program in that charges you to join and the earn/burn rate is disgraceful (they don't actually charge you to join if you live outside Australia).

Without the domestic ops Qantas would have been finished some time ago. The reality is that Qantas will either have to offshore their entire (with the exception of pilots) international ops or the government will need to subsidise them. I don't think it would actually be possible to split the international business out, government intervention aside, it would fail quickly. I can't imagine debt holders agreeing to carrying having their debt secured by a loss making operation.
 

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