24 August 2011 - any predictions?

[medhead]

And no worlds best practice does not mean minimum standards.

no usually it means just better than average. Or you develop some new vastly complex and pointless system that achieves very little and say it is worlds best practice. Then if anyone dares to question your system just keep repeating "we need to have worlds best practice" and "this is worlds best practice"

 

[ajw373]

no usually it means just better than average.

Yep, which as I said is not the same as meets the minimum.

 

[medhead]

Yep, which as I said is not the same as meets the minimum.

It depends on industry and the spin. If everyone does less than the minimum then worlds best is the minimum. Point remains that worlds best practice is rarely the highest standard, as the phase tries to imply, and it is only subjectively "best".

 

[dajop]

It depends on industry and the spin. If everyone does less than the minimum then worlds best is the minimum. Point remains that worlds best practice is rarely the highest standard, as the phase tries to imply, and it is only subjectively "best".

Does anyone strive for worlds best practice these days? Isn't all about being "best in class" now? ( .... apologies to anyone who like me, cringes every time they hear or read that ...)

 

[Awesom Andy]

I don't quite understand how replacing qualified and licensed experts with machines is world's best practice...

 

[medhead]

I loved:

continuing to be Australia's leading premium international airline

What by constantly bad mouthing qantas international in the press and destroying modernization of the qantas international fleet by giving the new aircraft to jetstar. Then I guess on 24 August, it'll be the leading premium airline on 2 routes.

 

[ajw373]

I don't quite understand how replacing qualified and licensed experts with machines is world's best practice...

The plan is not for them to replace the experts but to give them tools to utilise the on board diagnostic systems that newer aircraft have. Of course this may mean not as many are needed, as less physical checks are needed which is not necessarily a bad thing. It is technological advancements like this that Qantas needs to get its cost base down and on par with it's competitors.

...Qantas is about to launch a new airworthiness control system on its A380 fleet called Project Marlin, which will allow engineers to check maintenance records using their iPads.

"Project Marlin cost more than we wanted and took longer than we'd like," Mr Joyce said.

He says the days of highly specialised engineers checking aircraft between landing and takeoff have been made redundant by new generation planes.

Quote from ABC News online:

Qantas looks to partnerships for growth - ABC News (Australian Broadcasting Corporation)

 

[ajw373]

I loved:



What by constantly bad mouthing qantas international in the press and destroying modernization of the qantas international fleet by giving the new aircraft to jetstar. Then I guess on 24 August, it'll be the leading premium airline on 2 routes.

Both Qantas and Jetstar have BOTH been receiving a constant supply of new aircraft over the past few years and both Jetstar and Qantas have been royally screwed by the delays to the 7late7 and Qantas to a lesser extent by the A380 delays.

Having said that if you are running a business and can make more money by growing brand J rather than loosing money by allocating the exact same assets to brand Q what would you do? And BTW this is coming from someone who cannot stand Jetstar, but sadly facts are facts.

 

[rechoboam]

Both Qantas and Jetstar have BOTH been receiving a constant supply of new aircraft over the past few years and both Jetstar and Qantas have been royally screwed by the delays to the 7late7 and Qantas to a lesser extent by the A380 delays.

Having said that if you are running a business and can make more money by growing brand J rather than loosing money by allocating the exact same assets to brand Q what would you do? And BTW this is coming from someone who cannot stand Jetstar, but sadly facts are facts.

Exactly. Sad as it may be he is running a business that needs return on capital and growth.

 

[medhead]

Both Qantas and Jetstar have BOTH been receiving a constant supply of new aircraft over the past few years and both Jetstar and Qantas have been royally screwed by the delays to the 7late7 and Qantas to a lesser extent by the A380 delays.Having said that if you are running a business and can make more money by growing brand J rather than loosing money by allocating the exact same assets to brand Q what would you do? And BTW this is coming from someone who cannot stand Jetstar, but sadly facts are facts.

Exactly. Sad as it may be he is running a business that needs return on capital and growth.

I referring to the 787 in particular. Ordered for Qantas? Yes? Being late doesn't help, but exactly how do you get growth if you turn over the new aircraft that are desperately need by qantas to jetstar. As for the capital return the 787s were ordered by qantas, but are going to be used by jetstar. So where is that capital sitting on the books right now? I assume there would have been deposits taken and such. Capital expended by qantas, impacting their return with the delays. But the aircraft will go to jetstar. Bet there won't be any payments from jetstar to qantas.

Sorry but I think it is a bit rich for him to get out there and bag the cough out of qantas, expand jetstar at the expense of qantas, cut off qantas' growth due to lack of capital return seemingly ignoring the 787 delays and then sell the "world's leading international premium airline." a premium airline that he is doing his utmost to destroy.

Yep he is running a business but IMO a lot of the problems with qantas have been created by him and yet he still wants to get mileage from the thing that he is wrecking.

 

[ajw373]

I referring to the 787 in particular. Ordered for Qantas? Yes? Being late doesn't help, but exactly how do you get growth if you turn over the new aircraft that are desperately need by qantas to jetstar. As for the capital return the 787s were ordered by qantas, but are going to be used by jetstar. So where is that capital sitting on the books right now? I assume there would have been deposits taken and such. Capital expended by qantas, impacting their return with the delays. But the aircraft will go to jetstar. Bet there won't be any payments from jetstar to qantas.

Sorry but I think it is a bit rich for him to get out there and bag the cough out of qantas, expand jetstar at the expense of qantas, cut off qantas' growth due to lack of capital return seemingly ignoring the 787 delays and then sell the "world's leading international premium airline." a premium airline that he is doing his utmost to destroy.

Yep he is running a business but IMO a lot of the problems with qantas have been created by him and yet he still wants to get mileage from the thing that he is wrecking.

As you would well know Qantas is a group of brands of which Jetstar is one of them. From day dot the 787's were never intended to be used exclusively by Qantas the airline they were meant to be shared by Qantas and Jetstar. I see where your coming from though in saying that Qantas (the airline) has paid for these and Jetstar will use them, but that is not how business works. In fact I would suggest that if each part of the Qantas business had to operate as standalone entities, which is what it seems you are suggesting then I would have no doubt Qantas international would have been shut down years ago and Qantas domestic would be on shaky ground.

Anyway if Qantas would just get on with culling Qantas international and domestic and replacing it with a rebranded and repositioned (ala Virgin Australia) Jetstar the whole debate would be moot because Qantas would then be the only brand and it might have some hope of having a future.

As for the problems being created by Joyce, bzzzt. The problems have been created over the past 10 years as the aviation market changed, but Qantas was lucky enough to not have to make the changes due in no small part to the collapse of Ansett which handed them a massive domestic market share and sole access to the premium market. This is what has kept the company afloat. Joyce is merely the front man at a time when the changes NEED to be made, so that, coupled with his foreign heritage is making him an easy target which diverts the debate away from the reforms that are needed to keep the company as a whole in the air.

 

[Limewood]

And no doubt the decisions made about both QF and JQ are made by the board not one man, yet I'm not a fan of the current leader.

 

[medhead]

As you would well know Qantas is a group of brands of which Jetstar is one of them. From day dot the 787's were never intended to be used exclusively by Qantas the airline they were meant to be shared by Qantas and Jetstar. I see where your coming from though in saying that Qantas (the airline) has paid for these and Jetstar will use them, but that is not how business works. In fact I would suggest that if each part of the Qantas business had to operate as standalone entities, which is what it seems you are suggesting then I would have no doubt Qantas international would have been shut down years ago and Qantas domestic would be on shaky ground.

Anyway if Qantas would just get on with culling Qantas international and domestic and replacing it with a rebranded and repositioned (ala Virgin Australia) Jetstar the whole debate would be moot because Qantas would then be the only brand and it might have some hope of having a future.

As for the problems being created by Joyce, bzzzt. The problems have been created over the past 10 years as the aviation market changed, but Qantas was lucky enough to not have to make the changes due in no small part to the collapse of Ansett which handed them a massive domestic market share and sole access to the premium market. This is what has kept the company afloat. Joyce is merely the front man at a time when the changes NEED to be made, so that, coupled with his foreign heritage is making him an easy target which diverts the debate away from the reforms that are needed to keep the company as a whole in the air.

The problem with this is that Joyce does treat them as completely separate entities and not as a group. He is constantly banging on about qantas international and it's problems as if it is a separate entity. As a group they make a decent profit. $500 mil. If you look at the performance jetstar is not the best. In fact the qantas airlines and QFF out perform jetstar, iirc.

I think you'll find that each part of the group is a separate legal entity with its own ACN. I know enough about business to know that capital assets will be carried on the books of one legal entity.

The problems I am referring to is the way that qantas is being sidelined in favour of jetstar. This is unrelated to the other problems that you mention. Joyce could focus on making qantas work better and he could support them in public. He doesn't do that and all these problems we experience with qantas service can be attributed to poor staff moral. Seeing your boss on the TV telling the world that you are rubbish is not going to help staff moral. This doesn't address the airline industry problems to which you refer, but publicly supporting your company and employees at least proves a solid foundation.

And no doubt the decisions made about both QF and JQ are made by the board not one man, yet I'm not a fan of the current leader.

Yes, the board makes the decisions but they don't ask the questions. One man sets the agenda, develops the plans and presents them to the board. If the plans are approved, one man then goes off and runs those plans.

 

[drron]

no usually it means just better than average. Or you develop some new vastly complex and pointless system that achieves very little and say it is worlds best practice. Then if anyone dares to question your system just keep repeating "we need to have worlds best practice" and "this is worlds best practice"

Like QLDsHealth dept.payroll system?

 

[harvyk]

Every aspect of business has a certain amount of risk to it, that's why these CEO's are paid the big bucks. And no worlds best practice does not mean minimum standards.

Yes, every aspect of business has risk, as does aviation. But aviation is one of those things which airlines need to do everything they can to minimize that risk because if they don't many people can be killed. (plus the loss of a very expensive asset if looking from a pure $ point of view). There are many examples right around the world where airlines did the bare minimum and it's come back to bite them.

Exactly. Sad as it may be he is running a business that needs return on capital and growth.

No one is denying that, the problem is that he doesn't seem to understand that businesses core market. Just imagine, you book at the most expensive resturant in the world, the waiter comes over and after pouring your wine and placing your napkin on your lap they take your order, you decide to have the beef as you've heard it's excellent. 10 minutes later the waiter comes back and places in front of you - a big mac with fries on the side - and then charges $1000 for the privledge.

If QF's market was as cost sensitive as AJ makes out, you'd have a McDonalds on every corner, but no resturant's serving nicer but more expensive food. QF's traditional market will continue to happily pay more for flights, provided that they think they are getting improved service from it.

As for the problems being created by Joyce, bzzzt. The problems have been created over the past 10 years as the aviation market changed, but Qantas was lucky enough to not have to make the changes due in no small part to the collapse of Ansett which handed them a massive domestic market share and sole access to the premium market. This is what has kept the company afloat. Joyce is merely the front man at a time when the changes NEED to be made, so that, coupled with his foreign heritage is making him an easy target which diverts the debate away from the reforms that are needed to keep the company as a whole in the air.

The aviation market was changing prior to 2001, infact the AU aviation market was changing back in 1990 with deregulation. The collapse of AN helped DJ more than it helped QF. QF had the premium market to itself, DJ was given a national network of airport terminals. BFOD policies didn't help QF a great deal but it hasn't killed it either.

Again the current problems in the aviation market are part of it's own doing. By ignoring the value shoppers (using the analogy above, the ones who would spend triple the amount on a meal at a resturant compared to what it would cost them at McDonalds) they have created a toxic environment where price is the only deciding factor... DJ could see this happening and saw the space in the market and thus are doing all they can to capture that space. QF on the other hand seem to be concentrating only on the bottom line. AJ is taking the wrath for this as it is in a large part his doing given his LCC background where price (not value) is everything.

 

[Jobu]

OK fair enough. The Chairman is my biggest concern!I don't mind Strong. He was apparently well received in general by staff

It's not the chairman's job to run the business. Does Michael Chaney have banking experience???

 

[Jobu]

Seeing your boss on the TV telling the world that you are rubbish is not going to help staff moral. This doesn't address the airline industry problems to which you refer, but publicly supporting your company and employees at least proves a solid foundation.

Can someone please point me to some quotes where AJ has "rubbished" Qantas or its people? I have only come across some of his comments against the unions.

 

[medhead]

Can someone please point me to some quotes where AJ has "rubbished" Qantas or its people? I have only come across some of his comments against the unions.

Well there is the article quoted a few posts ago. His theme is the maintenance staff and pilots are resistant to change and they are trying to destroy qantas.

The comment about maintenance being least efficient and most expensive in the world. How would he know what other airlines maintenance costs?

The analogy with a 40 year old car. LAMEs are stuck in the 1960s repairing FJ holdens? Seems to undermine the work that I'm sure they all do to maintain and upgrade their currency with modern standards.

 

[ajw373]

The problem with this is that Joyce does treat them as completely separate entities and not as a group. He is constantly banging on about qantas international and it's problems as if it is a separate entity. As a group they make a decent profit. $500 mil. If you look at the performance jetstar is not the best. In fact the qantas airlines and QFF out perform jetstar, iirc.

I think you'll find that each part of the group is a separate legal entity with its own ACN. I know enough about business to know that capital assets will be carried on the books of one legal entity.

Firstly $500m is not a decent profit, considering the amount of capital that is needed to make that money, which makes Qantas a poor investment, which is reflected in the share price. More so when you look at how much Qantas the airline contributed to that profit, yet has the most amount of money tied up in capital, especially on the long haul aircraft.

Secondly with Qantas's corporate structure, you have Qantas Airways Limited (aka The Qantas Group), which is the publicly listed company. This company has a a shed load of subsidiaries, most are 100% owned by Qantas (and yes have their own ABN's), some, mostly offshore companies they own a share of. This ranges from Qantas (the airline), catering, the frequent flyer program, ground handling, travel agents, Defence services, leasing companies for certain aircraft or groups of aircraft and of course the various Jetstar companies. Each one is ran as a separate entity but each feeds it's money into various group units, which in turn feed that into Qantas Airways Limited. Qantas Airways Limited then decides where it wishes to invest and how it runs these subsidiary companies.

So if you look at their 2010 annual report you will see how much money each group made, listed below, and surprise surprise Qantas the airline was the 3rd best performer with a paulty 67m in the group with Frequent flyer the best and Jetstar the 2nd best performer. Now yeah I know you going to say Qantas did so poorly because it has been lumbered with Jetstars costs and debits, if you do think that please stump up some evidence...

Qantas 67
Jetstar 131
Qantas Frequent Flyer 328
Qantas Freight 42
Jetset Travelworld 14
Corporate/Eliminations (114)
Underlying EBIT 468
Net finance costs (91)
Underlying PBT 377 (profit before tax)

The problems I am referring to is the way that qantas is being sidelined in favour of jetstar. This is unrelated to the other problems that you mention. Joyce could focus on making qantas work better and he could support them in public. He doesn't do that and all these problems we experience with qantas service can be attributed to poor staff moral. Seeing your boss on the TV telling the world that you are rubbish is not going to help staff moral. This doesn't address the airline industry problems to which you refer, but publicly supporting your company and employees at least proves a solid foundation.

Herin lies the problem. For Joyce and the board to make Qantas work better they need to reform the business and work practices to bring down the operating costs. This reform is causing no end of tension on both sides which is the very public stoush we see on the news every day. Until such time as Qantas is reformed it makes perfect business sense to invest and grow parts of your total business, I.e those which are making a profit and doing well, and yes this is primarily Jetstar. I have said time and again if the workers faced the fact that Qantas is a business and not a government owned benevolent society and faced workplace reform rather than fight it, then maybe some capital and growth could be thrown their way. As it stands though it would be corporate negligence to plough investors money into business units that are giving such poor return or indeed loosing money. Yes reform is not good for morale short term, but long term it may well secure their futures, well most of them anyway.

Yes, the board makes the decisions but they don't ask the questions. One man sets the agenda, develops the plans and presents them to the board. If the plans are approved, one man then goes off and runs those plans.

Sorry that is not how boardrooms operate. There are many people on the board for a good reason. In many ways the CEO is either the hero or the villain because they are the public face of the board.

 

[ajw373]

Yes, every aspect of business has risk, as does aviation. But aviation is one of those things which airlines need to do everything they can to minimize that risk because if they don't many people can be killed. (plus the loss of a very expensive asset if looking from a pure $ point of view). There are many examples right around the world where airlines did the bare minimum and it's come back to bite them.

I actually wasn't referring to safety when I was talking about risk. I was talking about corporate risk. Ie the risk of damage to the imagine of the company, risk to investment etc etc.

Though as you mentioned safety it should be noted that safety is also a calculated risk. If you did everything in your power to minimise that risk to next to 0 then it would cost you so much you wouldn't fly. So clearly an equilibrium between cost and safety needs to be found, and over time this equilibrium needs to be adjusted. The way I see it the recent comment about maintenance is a change in the equilibrium to match the aircraft and technology we have available today.

No one is denying that, the problem is that he doesn't seem to understand that businesses core market. Just imagine, you book at the most expensive resturant in the world, the waiter comes over and after pouring your wine and placing your napkin on your lap they take your order, you decide to have the beef as you've heard it's excellent. 10 minutes later the waiter comes back and places in front of you - a big mac with fries on the side - and then charges $1000 for the privledge.

If QF's market was as cost sensitive as AJ makes out, you'd have a McDonalds on every corner, but no resturant's serving nicer but more expensive food. QF's traditional market will continue to happily pay more for flights, provided that they think they are getting improved service from it.[/QANTAS]

I think Alan Joyce and the board understand that full well. I also understand that they want to provide you with that service. However if your costs are so great, especially compared to your competitors you are going to loose money, even if you are charging $1000 for the big mac and fries.

The aviation market was changing prior to 2001, infact the AU aviation market was changing back in 1990 with deregulation. The collapse of AN helped DJ more than it helped QF. QF had the premium market to itself, DJ was given a national network of airport terminals. BFOD policies didn't help QF a great deal but it hasn't killed it either.

Again the current problems in the aviation market are part of it's own doing. By ignoring the value shoppers (using the analogy above, the ones who would spend triple the amount on a meal at a resturant compared to what it would cost them at McDonalds) they have created a toxic environment where price is the only deciding factor... DJ could see this happening and saw the space in the market and thus are doing all they can to capture that space. QF on the other hand seem to be concentrating only on the bottom line. AJ is taking the wrath for this as it is in a large part his doing given his LCC background where price (not value) is everything.

True the market did start to move a lot earlier, but as I said the collapse if Ansett in 2001 meant that it was difficult to push through the staffing reforms that were needed to be made. The company is now paying the price. Also don't think price and cost is everything to Qantas, but there problem is their competitors can offer the same, if not better for less, and are doing it. So Qantas has to offer something else and offer it at a price that makes them money rather than loose them money, which is what is on the cards. Hence they need to bring their costs down, and do so without degrading the product. But if you have a work force in denial and doesn't want to reform and change then what is Joyce and the board meant to do? Poor even more money to allow the staff of Qantas to play aeroplanes without any real sense of what a business is all about?