27th February Big Qantas announcement

[mannej]

I wonder which airline Tony Abbott + family flew to Europe with over the break and were all stuck in Y. Must be a first for a PM to be in cattle class. Me thinks if QF, they are regretting not finding him an upgrade.

Did he not decline any form of an upgrade for that trip anyways?

 

[dk4]

Then Abbott will announce the 'second best' option - that he's been forced into - of the debt guarantee.

ROFL. There are a large number of assets which Qantas can sell before the government need even consider if any form of "national interest" support is warranted for an individual market player...

100% sale of Jetstar

100% sale of QFF

 

[SeatBackForward]

ROFL. There are a large number of assets which Qantas can sell before the government need even consider if any form of "national interest" support is warranted for an individual market player...

100% sale of Jetstar

100% sale of QFF

While that would improve the balance sheet, it would destroy their revenue streams. I'd say selling QFi would be a better option.

 

[wandering_fred]

While that would improve the balance sheet, it would destroy their revenue streams. I'd say selling QFi would be a better option.

Without full transparency between QFi and Jetstar in historic and future transactions, would anyone in Australia buy?

Happy wandering

Fred

 

[markis10]

Without full transparency between QFi and Jetstar in historic and future transactions, would anyone in Australia buy?

Happy wandering

Fred

Qantas responded last night to the persistent rumours on that subject, IMHO it was a good response for a change:

ISSUE: Claims by Senator Nick Xenophon that Qantas should open its books to prove it is not cross-subsidising JetstarFACTS: These claims have been made a number of times over the past few years and Qantas has categorically denied them each time.


Qantas has obligations as an ASX listed company, which require us to publish accurate financial data.


Qantas has previously offered the unions an opportunity to have our financial accounts audited independently on the condition that they would cease making baseless claims about cross subsidisation when it was shown it wasn’t occurring. They didn’t take Qantas up on this offer.

Someone in qantas Corporate has bought a Karcher to clean up all the mud being thrown!

 

[dk4]

While that would improve the balance sheet, it would destroy their revenue streams...

Alan Joyce (aka Qantas) walks into centrelink (aka the government) and asks for a hand out, because he has fallen on hard times. Centrelink says, "that's sad, please fill out this form for me listing all your assets".

When the assessor looks over the form, AJ is asked why he can't sell off more assets (like anyone else who is experiencing a little bit of financial trouble), and he states "because they make money for me". Centrelink says "go away, and come back when you are in actual financial trouble".

Mind you, a listing on gumtree for "Jetstar Airways" would probably look a bit out of place.

 

[a330j]

ROFL. There are a large number of assets which Qantas can sell before the government need even consider if any form of "national interest" support is warranted for an individual market player...

100% sale of Jetstar

100% sale of QFF

Don't forget the $2.4 billion in cash and $600 million unused credit facility that Qantas can use before the Govt needs to provide support.

 

[badseed]

Don't forget the $2.4 billion in cash and $600 million unused credit facility that Qantas can use before the Govt needs to provide support.

Exactly!

What other business would have the temerity to ask for government assistance when they have at least another ~ 3 years of cash reserves (in a worst-case accelerating-losses situation)? Do Joyce and Co really have such little faith in their own recovery strategy? If that's so surely it's time for the board to act.

I agree with many others that they are unfairly constrained by the QSA - however, that's the law, and the 51% ownership part at least is going to stay around, given that all of the other parties are lining up to oppose the full repeal.

In reality much of what is going on is mere spin and politicking whilst for QF and VA shred their shareholders' value.

 

[yohy?!]

I cant find the link but at the last results announcement for QF there was an analyst who published a review on the cash balance basically stating that it's vastly overstated by the balance of forward bookings - ie all that cash is offset by liabilities to actually fly people places

 

[ComeFlyWithMe]

I find it fascinating that the armchair CEOs can completely disregard the various ways QF have one hand tied behind it's back (sale act, archaic industrial agreements, etc).

I'm not sure what right VA would have to any debt guarantee, considering they don't have the same constraints.

If the sale act doesn't go, let's impose one on VA requiring them to sell all foreign owned shares down to the same levels and see if the capital markets come to their aid. I think not.

Quite patriotic for many to be supporting the majority foreign owned carrier in this instance. It's no wonder nobody is flying QF any more.

 

[medhead]

I find it fascinating that the armchair CEOs can completely disregard the various ways QF have one hand tied behind it's back (sale act, archaic industrial agreements, etc).

I'm not sure what right VA would have to any debt guarantee, considering they don't have the same constraints.

If the sale act doesn't go, let's impose one on VA requiring them to sell all foreign owned shares down to the same levels and see if the capital markets come to their aid. I think not.

Quite patriotic for many to be supporting the majority foreign owned carrier in this instance. It's no wonder nobody is flying QF any more.

Even more fascinating arguing for government support because of the agreements that qantas management have made of their own free will. Armchair CEOs who think poor management should be rescued by government. Yeah, ok then.

The only external impediment is the sale act. There is considerable doubt anyway about the effect of that act as it's removal still requires qantas to sell some of the business to access cheap capital. Given the poor management track record, such a sale seems a marginal proposition.

As for patriotism, isn't there a saying about patriotism as a refuge?

How about qantas management focus on their own performance before worrying about anyone else. They can't even follow through a 3 year plan to save the airline for greater than 12 months. Are memories so short that they can't even recall the 3 year plan Joyce released last year? A plan replaced by a new 3 year plan this year.

 

[ComeFlyWithMe]

You will find that many of the industrial agreements were inherited from when QF was government owned, so suggesting they are of management's own making is disingenuous.

I'm not suggesting management are blameless, however an almost entirely foreign owned airline through some creative accounting can enjoy Australian designation and the benefits that come with that, against a privately owned carrier that has various investment impediments placed on it by government. It is clearly unfair, and when any impediments are lifted, it will still not be a level playing field due to their ridiculously high cost of labour for the legacy reasons I already mentioned.

 

[serfty]

...

The only external impediment is the sale act. There is considerable doubt anyway about the effect of that act as it's removal still requires qantas to sell some of the business to access cheap capital. Given the poor management track record, such a sale seems a marginal proposition.

As for patriotism, isn't there a saying about patriotism as a refuge?...

I believe there's a very important part of the QSA (Qantas Sale Act) that is dear to the heart of many. That is "Part 3" which includes:

[TD="class: alt2"] s7(1)(h) require that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering, flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas; and ...
[/TD]

 

[medhead]

Qantas private management have had 20 years to deal with those agreements. During that time they have kept renewing the agreements. As outlined in the AFR, iirc, last week they could have refused to offer a new EBA for agreements they didn't like. I can't believe anyone would seriously suggest enterprise agreements were out of management control for 20 years.

 

[medhead]

I believe there's a very important part of the QSA (Qantas Sale Act) that is dear to the heart of many. That is "Part 3" which includes:

[TD="class: alt2"] s7(1)(h) require that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering, flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas; and ...
[/TD]

What did I write again? The only external impediment is the sale act. That general comment includes the totality of the sale act, in case mentioning one specific example afterwards was confusing for anyone.

Still the primary point Joyce consistently raises is access to capital.

 

[serfty]

What did I write again? The only external impediment is the sale act. That general comment includes the totality of the sale act, in case mentioning one specific example afterwards was confusing for anyone. ...

Agreed.

What I was pointing out was a part that if revoked would enable some level of cost cutting.

 

[badseed]

Those supposedly 'inherited' industrial agreements have been renewed time-after-time, including by current management.

There are mechanisms in place within the Fair Work IR regime to vary agreements, or to supercede them entirely when they come up for renewal (usually within 6 months of the expiry date).

Prior to that they had Workchoices, which gave employers even greater scope to alter agreements without the level of consultation required under both the current FWA and pre-Workchoices model. The industrial situation that QF finds themselves in now is thus largely of their own making.

And to think that some people bought the 'Joyce smashed the unions' rhetoric after the shutdown...

 

[serfty]

...

And to think that some people bought the 'Joyce smashed the unions' rhetoric after the shutdown...

It's all how you look at it.

Mayday: How Qantas went from national icon to corporate tragedy

While the three unions at the centre of the dispute in 2011 failed in their bid for job security clauses to be inserted into new labour agreements, they still gained pay rises of 3 per cent to 4 per cent a year for their members.

 

[petercr]

Am I naive in thinking that if Qantas has $2B+ in cash reserves and a $600M line of credit that someone doesn't just say to the board 'hey why not go buy some new planes, sell off the old ones we can't use any more and make the punters happy and get more bums on seats'? Surely a good quality product with good quality services that people want to use will get people in the door...

 

[SeatBackForward]

Am I naive in thinking that if Qantas has $2B+ in cash reserves and a $600M line of credit that someone doesn't just say to the board 'hey why not go buy some new planes, sell off the old ones we can't use any more and make the punters happy and get more bums on seats'? Surely a good quality product with good quality services that people want to use will get people in the door...

$2.6bn in cash reserves is there for QF's day-to-day requirements. To invest in new airlines would require a significant draw down on cash, and might not leave enough for their day-to-day requirements.