Qantas announces intention to acquire the remaining 80% of Alliance (ASX:AQZ)

[AustraliaPoochie]

Did QQ do some minimal flying for VA?
How will that work now.
Edit: ah, AustAviation says that agreement is till Mar next year, also with ACCC approval, so QF has all its eggs in one basket now, after Mar next year, they have their hands in 3 major Aust airlines.

 

[Must...Fly!]

No one can stop Qantas creating an airline and seeing it to be a success, free leg up or otherwise (Jetstar). But this purchase has some pretty severe ramifications for not just RPT but also the charter industry, including government which do also lean on Alliance when required.

Now one could argue the type of work Alliance does complements Qantas core competencies, and to an extent that is correct. But how does that disappear (if at all) as Qantas slowly but surely eats in to the operation?

I think some will point to the Virgin acquisition of Skywest, but they were about to go bust and only present in WA really.

 

[jase05]

Interestingly at one point only recently Alliance were apparently considering purchasing Cobham. Will be interesting to see what happens to them now aswell as Australia’s number 3 airline

 

[justinbrett]

I find it amusing many of the same people who said it’s an outrage to outsource catering and handling are also saying it’s an outrage to acquire QQ. You can’t have it both ways.

If it doesn’t get approved, nothing stopping QF from starting their own E190 subsidiary and competing with QQ. That’s a worse outcome for the QQ employees who may lose their jobs if QQ lost the QF contract.

 

[Must...Fly!]

I find it amusing many of the same people who said it’s an outrage to outsource catering and handling are also saying it’s an outrage to acquire QQ. You can’t have it both ways.

Explain, because I think you most definitely can. One is an IR issue, the other is an industry wide competition concern.

 

[justinbrett]

Explain, because I think you most definitely can. One is an IR issue, the other is an industry wide competition concern.

Only if you buy into the ACTU propaganda, which I don’t.

 

[Saab34]

What happens if the ACCC rejects? Will QF dump it’s Alliance stake and then QQ sell to Private Equity?

 

[eastwest101]

Yeah as jb747 has implied, several different moving parts to this acquisition, there is the Qantas Group IR objective which is to have as many subsidiaries competing amongst themselves to drive down costs and conditions at Qantas mainline.

There is also the issue of resource charters in WA QLD and NT and SA, which can be highly profitable and give them access to aircraft and also access to skilled staff.

The competition aspects will be interesting as the ACCC may consider competitive effects on the public domestic market, and also the effects on the charter market plus the fact that Virgin may still be using Alliance as a charter operator for some intra-QLD RPT flying. By taking out Alliance, there is one sizeable competitor no longer bidding for charter contracts against the established Qantas-owned brands (e.g Network). It's true that maybe no one in the ACCC may be a Chairmans Lounge member, but you can bet that whoever is the next federal aviation minister, after the election will be a CL member, along with their political staff, and the head of the Department for Transport.

It's been a while since I looked at Perth FIFO for instance, but this is the current state of the charter market as I understand it?

Qantas Mainline - parent company (B738 and B717s do RPTs and some charters)
Qantaslink/Network Aviation - fully owned subsidiary of QF (A320s and F100s)
Alliance - currently 20% owned by QF seeking to go to 100% ownership (E190s and F100/F70s)

Virgin mainline & VARA - still operating RPT and charters with (B738s, B737s, A320s & ex Skywest F100s retiring)

Skippers Aviation - independent ownership (F100s and Dash 8s)
Cobham - independently owned (E190s, Dash 8-400s and Bae146s gone as freighters now?)
Air North - codesharing with QF but independent (E190s & E170s)

+
Some/numerous smaller guys running Metro's, Jetstream 31s, EMB-120 Brasilias, Beech 1900s, Beech KingAirs and other light aircraft >19 seats

I'm guessing this will all be part of the consideration for the ACCC.

 

[Must...Fly!]

Only if you buy into the ACTU propaganda, which I don’t.

So you have no explanation then. We can come back to this discussion if the high court overturn the original decision

 

[jase05]

Bae146s gone as freighters now?

Still used daily

 

[justinbrett]

So you have no explanation then. We can come back to this discussion if the high court overturn the original decision

The question is are the employees better working for the Qantas Group or an independent contractor. This is the same question for both issues.

You can question the way Qantas executed the outsourcing of handling, and that might or might not have merit - but to say a company is not entitled to outsource an element of their business is a pretty extreme unionist view, IMO.

So if you're arguing the handling employees are better off being employed by QF directly - surely doesn't that apply to QQ employees too? Because the result of the takeover being blocked will likely lead to QF doing it in house and those employees laid off.

 

[Must...Fly!]

The question is are the employees better working for the Qantas Group or an independent contractor. This is the same question for both issues.

You can question the way Qantas executed the outsourcing of handling, and that might or might not have merit - but to say a company is not entitled to outsource an element of their business is a pretty extreme unionist view, IMO.

So if you're arguing the handling employees are better off being employed by QF directly - surely doesn't that apply to QQ employees too? Because the result of the takeover being blocked will likely lead to QF doing it in house and those employees laid off.

That's exactly what I have been doing on this forum.

And you cannot say the argument does not have merit because the courts of this country decided it had merit by agreeing to hear a case. And so far, up to the level of the federal court, the justice system says Qantas did not conduct proper process.

You are the one that appears to have an extreme view here, not me. I never mentioned employees being better or worse off under Qantas or any other contractor.

 

[justinbrett]

That's exactly what I have been doing on this forum.

And you cannot say the argument does not have merit because the courts of this country decided it had merit by agreeing to hear a case. And so far, up to the level of the federal court, the justice system says Qantas did not conduct proper process.

You are the one that appears to have an extreme view here, not me. I never mentioned employees being better or worse off under Qantas or any other contractor.

Did I say it didn't have merit? I believe I specifically left that open ended. I'll leave it to the courts to decide if it was illegal. I don't see how it is, but I'm not an expert on IR law. I'm commenting on the decision to outsource or not.

What exactly is my extremist view? That companies should be allowed to outsource? I'm confused. I don't think I've even expressed an opinion on the QQ takeover.

 

[jakeseven7]

What happens if the ACCC rejects? Will QF dump it’s Alliance stake

Nope because it keeps Virgin away who are struggling to cobble together a network that services skinny/regional routes with the 737 only fleet.

 

[Saab34]

Nope because it keeps Virgin away who are struggling to cobble together a network that services skinny/regional routes with the 737 only fleet.

Isn’t that a good reason as to why the regulator would potentially block this deal?

Virgin won’t obviously continue it’s QQ relationship once it becomes a QF subsidiary, is many routes not like mining related that is impacted, ie they are not 737 match fit routes.

It does appear that Alan wants market dominance before he leaves. He has continually quoted in the press how he is pro competition, I think that is just bull dust and he wants a tight grip over the market and his employees also.

Virgin is a very important part of the cogwheel in keeping this country competitive. Virgin put up a very strong case for that Japan deal which was quashed, hopefully same here

 

[jakeseven7]

Virgin won’t obviously continue it’s QQ relationship once it becomes a QF subsidiary,

They didn't even wait for that, basically have scaled right back the use of Alliance already - I mean why would they use even a partially owned QF company let alone a fully owned one.

 

[Must...Fly!]

Did I say it didn't have merit? I believe I specifically left that open ended. I'll leave it to the courts to decide if it was illegal. I don't see how it is, but I'm not an expert on IR law. I'm commenting on the decision to outsource or not.

What exactly is my extremist view? That companies should be allowed to outsource? I'm confused. I don't think I've even expressed an opinion on the QQ takeover.

I didn't bring up the ramp services outsourcing in this thread.

 

[justinbrett]

I didn't bring up the ramp services outsourcing in this thread.

I know, I did.

 

[RooFlyer]

I find it amusing many of the same people who said it’s an outrage to outsource catering and handling are also saying it’s an outrage to acquire QQ. You can’t have it both ways.

Sure you can. The first is creating more competition ( turning an house service to one that can compete) and the other is about reducing competition.

If it doesn’t get approved, nothing stopping QF from starting their own E190 subsidiary and competing with QQ. That’s a worse outcome for the QQ employees who may lose their jobs if QQ lost the QF contract.

That’s true, but QQ employees are just one part of the equation. Well it may not be entirely true. Qantas’ balance sheet may well stop them from starting a new airline ( I dunno) and if they did, and forced QQ out of business, they may suffer yet more repetitional damage ( but they not care about this of course).

I think we are seeing another thread where ‘Qantas can do no wrong’ and those who argue the other side could well be accused of ‘ranting’

 

[justinbrett]

Sure you can. The first is creating more competition ( turning an house service to one that can compete) and the other is about reducing competition.


That’s true, but QQ employees are just one part of the equation. Well it may not be entirely true. Qantas’ balance sheet may well stop them from starting a new airline ( I dunno) and if they did, and forced QQ out of business, they may suffer yet more repetitional damage ( but they not care about this of course).

I think we are seeing another thread where ‘Qantas can do no wrong’ and those who argue the other side could well be accused of ‘ranting’

If you must ask, I actually lean more to the side of QQ being independent - I think I've made posts to this previously (I like the US model where you have a regional airline that simultaneously flies for multiple competing mainline carriers).

Curious why it's OK for competition between aircraft operators but not OK for handling agents?

I don't have strong opinions on either matter, I'm just challenging the views, because in my mind there's at least an element of hypocrisy to being against both outsourcing and merging - because they're pretty much two ends of the same stick.