QANTAS being taken over by Macquarie Bank..

[simongr]

How does destroying a brand deliver value to shareholders? Turning QF into Ryanair will basically destroy the brand. There isnt the volume of population to support a Ryanair type model so I dont understand the scaremongering.

Mind you, you might be privvy to the business plan that MacBank has for QF - otherwise its just speculation based on some random assumption...

 

[Tooner]

Apparently Macquarie is moving aside after they receive the $400 million fee that was promised.

In fact it appears to be the Allco show now, with AEP at 35% (not 25% - sorry) and surely they have an interest in shiny new planes to lease!

Maybe Geoff will donate to AFF as well

 

[swissbignose]

The "Sprit of Australia" - will now only be Australian in spirit.

Dixon and Jackson have sold Qantas down the river.

I may have missed something. As the executive management of the airline, they don't own anything about from their own stock and options. They can't sell Qantas. They can recommend that the offer for Qantas shares is worthwhile and that shareholders should take it. I understand that for the buyout to occur, they need 90% acceptance from shareholders.

And why wouldn't they? It's a 15% premium to what the closing price of the stock was before the buyout rumour began.

As for the proposed owners, they've done their sums that reckons that they can get a worthwhile return by restructuring Qantas, and inevitably, that'll mean cost cuts and changes in services. Maybe when that happens, there'll be an incentive for another airline to replace Qantas, if the brand no longer has the same appeal as it currently does.

 

[simongr]

Just in relation to the brand question. You say that cutting services etc. will erode the brand. The brand is one of Qantas' key assets so what is the incentive to ruin that brand?

SQ has a strong brand and is profitable - teh two are not mutually exclusive.

I assuem the Board have liaised with instutional investors to see if they would accept the deal before they themselves recommended the deal to the shareholders.

 

[Yada Yada]

Like any company, MacBank's primary aim is profit. They see enormous value in Qantas so are unlikely to destroy that. I envisage that there will be major changes financially, e.g. how they structure their aircraft leasing, maintenance, and property ownership.

In terms of brand management, I am guessing that Geoff will continue on with the quick growth of Jetstar both domestically and internationally, and a reduction in Qantas services to those where premium margins can be achieved, e.g. the main Cityflyer routes, the main international routes (LHR, LAX), etc. I think we'll see JQ outgrow QF in the years to come.

 

[Tooner]

In terms of brand management, I am guessing that Geoff will continue on with the quick growth of Jetstar both domestically and internationally, and a reduction in Qantas services to those where premium margins can be achieved, e.g. the main Cityflyer routes, the main international routes (LHR, LAX), etc. I think we'll see JQ outgrow QF in the years to come.

Indeed, this is the essence of the note Geoff kindly sent to us all a few minutes ago.

 

[Tooner]

In terms of brand management, I am guessing that Geoff will continue on with the quick growth of Jetstar both domestically and internationally, and a reduction in Qantas services to those where premium margins can be achieved, e.g. the main Cityflyer routes, the main international routes (LHR, LAX), etc. I think we'll see JQ outgrow QF in the years to come.

Indeed, this is the essence of the emial note Geoff sentus a few minutes ago.

 

[pacblue]

I may have missed something. As the executive management of the airline, they don't own anything about from their own stock and options. They can't sell Qantas.

Swissbignose, I think you took me too literally.

Foreign investment is fine - and it's what Dixon has been moaning about (Qantas Sale Act etc) for years.

I simply meant that Dixon and Jackson have jumped at this with alacrity - and they must be aware of what private equity groups do when they acquire companies.

Dixon in particular continues to shave costs at the expense of service - all for the sake of the shareholder.

Now you may say that this is his job - and to an extent it is.

BUT to continue profitability, you must also provide a good product, a good level of service ...

So, how far is too far, when it comes to the bottom line ?

 

[simongr]

I guess we all got the email. For anyone that autodeletes them:

• Business as usual for
Qantas Frequent Flyers

Yesterday, the Qantas Board decided to recommend that shareholders accept an offer for their shares from a private consortium, Airline Partners Australia (APA) consisting of Allco Equity Partners, Allco Finance Group, Macquarie Bank and offshore investors including TPG and Onex at a price of $5.60 per share.

A media release with details of the bid is available at qantas.com

Qantas management is committed to a strong future for the Group and to working with the APA partners, who have valuable expertise both in aviation and business development, to position Qantas for the future.

Under the APA proposal, Qantas will remain majority Australian-owned.

Qantas' prospective new owners recognise that Qantas is one of the most valued brands in Australia, embodying safety and service through 86 years of private, public and government ownership.

APA has said it is committed to partnering with the current management team on existing strategies, and has endorsed the aircraft and product investment program Qantas has in place.

Whether the bid is successful will be dependent on the consortium acquiring 90 per cent of all shares in the company - a process that will take until the end of February 2007.

It is business as usual at Qantas, with no changes currently planned to any area of the business, including the Qantas Frequent Flyer program, as a result of APA's bid.

 

[AnonymousCoward]

Just in relation to the brand question. You say that cutting services etc. will erode the brand. The brand is one of Qantas' key assets so what is the incentive to ruin that brand?

There isn't an incentive to "ruin" the brand per se. No sane businessperson goes out to deliberately destroy value.

However private equity firms, in general, have generally been about extracting value from firms they take over - that's what they are all about. For example by loading the firms up with debt and removing surplus cash from the business as fees. There's nothing wrong with that in the sense that these actions are benefitting the owners (aka the PE firms).

However it doesn't always bode well for the customers. The trick, obviously, is to ensure that you don't tick the customers off too much and/or be in a position where a new entrant (or existing competition) eats your shorts.

Somewhere along the line the new owners are going to have to extract enough of a return from the firm to justify the much-higher than market price they just paid for this company - and it can't be via "business as usual", because business-as-usual only justified a ~$4.50 share price a few weeks ago, not a $5.60 share price. Usually a premium could be demanded in a merger or acquisition if the new owners could, for example, wring synergies out of their own company and the new acquisition, but these new owners don't own any other airlines.

 

[swissbignose]

BUT to continue profitability, you must also provide a good product, a good level of service ...

So, how far is too far, when it comes to the bottom line ?

That is exactly the core argument of my tirades about companies that exist for the profitability of their shareholders. It's a finely balanced act that ensures that the customers and the workers don't hate you enough to desert you, while striving for maximum shareholder return.

At the moment, one would have to say that Qantas have things in their favour, especially with the lack of real domestic competition and a strong loyalty program (linked to the first point).

I agree with the sentiment that there's only so much that Qantas can do to current operations before it starts to backfire.

 

[JohnK]

In fact it appears to be the Allco show now, with AEP at 35% (not 25% - sorry) and surely they have an interest in shiny new planes to lease!

So true. Sell all QF aircraft to Allco and then lease back to QF at inflated costs.

Someone please explain to me how Bob Mansfield is going to make the new Qantas a roaring success? This person has a string of failures behind him that would see a normal worker struggling to get a job packing shelves in a supermarket. Anyone remember Telstra?

What is David Turnbull doing on the new team? Looking pretty? Geoff Dixon will take the $60 million and put it into his own charity trust. Scu..ags!

These corporate raiders could not care about shareholders, could not care about Qantas, could not care about loyal customers or Australia. Did the board have a conflict of interest when they made the recommendation to accept the offer? $111 million anyone? In an open market these shares are worth at least $7.00 but let's settle for 20% less.

The main aim would be to sell off as many assets as possible, put Qantas into $7.5+ million debt covering almost 75% of acquisition cost, re-float to the suckers who think they are on a winner. If the sale goes ahead then the QF name and logo should change to stop any grief for poor fools in the future.

I hope that something terrible happens to the global economy so that these mindless morons, if successful, burn their fingers as well as their b...s!

 

[Kiwi Flyer]

Don't hold back JohnK, tell us how you really feel!

 

[JohnK]

My sources guarantee the information provided is 100% accurate.

 

[macca172]

I have been tru blu and remained faithful and have been flying with Qantas and the then TAA for the last forty years. I "will not" be party to the parasites of the Macquarie Bank(MB) and hence my days flying with our ex national carrier, are all but over. With that said, I have in the order of 170,000 FF points, which I will burn off as a matter of immediate priority. I do not trust MB and its partners in this deal, in any shape or form and hence will bail out of the QFF program.

On another matter, I wouldnt be a Qantas/Jetstar pilot for all the tea in China right now. The days of "bidding" and the senority pecking order for flight picking will be over as well. Also the lucrative pay cheques the senior guys recieve for very little monthly flying, will come to an end. You can back it in there will be IR contacts for all these guys and if they dont sign up, you watch the influx of European and US based pilots take the jobs.

This take over is a very sad day for what was left of Australain aviation.

 

[JohnK]

Sad day indeed. Greed reigns supreme!

MacQanTexCoe verdict: sceptical media, populist politicians, mystery owner

Date: Friday, 15 December 2006
Michael Pascoe writes:

The reviews of the MacQanTexCoe show are mixed – but irrelevant. The mumblings of various politicians fulfil their need to appear "concerned" but mean nothing. The commentariat is split, ranging from Bob Gottliebsen predicting the end of civilisation to Liz Knight being unable to see the upside for the buyers to Bartho believing it all makes financial sense to Chanticleer having his own each-way bet by saying it’s all a big gamble.

"The highly leveraged structure, which will be 80% debt and 20% equity, all going well will provide cheaper capital, but that depends on events outside the owners' control. The key question remains, if the purchase price fully values the airline, then what do the new owners know that everyone else doesn't?" asks John Durie before answering it pretty much along the lines we’ve previously suggested – it’s a punt on the local duopoly remaining cozy and the world remaining a nice place.

More...

 

[pacblue]

This take over is a very sad day for what was left of Australain aviation.

That just about sums it up nicely.

Yes, that dubious duo - Dixon and Jackson - have flicked the switch to vaudeville - an all singing, all dancing sales pitch - telling us the take over really will be GOOD for Qantas --- and us...

But let's not kid ourselves that we didn't see it coming - and as for Qantas being the "Spirit of Australia" - well that is patently now just a load of cr*p...

It all started with outsourcing IT, some maintenence - and threatening more, cabin crew bases employing locals in Thailand, NZ and the UK (at much cheaper rates) - and now this deal ... stay tuned for much, much more, once this mob gets hold of QF

Dixon says in the blurb that all FF's received that "Qantas will remain majority Australian-owned" ... and that "no changes are currently planned to any area of the business, including the Qantas Frequent Flyer program".

Please note the use of the word "currently" in that last quote... and don't hold your breath.

As far as I'm concerned Dixon is just whistling Dixie ...

He - and Meg Jackson will go down as the double-act that danced on the grave of a once great airline.

 

[simongr]

Hmm - again we have this view that an Australian airline needs to be 100% australian staffed to be Australian. This isnt the 19th century - things have moved on. I dont see why this is the end of the world.

Just going back a few posts - someone posted that "in the open market the shares are worth $7" - umm how does that work. There is an open market for QF shares (I dont think they have a dual listing in the US?) on the ASX - and that valued the shares at $5. Some spurious calculation of "if/but you do this makes them worth $7" is not a real valuation. If there was open and freer trade of these shares there would also need to be more competition of profitable routes. So yes the price would rise - but then profits would fall - and of they didnt fall then that would only be because costs had been cut.

I am not sure what you people want from QF - cheaper airfares, better service, more competition, all australian staff, better planes, more services to places that are not economic, more FF flights, cheapers FF flights, no outsourcing. Cant you see that these are completely contradictory requirements?

 

[dizey47]

How long is it safe to hold onto our QF FF points? We are a little short for the trip we want to do in March 2008 and I can't book it until March 2007 anyway. I don't know how long a sale like this is going to take to go through. We don't want to burn our points on an earlier trip, unless it is likely we are going to lose them, as we did our Ansett points.

 

[Dave Noble]

Dixon says in the blurb that all FF's received that "Qantas will remain majority Australian-owned" ... and that "no changes are currently planned to any area of the business, including the Qantas Frequent Flyer program".

Please note the use of the word "currently" in that last quote... and don't hold your breath.

The use of the word currently means nothing other than there are no plans to change it. This doesn't mean that they won't change it in the future and that is no different than if they were not selling. I would not expect anyone to make an absolute that they will never change it in the future

I don't believe that the sky is falling in

Dave