Qantas Cancels 787-9 order

[JohnPhelan]

You are showing your youth. The older set will understand how Ansett got into trouble with a one sir Peter visiting an air show and deciding on a major airbus order on the spot!!

Yes, the big man returning with the news that he had just ordered a fleet of "A320 Skystars". I think that was the moment Rupert Murdoch decided to sell his share of the company!

Did any other airline call them "Skystars"?

 

[JohnPhelan]

... the middle ground is missing, and QF need to be thinking and acting on that middle ground now, which is 747 replacement.

The 747-800 would be the one!

 

[drron]

Maybe we are all missing the point.Looking at the accounts might not AJ and the board setting things up for an incredible turnaround next year?

The loss for the last year included a charge of $398 million for restructuring.Also a $194 million loss during the shutdown and industrial action last year.Offset by ~$95 million from Rolls Royce.Their profit before tax was $95 million.
For next financial year several billion in future liabilities have been removed,a one off payment from Boeing reportedly ~ $450 million.Now if the restructuring charges have all been pushed into the 2012 year there will be a tremendous reported profit result even if the before tax profit is less.Bonuses all round anybody?

 

[ajw373]

Yes, the big man returning with the news that he had just ordered a fleet of "A320 Skystars". I think that was the moment Rupert Murdoch decided to sell his share of the company!

Did any other airline call them "Skystars"?

If I recall the Airbus order wasn't the issue, the issue was more the fact he also ordered around the same time a whole heap of other aircraft, including 737-300's, Fokker 50's and shed load of BAe146's for Ansett and TNT which he owned at the time. As for Murdoch took him another 10 years or so to sell.

As for the name only Ansett called them Skystars but clearly airlines like SIA and Qantas (with the 747-400's) have a habit of giving a type a name.

But getting back on topic don't think Qantas will be ordering any new types, I was being a bit flippant above with my comment about the 777. If anything I could see more new build A330's in the fleet, as clearly the ones at Jetstar are not enough to replace the 767's in domestic and some more -200's wouldn't go astray at international too.

 

[Platinum A332]

Surely successive Australian governments is equally (if not more) complicit in the struggles faced by Qantas. If one looks at how open the international aviation market is out of Australia compared to other developed economies such as Canada, Germany, Japan and France (just to name a few), combined with the poor aviation infrastructure compared to the mega hubs of Asia and the Middle East, it is no wonder Qantas is struggling.

 

[ajw373]

Surely successive Australian governments is equally (if not more) complicit in the struggles faced by Qantas. If one looks at how open the international aviation market is out of Australia compared to other developed economies such as Canada, Germany, Japan and France (just to name a few), combined with the poor aviation infrastructure compared to the mega hubs of Asia and the Middle East, it is no wonder Qantas is struggling.

Correct in particular the Qantas sale ACT. This is an Act that has well and truly served it's intended purpose and is now doing more harm than good.

 

[codash1099]

Maybe we are all missing the point.Looking at the accounts might not AJ and the board setting things up for an incredible turnaround next year?

The loss for the last year included a charge of $398 million for restructuring.Also a $194 million loss during the shutdown and industrial action last year.Offset by ~$95 million from Rolls Royce.Their profit before tax was $95 million.
For next financial year several billion in future liabilities have been removed,a one off payment from Boeing reportedly ~ $450 million.Now if the restructuring charges have all been pushed into the 2012 year there will be a tremendous reported profit result even if the before tax profit is less.Bonuses all round anybody?

I think that's basically what I was saying earlier. However if that is the case, why on earth would you cancel delivery of a plane that has, if anything, only just got off the drawing board and on which construction hasn't even started. I would guess that delivery is probably 2 years away. The only reason I can think of is that it triggers a significant compensation payout and notional slots for their options are well place.

 

[The Rok]

They had nothing to lose & everything to gain! There is still no guarantee that the plane will be ready in 2 years.

Bank the cash, tidy up your cost base and then reassess.

 

[medhead]

Correct in particular the Qantas sale ACT. This is an Act that has well and truly served it's intended purpose and is now doing more harm than good.

And the current government tried to remove some restrictions of that Act only to be blocked in the parliament.


Sent from the Throne

 

[nlagalle]

And the current government tried to remove some restrictions of that Act only to be blocked in the parliament.


Sent from the Throne

I thought overall they wanted it tightened? Especially with the so called expert Nick Xenophan running the senate enquiry.

 

[medhead]

I thought overall they wanted it tightened? Especially with the so called expert Nick Xenophan running the senate enquiry.

Before that Xenophon cough they tried to remove the secondary ownership restrictions so it would only require 51% Australian ownership. I can't remember exact details be things like no other airline can own more that [25%] (not sure of the correct number) and there might have been another restriction like that. I'm not sure who blocked it, but it was blocked.


Sent from the Throne

 

[Awesom Andy]

Before that Xenophon cough they tried to remove the secondary ownership restrictions so it would only require 51% Australian ownership. I can't remember exact details be things like no other airline can own more that [25%] (not sure of the correct number) and there might have been another restriction like that. I'm not sure who blocked it, but it was blocked.

And using the Jetstar name to start up JVs elsewhere in the world seems to be able to get around that - and without having to worry about high costs and unions either.

 

[MarcB]

Maybe we are all missing the point.Looking at the accounts might not AJ and the board setting things up for an incredible turnaround next year?

The loss for the last year included a charge of $398 million for restructuring.Also a $194 million loss during the shutdown and industrial action last year.Offset by ~$95 million from Rolls Royce.Their profit before tax was $95 million.
For next financial year several billion in future liabilities have been removed,a one off payment from Boeing reportedly ~ $450 million.Now if the restructuring charges have all been pushed into the 2012 year there will be a tremendous reported profit result even if the before tax profit is less.Bonuses all round anybody?

People also need to distinguish between the statutory loss and the underlying profit. Accounting standards dictate the inclusion of certain amounts in statutory accounts that are not "cash" elements. The restructuring costs are a good example, which they went to great pains to indicate are mostly "non-cash". This is an important distinction. Depending on how they have been accounted for, writing down the value of certain assets will have an impact on either the balance sheet or the profit and loss statement. It is sometimes necessary to "expense" certain costs associated with assets that may have otherwise been capitalised. This is often the case where you are preparing to acquire assets but do not proceed (maybe the Dreamliners?). In this case, if you have not expensed those acquisition costs (but instead capitalised them in the expectation they will be depreciated over time with the asset), then you are required to bring them back onto the profit and loss statement as expenses. The net effect on the accounts is essentially nothing because you're just changing the way something is accounted for - but you will take a profit and loss hit in statutory terms.

Basically, the underlying profit - and whether a business is cash flow positive (i.e. can fund it's operating expenses from its operations) are the important factors. Qantas indicated that it was in Q4 able to operate on a cash flow positive basis and intends to do so going forward. I think this is a better indication of their financial health than a statutory measure.

 

[lovestotravel]

Interesting that the folks at Australian Aviation agree with you to a certain extent, they a certainly a source of creditable info on my books, and clearly they see an ongoing shrinkage problem!

Analysis – For Qantas Int’l, the future is looking smaller all the time | Australian Aviation Magazine

Indeed, some (not many) of my rants on here do have a bit more credibility......

 

[markis10]

Yes, Virgin did chase the 787 slots vacated by QF:

The folk at Virgin Australia are a very obliging bunch. The airline that has already taken on senior executives and unwanted alliance partners from Qantas has now shown a willingness to go one step further.
''We were pretty quick but not quick enough, obviously,'' Virgin's chief executive, John Borghetti, said yesterday in relation to the phone call he put through to Boeing after Qantas cancelled orders for 35 Boeing 787 Dreamliner planes last week.
''As soon as we heard that [from Qantas], we did ring Boeing to see whether or not we could get our hands on some of them … but unfortunately, when we spoke to them those slots had been taken,'' he told CBD. ''There must be high demand for them if those slots were taken within literally hours of us calling,'' said the Virgin boss, who actually worked at Qantas when the original 787 order was made in 2005.
At least Borghetti seems to understand that ordering aircraft can often be more involved than a simple phone call.

Read more: Newcrest on slow boat from PNG
​

 

[oz_mark]

Yes, Virgin did chase the 787 slots vacated by QF:

QF did bring forward its options, so QF may have filled some of the slots vacated by QF!

(In any case, Boeing would have known about the cancellation earlier and would have been working on filling any void already!)

 

[markis10]

QF did bring forward its options, so QF may have filled some of the slots vacated by QF!

(In any case, Boeing would have known about the cancellation earlier and would have been working on filling any void already!)

Doubt it, options only get slots when they become a firm order and a MSN is applied to that order.

 

[The Rok]

I suspect this might be a PR exercise in having a dig at QF.

They may very well have rung Boeing but might have done so in the knowledge that the slots were already gone!

 

[markis10]

I suspect this might be a PR exercise in having a dig at QF.

They may very well have rung Boeing but might have done so in the knowledge that the slots were already gone!

Possibly (especially given the dig about them being popular), but with the delays experienced any improvement in delivery would have been rapidly taken up by any of the customers, as shown with LAN taking up some slots from ANA which results in their first aircraft being delivered this week.

 

[ajw373]

Doubt it, options only get slots when they become a firm order and a MSN is applied to that order.

Not true. Options have a nominal position on the line hence why they can have dates. If that option is not exercised by a given date then that slot can go to someone else.