Qantas results 28Aug .

[dougieboy]

Maybe a bit off topic: (use of widebodies on domestic)

Whilst some A330s are being utilised on the golden triangle routes (SYD-MEL-BNE) and 767s once the old birds leave the nest for Victorville it will become narrow body only. Perth is the winner scoring the A330. I would have thought that having at least 2 or 3 widebodies for the golden triangle would be more attractive for the corporate market/road warriors as its quicker on and off the bus. 737s for everyone! I prefer a widebody when travelling but happy to slum it in the sardine can (compared to the A300/A330/B767). I was looking forward to the 787 for QFd but not in my lifetime with this board as its stands. Perhaps the 'announcement' by VA over the coming weeks might sway more of the corporate market their way who knows (context: Borghetti at the VA press conference seemed to infer a fleet and/or product enhancement but was rightfully being stiff lipped about it).

 

[ajw373]

Sorry but I tried to show you the proportion new for Jetstar in the last 12 months is virtually equal to the proportion new for Q in the last 5 years. Q's new proportion as a % over the 5 years is just 3.2% more than Jetstar's new proportion for the last 12 months.

Go check the fleet line by line and you will be disappointed.

See there you go again changing a metric to suit you argument. The talk was about new aircraft count not a percentage. What exactly does a percentage show? Also even if JQ received more new a/c what does it matter as mentioned above it is the e boards role and decision to allocate resources to where THEY feel the best return is to be made.

Anyway as I suspected I am very much right in the last 5 complete fy's Qantas has received more new aircraft than Jetstar (Australia).

My count is 63 brand new aircraft to Qantas and 38 to JQ. The breakdown is as follows:

Qantas

4x A380
5x A330 (not counting Jetstar returns)
32x 737 (I have counted the NZ registered ones as they fly QF flight numbers)
17x Q400's
Total 63

Jetstar (JQ)

4x 787
2x A321
32x A320
Total 38

I have not counted Jetstar Asia as these are not 100% Qantas owned or controlled companies so are not relevant to the discussion.

That of course doesn't also count the second aircraft such as the 717's and returned A330's. Clearly you have a serious weed on over Qantas getting the returned A330's in particular, but frankly they are hardly old and are perfect for where Qantas uses them.

 

[Kefci2000]

Can you really count those going to QF NZ or Qantaslink?

 

[drron]

Where is all this negativity coming from?
According to AJ everything is going to plan and we are enjoying QF more each day!
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[Kefci2000]

Maybe a bit off topic: (use of widebodies on domestic)

Whilst some A330s are being utilised on the golden triangle routes (SYD-MEL-BNE) and 767s once the old birds leave the nest for Victorville it will become narrow body only. Perth is the winner scoring the A330. I would have thought that having at least 2 or 3 widebodies for the golden triangle would be more attractive for the corporate market/road warriors as its quicker on and off the bus. 737s for everyone! I prefer a widebody when travelling but happy to slum it in the sardine can (compared to the A300/A330/B767). I was looking forward to the 787 for QFd but not in my lifetime with this board as its stands. Perhaps the 'announcement' by VA over the coming weeks might sway more of the corporate market their way who knows (context: Borghetti at the VA press conference seemed to infer a fleet and/or product enhancement but was rightfully being stiff lipped about it).

Yes 737's on the very crowded SYD-MEL route are horrid, even the crews hate only 1 aisle, whether it be serving or people needing to get from 4c to the rear for the toilet (ie me after a few 150 lashes in the J lounge)

 

[Foreigner]

Advertising agencies acting for QF will have a field day ($$$) in attempts to turn negative sentiments to positives.

 

[burmans]

Where is all this negativity coming from?
According to AJ everything is going to plan and we are enjoying QF more each day!
No Cookies | dailytelegraph.com.au

I think this graph explains it well

 

[moa999]

Albeit Virgin's continual reduction of benefits (particularly food) and increases in prices, are driving away more of their loyal Flexi customers imho.

 

[waynemerry]

All Q's 747-400s (of the latest tranche) but 2 were over ten years old then. It was common knowledge that there were no buyers to be found at anywhere near book value, yet Q did not write them down then - why? Why didn't the auditors question it?

You don't have to write it down if you can't find a buyer at book value (i.e. low value in disposal less costs), so long as expected recovery is through using the plane over its remaining life (value in use). The assumptions used to justify this in the past perhaps did not hold water now, but also Qantas might have gone hard now to "clear the decks" by now having a very conservative value in use. FX rates would be a key assumption in value in use estimations.

I would like Red Roo to tell me where I've gone wrong on the figures but I've used the ATO draft rulings, calculations, mkt historical AUD/USD rates, published price lists for the aircraft etc.

Tax rulings or anything else from the ATO or tax law are not relevent for financial reports, except for tax items. Tax depreciation does not necessarily equal accounting depreciation.

 

[woodborer]

You don't have to write it down if you can't find a buyer at book value (i.e. low value in disposal less costs), so long as expected recovery is through using the plane over its remaining life (value in use). The assumptions used to justify this in the past perhaps did not hold water now, but also Qantas might have gone hard now to "clear the decks" by now having a very conservative value in use. FX rates would be a key assumption in value in use estimations.

The reason for the 'now', is that they have 'now' structurally separated QFi into a separate holding structure. This precipitated a valuation of the fleet on a standalone basis.

 

[ajw373]

Can you really count those going to QF NZ or Qantaslink?

They are flying Qantas flights with a Qantas flight number so are they not new aircraft to the Qantas fleet? Yep. But even if you take them out Qantas still had more new aircraft over that time.

 

[ajw373]

The reason for the 'now', is that they have 'now' structurally separated QFi into a separate holding structure. This precipitated a valuation of the fleet on a standalone basis.

If you look you will see most (almost all new aircraft and some older ones) of the aircraft are also owned by seperate holding companies too (search CASA register). Wonder how this effects the accounting and structural split of domestic and international?

 

[RAM]

You don't have to write it down if you can't find a buyer at book value (i.e. low value in disposal less costs), so long as expected recovery is through using the plane over its remaining life (value in use). The assumptions used to justify this in the past perhaps did not hold water now, but also Qantas might have gone hard now to "clear the decks" by now having a very conservative value in use. FX rates would be a key assumption in value in use estimations.



Tax rulings or anything else from the ATO or tax law are not relevent for financial reports, except for tax items. Tax depreciation does not necessarily equal accounting depreciation.

The point is though the financial covenants from their debt commitments and from their statutory accounts reconciliation require the auditors to sign of that the value ascribed within the accounts are 'true and fair'. The spin about the reason for the write-down does not measure up and from the number crunching it does not look replicable (numbers done on a per plane basis - no averaging used).

Nowhere in the accounts was their a 'contra' account showing this 'intangible' asset revaluation offset due to currency fluctuations - at least not that I can see in this year's, last year's of the year before's accounts. Three years ago it was a $4bn+ figure (more likely $5bn as 3 more years depn has been written off).

Why not recognised previously? Well through this entire period Q has been quietly scrapping planes through-out covering different models - 747, 767 & 737. So they knew exactly what the market value was for the aircraft - there goes that excuse.

The spin that it is being done now as they are splitting the units is true as far as it goes. They are being forced to finally recognise this mismatch otherwise their financial counter-parties will not roll fwd various long-dated swaps or fx facilities I suspect. It would be good to know what the historical rate roll balance is. How can the auditors have not noticed (apparently) that near worthless B747-400s were in the books for apparently multiples of their mkt value and a normal depreciated value? Is it correct to possibly book the 'list' price as the cost for your purchase as well as booking a realised profit for the difference between the list price and what you actually paid? Who knows what Q did because they sure are not telling us.

From a tax perspective a company in good health ALWAYS wants to get whatever decuctions they can now and postpone as much revenue to later years to achieve a cash flow benefit. A company on life support or ailing does the opposite as they do not have the profits to offset.

Welcome to the wonderful world of Qantas....

 

[codash1099]

Some people think the situation isn't all that rosy:

Is Qantas too big to fail? - The Drum (Australian Broadcasting Corporation)

 

[samh004]

Some people think the situation isn't all that rosy:

Is Qantas too big to fail? - The Drum (Australian Broadcasting Corporation)

Scaremongering like that article doesn't help anyone.

Say they do fail, the result would be VA rising to win all travel... and then Australia entering the same phase it did after Ansett, with a monopoly and high fares (not that they aren't high already). Considering the ownership structure, I can't see why the government would like the new national carrier to be owned by foreign players... especially considering how they treat Qantas with regards to foreign ownership.

Thus, I can only imagine the government wouldn't let them fall, but a help with some restructuring would be useful.

 

[JohnK]

Scaremongering like that article doesn't help anyone.

Say they do fail, the result would be VA rising to win all travel...

That's the worst case scenario we don't need.

This airline is arrogant now with relatively strong competition. I'd hate to see it operating a monopoly without Qantas. High airfares with low service. Hmmm....

 

[amaroo]

Qantas to beat Virgin in race to turn a profit

 

[harvyk]

Where is all this negativity coming from?
According to AJ everything is going to plan and we are enjoying QF more each day!
No Cookies | dailytelegraph.com.au

That is the most positive I've ever seen AJ... There was no "we're doing well, BUT..."
I wonder if a marketer has had a little whisper in his ear...

I think that's my biggest problem with the guy, behind every silver lining there is a cloud. He trash talks his own brand as if he is addressing the board and no one else. He tends to forget that his words are a direct reflection on the airline. It's certainly fine to talk like that to the board, since it's their job to fix problems, however when talking to the public, he should be inspiring confidence in the traveling public, whom have seen in the pasrt another un-collapsible airline collapse.

So in saying that, let's hear more of this positivity from you AJ...

 

[moa999]

Have you seen a CEO that doesn't talk up their brand and share price.

That is part of the role.

In bad time however you've got to defend it, so Joyce's strategy has been blame xx,yy,zz but it's much rosier over the horizon

 

[BD1959]

I think that's my biggest problem with the guy, behind every silver lining there is a cloud. He trash talks his own brand as if he is addressing the board and no one else. He tends to forget that his words are a direct reflection on the airline. It's certainly fine to talk like that to the board, since it's their job to fix problems, however when talking to the public, he should be inspiring confidence in the traveling public, whom have seen in the pasrt another un-collapsible airline collapse.

So in saying that, let's hear more of this positivity from you AJ...

But PLEASE not for the sake of spin.

Remember how well the Emirates tie-up was going... turned around International and forward booking (when he was in Dubai for the inaugural flight) were very positive for QFi ... we all knew where that was going.

Or how he insisted (on the 7:30 Report?) that the interviewer couldn't possibly know how well the remaining QFi routes were performing and that they were all now "making money"?

He needs to eek positivism but he also needs to come across as being pragmatic. At the moment he just looks like a clueless prat.

Regards,

BD