Qantas results 28Aug .

[samh004]

So last year they had a write down of QFi aircraft, giving them a massive loss, and this year they've found a new way to report that, so another massive loss. I know what I'll be expecting next year

I'm surprised to see QFd not doing so well though, especially seeing as they're losing the B737-400s and B767-300s, which are presumably more gas guzzling? I don't claim to know how to read this all, but can't imagine a drop of 6% in revenue and 2.6% RSK would drop the underlying EBIT from $365m to $30m.

I note I can no longer see a breakdown between (domestic) Mainline and Link... or is that in another document?

 

[THE TRIMMER]

B787-900 options to be pushed back from 2016 until 2017 and then brought into the "Qantas fleet"

edit: just confirmed they will go to JQ

Why does Jetstar get the new aircraft? It,s like the kids get the new planes & dad gets the old ones!

 

[Captain Halliday]

The market likes the result. QAN up 2.5% or 3.5c on the open.

EDIT: at 1007 AEST - now up 5% or 6.5c

 

[Slats7]

QAN shares up 4.250%.

 

[Kendall Roy]

What is the standard timeframe of depreciation for Australian based aircraft?

 

[JohnK]

Flicked through most of the ASX documents, can't see any mention of any further route cuts or staff cuts?

Any mention of Alan Joyce getting a pay rise for the great job he is doing keeping Qantas afloat?

 

[Captain Halliday]

Any mention of Alan Joyce getting a pay rise?

On the contrary. Pay freeze for another year and no executives bonuses this year (according to Peter Ryan, Business Editor @ ABC). I haven't seen it myself.

 

[harvyk]

What is the standard timeframe of depreciation for Australian based aircraft?

Don't know what the timeframe is, but I do know it's a fair bit longer than other countries like SIN...

 

[Brettmcg]

B787-900 options to be pushed back from 2016 until 2017 and then brought into the "Qantas fleet"

edit: just confirmed they will go to JQ

I can't see a reference to the 789 options going to JQ from 2017 in any of the documentation.

 

[bobe]

Any mention Per-Sin getting a lifeline?

 

[samh004]

On the contrary. Pay freeze for another year and no executives bonuses this year (according to Peter Ryan, Business Editor @ ABC). I haven't seen it myself.

I read that in the documents, also makes note of the same freeze coming to EBA's

 

[grussellt]

Some important points for the ongoing operations of the Qantas Group:

In 2014: Operating cash flow $1.1 Bn.

Overall cash flow neutral (after Transformation costs, etc)

Net debt down $100 m.

In 2015 debt reduction will be $1 Bn.

I don't think we should worry about our QFF points turning to dust - but QF, please give us a few more F/ J awards for redemption.

It's been a tough year, and a bit more suffering to come but well done TEAM QANTAS (with apologies to Tony Abbott for plagiarism!).

 

[BD1959]

So, a $2.8bn loss, most fuelled by a massive depreciation write-down of the International Fleet. International Group is restructured. ergo: the shareholder takes a hit in order to be able to sell the International arm more cheaply?

Returning two domestic A330s - becoming more and more VA-like.

Deferring 787 options another 12 months.

Big loss for JQi - but JQ HK to remain to plan ... eh? Pulleeezzze: JQ HK has *never* run to plan!!

Regards,

BD

 

[Standby]

What is the standard timeframe of depreciation for Australian based aircraft?

I believe Aust depreciation is ~20yr level and in SIN its def <5yrs, hopefully an accountant out there can verify

 

[waynemerry]

Both use IFRS (international accounting standards), so it's based on useful life of the asset. 20 years doesn't mean that the airline uses the plane for 20 years, they could own/lease for 10 and pass on to someone else for the expected remainder.

Variations are based on what useful life is. I'd be suprised about <5 years in Singapore because the planes are clearly being used as assets for periods longer than that. That would mean the auditors would not be prepared to sign off such aggressive depreciation as it would have the effect of overstating expenses.

Tax depreciation is another matter, that is very dependent on the location, perhaps the <5 years is accelerated tax depreciation in Singapore.

 

[GoldCanyon340]

QF shares up 5%, or 6.5c? I remember when a 5% rise equated to more than 25c.

 

[docjames]

Ok had a bit more time to look at the market (ASX) releases. It really strikes me as "take the medicine now" (with large operating loss this year anyway, wipe out some "structural" asset value costs (ie. write down the optimistic valuations of aircraft) in order to reduce costs in subsequent years). The "positive" initial market reaction is actually good news that investors think they may finally be "righting" the ship. Frankly, some of this should have been done years ago.

Some interesting tidbits (to me anyway):

- $566 million of yield and load factor decline from market capacity growth running ahead of demand
I think they clearly got caught out throwing capacity at the 65% line and then demand froze (budget, election etc etc)

- a large number of the "responses" are already announced but yet to show an impact
eg. Aircraft utilisation increases, staff layoffs (and associated costs bourne this FY but costs of carrying those staff will be permanently gone in subsequent FYs to try and improve annual profit)

- they worked out they were crazy if they spun off QFF

- restructure into 4 "arms" not unexpected in an effort to "match" VAH's structure

- well done keeping QFd profitable!

- in the summary of group revenue / expenses / pax carried you can clearly see they've basically gone sideways over 12 months

- JQ asia lost 40m, JQ japan -70m (which they try to appear to "include" JQ costs associated with JQ HK) - I'm not unsurprised they dont want to admit how much JQ HK is costing them.....

- 2200/5000 FTE gone --> cost $430m

- Debt/equity (gearing) goes from 46:54 to 62:38

- fleet changes were largely announced previously, but all seem like sound strategies - again why wasnt some of this done years ago?



All in all, very interesting, and I cant actually help but think maybe they are finally getting their house in order! Maybe after a year or two of stabilisation, they can look to grow QFi again.

 

[JessicaTam]

I can't see a reference to the 789 options going to JQ from 2017 in any of the documentation.

It was in response to a question from the floor at the press conference.

 

[markis10]

All in all, very interesting, and I cant actually help but think maybe they are finally getting their house in order! Maybe after a year or two of stabilisation, they can look to grow QFi again.

i don't thing the opposition will allow stabilisation, we will have a better idea tomorrow but I suspect XFA has not left the fleet and VA will be stepping in to take up some EY slack re routes and also get some new equipment via EYs mega deals.

 

[Saab34]

It was in response to a question from the floor at the press conference.

I think it was A320's. A reporter asked if any A320neo's could possibly go to mainline, CFO said no, all to Jetstar.

?