Qantas results 28Aug .

[moa999]

On the A330 reconfig.
In the Supp pack p8, QF Dom, seats from Q2 FY15 (ie. Oct-Dec 2014).

Interesting as I had expected them to go on Intl routes first, but maybe they are targeting the Domestic routes first.

 

[turtlemichael]

What Ian Verrender thinks of the results and explanations. Qantas loss now nearly $3b: What will it take for Joyce to go? - ABC News (Australian Broadcasting Corporation)

 

[Spongbob]

Reading all the ASX associated documents, it seems the highlight from QF management is no more planned capacity growth and no new Jetstar ventures. Excluding fuel costs, these two activities are a large part of the loss. I guess management are conceding their past decisions were suspect, but then want to be congratulated for not repeating them.

 

[QF WP]

Qantas Loyalty recorded its fifth straight year of double-digit earnings growth - another record result in a great business.

I know quite a number of the QF Loyalty staff, their jobs are safe...

Wonder how comfortable Simon Hickey (CEO, QFi) is feeling...??

 

[RAM]

$646M loss. results are out

http://www.asx.com.au/asxpdf/20140828/pdf/42rt768vx1f7lc.pdf

Two 738s and two A332s to leave the fleet.

What not 1 AJ to go?

 

[RAM]

The only good news in this announcement is that QF 'won't establish any more Jetstar ventures in Asia at the moment'/

That wouldn't be because:

# They have not managed to get their previous ones up and running?
# They have been told they would be persona non-grata by the various Govts?

 

[RAM]

They do have $3.001 billion in cash in the bank.. I love a rainy day fund.. Is it raining now?

Due to their parlous state that $3bn 'in the bank' relates to:

# Bank and other debt covenants
# Airfares paid in advance but not yet earned
# Aircraft leasing covenants

as well as some mighty interesting offshore subsidiary matters...

 

[harvyk]

What Ian Verrender thinks of the results and explanations. Qantas loss now nearly $3b: What will it take for Joyce to go? - ABC News (Australian Broadcasting Corporation)

For all of Joyce's faults

He complained long and loud about the lousy financial performance of Qantas International, essentially trash talking his own company, an unprecedented step for any chief executive.

This is the thing which most baffles me. As the public face of the company, why has he been allowed to (by company regulators or by shareholders) stand up and trash talk what is "QANTAS". In the mind of the average traveling public (AFF'er and Non-AFF'ers alike) QFd is what you fly on because you have a meeting in Melbourne tomorrow, or you want to head up to Sydney for the weekend. It's Qantas because the boarding pass says so. QFi is the airline for holidays. It is the first Australian face that international visitors sees, it is the airline of which the selfies at the airport are taken, the airline which global adventures start.

QFd might be paying the bills, but QFi is the heart of Qantas, it's what Qantas is and will remain to be in the hearts and minds of most Australians, and it is "Australia" to those overseas. But since AJ is purely bottom lined focused, he can't see that, he doesn't make the connection that the only reason why QFd has bums in seats, is because of the link with QFi, and if he trash talks QFi too much, he won't have bums in seats in QFd either.

 

[moa999]

Positives from the result
- Operating cash flow was still positive $1bn, with it being spent on new aircraft (approx $1bn), no change in debt, no dividend
- The rash increase in capacity (both domestically by QF and VA) and in SEAsia (by Jetstars, AirAsias and Tigers) seems to be moderating on all sides - this will help improve load factors and yields
- The 'accounting trick' to separate the QFi division and force a write-down, will improve next years QFi result by $200m even standing still, and potentially (unsure o the exact mechanics) let them recognise profits if the Aussie dollar drops when the sell the aircraft.
- Seem to be reducing CASK in all areas of the business

Negatives
- Failure to commit to new aircraft, the delivery deferrals and sales are understandable given the capacity issues above

 

[moa999]

What Ian Verrender thinks of the results and explanations. Qantas loss now nearly $3b: What will it take for Joyce to go? - ABC News (Australian Broadcasting Corporation)

All very negative.

Describing Jetstar's venture as a disaster is a bit much.

Asia (Singapore) - Yes it should be profitable by now (and was over 2012 and 2013) being a mature market but it got into a capacity war (much like QFd and JQd and suffered as a result). Overall a decent business that will look a lot better this year.
Pacific (Vietnam) - Seemingly a small loss, but expanding again and has won international flights
Japan - Has grown really quickly - at 18 planes is the size of Singapore after only a couple of years, has the highest LCC market share and the only one with two bases. Still in rapid growth phase and would be expected to be loss making - needs to deliver profit in the next couple of years
Hong Kong - OK... disaster.


The reality is - the market has seen the result as more positive than expected, thinks the writedown is smart, and very much likes the deferral of capex and reduction of capacity.

 

[Mr_Orange]

Email received from Qantas Loyalty. Interesting to note the lounge upgrades for DRW and BNE, otherwise just a repeat of the sound bites from AJ's speech.

[TABLE="class: ecxw100, width: 580"]
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[TD="align: left"]Dear Mr_Orange,
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[TD="align: left"]Today Qantas announced its full year financial results, an update on the accelerated Transformation program announced last February and the outcomes of the Structural Review announced last December. I have received many questions in the lead up to today and wanted to reach out to you with an update as a valued customer.

Financial Year Results and Transformation Program

Today's financial year results are confronting. But they represent the year that is past. The Group is addressing its major challenges and we have now come through the worst. Our Transformation program is on track. Our overall financial performance is rapidly improving and, subject to events outside our control, the Group is expecting to a return to an Underlying PBT profit in the first half of the current financial year.

Structural Review including Qantas Loyalty

The Structural Review announced last December is now complete and the results include the following decisions:[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]No sale of Qantas Loyalty. Qantas Loyalty is a standout business of the Qantas Group, which I am proud to lead. After careful consideration, our judgement was that Qantas Loyalty continued to offer significant growth opportunities and there was insufficient justification to sell any part of it.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]The continuing sale of non-core assets such as airport terminals, land and property holdings, where this enhances shareholder value.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]As a result of recent amendments to the Qantas Sale Act, and building on the existing domestic and international airline separation at internal management level, Qantas will establish a new holding structure and corporate entity for Qantas International. This is about creating longer term options for this great airline - there are no changes to network, staffing or operations as a result of today's announcement.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]As a consequence of this change, accounting rules require assets to be reassessed. The international fleet value has been written down to be aligned to current market value. This writedown is the biggest component in today's result but it is a non-cash cost and does not alter the fundamentals of our business.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]No new Jetstar ventures will be established while the Group is focused on transformation. Substantial value exists across the Jetstar Group airlines to be realised over time.[/TD]
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[TD="align: left"]Investing in Customers

Customers are at the heart of everything we do at Qantas. We are continuing to invest to make your experience even better.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]We will continue to introduce more everyday ways for members to earn and redeem Qantas Points to add to the thousands of opportunities that exist today.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]In the past year Qantas Loyalty has introduced Qantas Cash, the award winning prepaid travel card; Aquire, the new loyalty program for small and medium enterprises; and qantaspoints.com - a dedicated website for members and partners, including an Online Mall. The Qantas Golf Club is planned for launch this coming summer and we will continue to focus on innovating to further reward members.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]We keep investing in our people to deliver outstanding customer service and continue to lead on key indicators, including customer advocacy and on-time performance.[/TD]
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]We are accelerating the retirement of older aircraft and updating and reconfiguring the cabins of our Airbus A330 and Boeing B738 fleets. The upgrade of our Airbus A330 fleet features new Business fully flat beds and the latest Panasonic entertainment system, to be progressively introduced on our domestic and international network from late 2014.
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[TD="width: 10, align: left"]•[/TD]
[TD="align: left"]We are investing in new and expanded international and domestic lounges. In addition to the recently opened Los Angeles Business, Hong Kong and Singapore lounges, the new Los Angeles First and expanded Business lounges will open later this year. Lounge upgrades will also be introduced domestically in Darwin and Brisbane.
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[TD="align: left"]Thank you for your Loyalty

Loyalty is a relationship business, and I sincerely appreciate the commitment of our members, partners and people. We will do everything in our power to keep earning and deserving that support. We have a lot of exciting plans for our customers.

We are looking to the future, can move forward with certainty and are passionately committed to rewarding you for your loyalty, whether on the ground, or in the air.

More detail on our result is available from qantasnewsroom.com.au.

Yours sincerely,[/TD]
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[VHOEJ]

What Ian Verrender thinks of the results and explanations. Qantas loss now nearly $3b: What will it take for Joyce to go? - ABC News (Australian Broadcasting Corporation)

Great article and I fully agree - forget the $2.8b, the performance of all the Jetstar expansions and QF Intl should be getting the headlines.........the writedowns have just masked the poor performance

 

[JohnK]

They should be looking at expanding routes.... I Don't understand the logic of selling aircraft and contracting routes? I would have figured for an airline to make money you need to sell seats on a plane!

Sell seats? That's not how you make money.

Sell FF points. That's how you make money....

 

[codash1099]

$646M loss. results are out

http://www.asx.com.au/asxpdf/20140828/pdf/42rt768vx1f7lc.pdf

Two 738s and two A332s to leave the fleet.

Certainly hope the loss of those 332's doesn't mean more 738's on the E/W routes.

 

[codash1099]

All very negative.


The reality is - the market has seen the result as more positive than expected, thinks the writedown is smart, and very much likes the deferral of capex and reduction of capacity.

Or maybe just not as bad as they had previously thought and factored in.

 

[markis10]

Email received from Qantas Loyalty. Interesting to note the lounge upgrades for DRW and BNE, otherwise just a repeat of the sound bites from AJ's speech.

The lounge upgrades were announced at the 1/2 yearly results announcement in Feb. Darwin is well advanced, the current temp QP actually is in an area where two new gates are being made.

 

[harvyk]

Sell seats? That's not how you make money.

Sell FF points. That's how you make money....

No, you still need to sell seats. FF points whilst profitable for the airline they are only profitable because the vast majority of people don't use them and either let them expire (aka 100% pure profit for the airline) or simply let them linger in an FF points account which earns no interest (unlike the money which the airline has received for selling said point)

If all of a sudden every single person in QFF decided to cash in their points, either via seats or toaster, I would be very surprised if QFF had the cash reserves to cover it. (Of course I'll retract that last statement if someone can point me to an article which states they do)

 

[QF WP]

Just got the email from Lesley Grant - QF Loyalty must have been reading my post from 2.51pm above...

Great to see the upgrade for the QF Lounge in BNE - I wonder what they plan to do?? (off to ring my QF local contact to see what he can tell me).

 

[Hermes]

Since Lesley assures us the QFF program is to stay in house, can she tell me how to book a Classic award seat in J, MEL-LHR return, for next April/May? Go to the QF website and look at QF9/10 for those months and you will see the info icon beside every date. Click on it and it says "you will be in economy for the MEL-DXB leg" (and ditto return). Why do we have FF points if we can't ever get a seat?

 

[Captain Halliday]

Interesting to note the lounge upgrades for DRW and BNE, otherwise just a repeat of the sound bites from AJ's speech.

The DRW lounge upgrade is underway - certainly not new news.