Re: Qantas to cut 1,000 Jobs.
I really believe this is an actual crisis. At the end i suspect AJ will lose his job and Qantas to sell off a whole range of assets (which ones? who knows) to stay afloat. What the consequences will be for the rest of us?
If we go with your premise, that this is more than a hissyfit outburst from the CEO or a toddler temper tantrum because things didn't go his way in the playground, then the assets that must go are the ones which will pull the biggest buck. Clearly that's the
Loyalty/Frequent Flyer Program and Jetstar Airways. (A 100% sale of an unencumbered Jetstar Airways; with no ties or obligations to Qantas, will probably raise a pretty penny. Plus, without JQi (or a restructured JQi like VAi) it could be sold 100% to a foreign buyers, without the need to use a facility like an IPO, or Australian institutions to guarantee a float.)
Also a sale of Jetstar - JQ, fulfills a national interest test, because it will leave us with a solid competitive domestic market place: 3 strong, large, mature, independent airlines (by size - QF, VA/TT & JQ), none of which is too big to fail (should a future management team lead one of them down the garden path). Plus some small independents nipping at their heals, if one of the "big three"
steers themselves into a Titanic iceberg.
Yes, QAN will need to contract, so yes there will be significant job losses there. The current management team has not been able to lower staff costs sufficiently, and this will also help them achieve it, or it goes out of business.
What is also clear from the current situation, is that QAN is prepared to use its size to hold our country to ransom, so the only solution for the government is to ensure it is split up, so it will never again be able to use this tactic.
Also if they are downgraded from "investment grade" to "junk" which seems likely then they can no longer count on forward bookings as cash, assets that are currently unencumbered will effectively become mortgaged and the cost of their debt will balloon overnight. A lot of that is accounting and it can change quickly.
This is the more worrying aspect, because with the flip of an accountant's switch, and as they have negative cash flow, they may become insolvent overnight.
But, unlike Ansett, the various parts of QAN (as long as QF and its goodwill remains in the air) are worth significantly more as separate entities, than they are together as a whole business. (So in that sense, it's a case of -
divided they stand, together they fall.) But if the QAN board doesn't have the stomach to carve up the company, and do so quickly, I am sure voluntarily allowing an administrator to do it, is a valid solution.
