Qantas to outsource ground handling across Australia

[TheInsider]

By replacing them with higher opex spending through outsourcing? I've never fully understood the vehement opposition to capex investment by (in particular, technology - as that's my world) companies - I understand leasing or services provide easier budgeting by paying costs pro-rata, but this is at the expense of depreciation, equity and services margin. Not to mention lowering the barrier to entry for competitors who have access to the same shared services.

That said, it certainly helps during a 1 in 100 year global pandemic in that you can cease to honour your agreements, but more than likely comes back to bite in terms of higher margins on services for the other 99 years - for those outsourcers who survive the year, anyway.

C'mon Qantas still run Internet Explorer 8 and 9 on their computers.... And then an even bigger hassle trying to get them to put chrome on.

 

[p--and--t]

C'mon Qantas still run Internet Explorer 8 and 9 on their computers.... And then an even bigger hassle trying to get them to put chrome on.

Similar to other large corporates where the logistics, costs and testing and a fear of reduced robustness of rolling out a change to 10s or 100s thousands of staff drive decisions not to change unless absolutely necessary. I worked in a high technology company that would not change a version unless Microsoft had threatened them for 12 months or so that all support would be removed and were running versions of software 5 or more years behind. Sometimes we were running unsupported products for many months during a rollout program.

 

[PLM]

I support this move as long as it means they hire baggage handlers who don't try to smash my beautiful Rimowa suitcase every time I fly.

 

[TheInsider]

I support this move as long as it means they hire baggage handlers who don't try to smash my beautiful Rimowa suitcase every time I fly.

Nothing to do with the baggage handlers, more to do with the sortation system.

 

[sxc]

Sidebar: as DNATA is owned by a sovereign state, their employees who have been furloughed are not eligible for jobkeeper.

 

[Deleted member]

It’s at absolutely no cost to Qantas if it offers staff the chance to be stood down, without pay, until their business picks up.

But no, qantas wants a cheap workforce when it returns.

Aussie icon? It’s not even giving aussie battlers a chance

Cheap or less expensive. There are probably arguments on both sides. But it occurs to me that the working conditions and pay at Qantas are “Generous “ even by airline standards

 

[Deleted member]

IIRC, they made $15 million operating the essential flights? Out of a total of ~$500m? But I could be wrong on that.

They've previously held their hand out for government loan guarantees, and they benefited from waived landing fees etc at the beginning of covid.

Was there much actually landing?

 

[jb747]

I support this move as long as it means they hire baggage handlers who don't try to smash my beautiful Rimowa suitcase every time I fly.

Given that they’re likely to be paid even less, I’d expect your luggage will be sold and replaced with a hessian bag.

As a side note, I have never understood why anyone would take expensive luggage on anything other than a private jet.

 

[TheInsider]

Cheap or less expensive. There are probably arguments on both sides. But it occurs to me that the working conditions and pay at Qantas are “Generous “ even by airline standards

QGS pay and conditions are not generous at all!

 

[RAM]

Given that they’re likely to be paid even less, I’d expect your luggage will be sold and replaced with a hessian bag.

As a side note, I have never understood why anyone would take expensive luggage on anything other than a private jet.

Ah, inside knowledge - you used to see first hand the baggage handling....

Datapoint: Had to fly my bike to/from Hawaii in 2016. Used a Q bike box. Came off the plane with 7 (SEVEN) holes, 3 one side & 4 the other. Two were star-shaped, largest big enough to put my fist into. Luckily I had padded the box with empty soft drink bottles with the lids on tightly but ever so slightly underfilled with air. The holes had aligned with the bottles & not the frame. Ground staff in HNL volunteered that someone had deliberately done it, as there was no way the star shaped impacts matched anything on the plane nor the ground systems.

Coming back I had weakened & purchased a new bike. For the new bike I used a bicycle box from the bike shop's empty delivery supply.

Got back to Sydney. New 'branded' bike box still looking brand new. Q repaired bike box (added layer of 7ply cardboard internally on both sides & compressed plastic bags to hold the bottles more firmly in place) had 5 new holes.

Suspect there's been issues with the ground handling & how Q treats them for some time!

 

[Carrots]

Ah, inside knowledge - you used to see first hand the baggage handling....

Datapoint: Had to fly my bike to/from Hawaii in 2016. Used a Q bike box. Came off the plane with 7 (SEVEN) holes, 3 one side & 4 the other. Two were star-shaped, largest big enough to put my fist into. Luckily I had padded the box with empty soft drink bottles with the lids on tightly but ever so slightly underfilled with air. The holes had aligned with the bottles & not the frame. Ground staff in HNL volunteered that someone had deliberately done it, as there was no way the star shaped impacts matched anything on the plane nor the ground systems.

Coming back I had weakened & purchased a new bike. For the new bike I used a bicycle box from the bike shop's empty delivery supply.

Got back to Sydney. New 'branded' bike box still looking brand new. Q repaired bike box (added layer of 7ply cardboard internally on both sides & compressed plastic bags to hold the bottles more firmly in place) had 5 new holes.

Suspect there's been issues with the ground handling & how Q treats them for some time!

If that was a Sept/Oct timed Hawaii trip I'd imagine they'd be fairly sick of seeing bike boxes in HNL too!

Mid to late January in Adelaide is not a popular time with the baggage handlers from all reports.

Always makes me cry when I see a bike bag sitting with the wheels pointing to the sky (upside down!).

 

[flydoc]

The proposed action is not a fait accompli: the Transport Workers Union has taken Qantas to the Fair Work Commission, allleging failure to consult the workers about their plans

ASX rises on Wall Street's record highs, Qantas sued for job cuts

Australian shares saw another strong rise today, with healthcare and banks leading the gains, but ended off their highs.

www.abc.net.au

 

[ANstar]

The proposed action is not a fait accompli: the Transport Workers Union has taken Qantas to the Fair Work Commission, allleging failure to consult the workers about their plans

ASX rises on Wall Street's record highs, Qantas sued for job cuts

Australian shares saw another strong rise today, with healthcare and banks leading the gains, but ended off their highs.

www.abc.net.au

Its going to happen.. it may just take longer going through fair work. TWU are just clutching at straws as they will lose their foot in QF.

 

[Spongbob]

The proposed action is not a fait accompli: the Transport Workers Union has taken Qantas to the Fair Work Commission, allleging failure to consult the workers about their plans

ASX rises on Wall Street's record highs, Qantas sued for job cuts

Australian shares saw another strong rise today, with healthcare and banks leading the gains, but ended off their highs.

www.abc.net.au

It would not be the first time Qantas has failed to comply with its obligations to consult with the workforce when planning a major change.

 

[RAM]

It would not be the first time Qantas has failed to comply with its obligations to consult with the workforce when planning a major change.

Q is becoming a serial offender in not complying. Such as being made by the ACCC to issue cash refunds instead of Q issuing travel credits regardless.

Is this a sign of Q's desperation? Possibly the last straw now gone for getting anything but an 'In administration' bailout from the Fed Govt that sees all shareholders lose 100% & unsecured creditors (especially those who just parted with $500m) getting to claim tax losses.

Interesting data point (from Q's results). The Board only cancelled their overdue dividend payment just before 30 June 2020.



If the 13.5 cent dividend was paid then Q's net tangible assets (pre June 26 share issue) would have fallen to less than a weeks 'operating expenses' after receiving JobKeeper, at most a little over 3 cents per share if no value attributed to the 5.79 cents per share franking credit (17 - 13.5).

Not paying the dividend saw them with around 5 weeks operating expenses left in the tin - AFTER raising the $1.4bn in new cash via their Institutional share issue on June 26th.



Hard to reconcile these Q Annual Report figures (as at 30 June 2020) with AJ's claim of billions in security available for further borrowing? The Net tangible assets as at 30 June included the $1.360bn (gross) raised from the Insitutional issue on 26 June, after fees of $18m Q raised a net $1,342m.

Cash is classified as a tangible asset.

Net tangible assets per share of 17 cents is around $260m - I may be missing something here but $1,100m of the cash just poured in by the Institutional shareholders was required to OFFSET existing debt/liabilities.

The Statutory Loss of $1,964m equates to 129.6 cents per share loss, (see Q's report)

$1,964,000,000 / 129.6 = shares on issue used in calc = 1,515,432,000.

Cash raised of $1,342,000,000 / 1,515,432,000 shares = 88.6 cents per share.

Yet after getting in 88.6 cents per share in cash they only have 17 cents per share NTA remaining just 4 days later.

But AJ said the write down had no cash impact. Then what did?

Some creative accounting saw what I expected their 'underlying operating loss' of $400m+ become an $124m underlying operating profit. In the first half they booked the profits on fuel hedging as operating profits & in the second half they reclassified the $500m+ fuel hedging losses as non-operating expenses.

"Heads I win, tails you lose?"

Strange as for the first three months of 2020 Q was using nearly 100% of projected fuel demand & for the last 3 months still used fuel - so over the entire half then at least 64% of the fuel hedges should have been booked as 'operating expenses'. Even on that basis would have resulted in a $220m operating loss though. Also as the hedges had been operating since early 2019 (Q 2018/19 Annual Report) - does this seem to be an example of extreme cherry picking?

I do not recall this seeing this 'creative' methodlology before.

Figures also seem to show Q dragging the chain since the ACCC order for full cash refunds to be offered to ALL customers who were denied them & forced to take travel credits - by at least $1.7bn. Seems to tie in with the continuing anecdotal evidence here on AFF about pre- & post June 30.

Perhaps this cash situation explains their recent $500 unsecured bond issue. Yet again, somewhat inconsistent with AJ's claims about billions in security available to secure future borrowing - if so, then why pay a higher interest rate for unsecured debt?

Does make me wonder what the difference is in AJ's mind between loan 'covenants' vs 'conditions'?

 

[Carrots]

From what I've heard locally here in SA, it sounds like Swissport is most likely to be awarded the ground handling contract.
Although it was mentioned there's no contract locked in for Adelaide yet so I do wonder if it's been contracted by airport rather than state/nationally.

 

[AIRwin]

Qantas to outsource more than 2,000 ground staff roles across 10 airports

Qantas is outsourcing more than 2,000 ground crew jobs across 10 airports in a bid to lower costs as it faces a financial hit from the coronavirus pandemic.

www.abc.net.au

 

[SeatBackForward]

I don't understand this trend of outsourcing everything. What is then the actual DNA of the company you're buying from if all providers are essentially using the same outsourced provider. But then again, I'm also not very sophisticated business wise.

 

[dylarr]

A very defensive full statement from Qantas:

UPDATE ON PROPOSED OUTSOURCING OF QANTAS’ AUSTRALIAN AIRPORTS GROUND HANDLING SERVICES

Keep up to date with Qantas' latest news and information, media releases, articles, images and more with the Qantas News Room.

www.qantasnewsroom.com.au

 

[33kft]

I don't understand this trend of outsourcing everything. What is then the actual DNA of the company you're buying from if all providers are essentially using the same outsourced provider. But then again, I'm also not very sophisticated business wise.

The theory is reduced costs through the optimization/centralization of the services. Better buying power, better efficiency, better cost control.

The reality is that service quality now becomes lowest common denominator. Who nowadays calls a service centre that has been outsourced and expects the agent to know more than them about the product or service? We have adjusted to this being acceptable rather than it ever having been comparable to pre-outsourcing levels of knowledge or assistance. Certainly for specialized areas like aviation it would be better than call centres, but as you say all that is left of the outsourcee is brand value and a thin veneer of marketing slapped on a mediocre and generic product.