Qantas Junk Status

[ryeman]

Moody's are the second rating agency to downgrade Qantas to 'non-investment' grade JUNK status which raises its important borrowing interest rate and thus costs.
Like the ABC, and NOT living in Sydney, why should I give a rats.........

[jpblue1000]

Another Australian Icon owned shy of 44% by foreign investors operating possibly with one arm tied behind their back becuase of the high australian dollar in a world economy that has slowed down in a very competitive sector where other airlines are flourishing based on different economic business models while a crap management fails to manage the inefficient workforce.
Glad Im not an investor but now might be the time to invest! might not?

JP

[ryeman]

Originally Posted by jpblue1000

Another Australian Icon owned shy of 44% by foreign investors operating possibly with one arm tied behind their back becuase of the high australian dollar in a world economy that has slowed down in a very competitive sector where other airlines are flourishing based on different economic business models while a crap management fails to manage the inefficient workforce.
Glad Im not an investor but now might be the time to invest! might not?

JP

With my knowledge of aviation, I couldn't imagine a worse sector to 'invest' in....it truly is a junk sector but a great chance to 'trade' in, if you like gambling that is.

[jpblue1000]

Yeah, Ive worked with the industry for the last 7 years and the amount of operational regulation, governmental regulation, law changes, the rise and fall of individual airlines influences, the alliances betwen carriers and the European Virgin hosties makes it a damn tough industry, and I was only designing terminals for them...

JP

[cheap]

Originally Posted by jpblue1000

Another Australian Icon owned shy of 44% by foreign investors operating possibly with one arm tied behind their back becuase of the high australian dollar in a world economy that has slowed down in a very competitive sector where other airlines are flourishing based on different economic business models while a crap management fails to manage the inefficient workforce.
Glad Im not an investor but now might be the time to invest! might not?

JP

So how is the "crap" Qantas management supposed to improve efficiency - given the industrial relations regime that they must comply with and lets not mention the "marvellous" CO2 tax (ops I just did), both of which were put in place by the previous "genius" government.

There does seem to be pattern of the well known Aussie companies going to the wall. I guess all these Aussie companies must all have "crap" management?

[ryeman]

Originally Posted by cheap

So how is the "crap" Qantas management supposed to improve efficiency - given the industrial relations regime that they must comply with and lets not mention the "marvellous" CO2 tax (ops I just did), both of which were put in place by the previous "genius" government.

There does seem to be pattern of the well known Aussie companies going to the wall. I guess all these Aussie companies must all have "crap" management?

It's good to see life's so simple.

[jpblue1000]

Originally Posted by cheap

So how is the "crap" Qantas management supposed to improve efficiency - given the industrial relations regime that they must comply with and lets not mention the "marvellous" CO2 tax (ops I just did), both of which were put in place by the previous "genius" government.

Gee, I think I gave them all every opportunity and excuse in the book, to be able to blame everyone else but themselves. and you bit!

JP

[GasoLane]

Originally Posted by ryeman

Moody's are the second rating agency to downgrade Qantas to 'non-investment' grade JUNK status which raises its important borrowing interest rate and thus costs.
Like the ABC, and NOT living in Sydney, why should I give a rats.........

Hmm, well as long as they don't go under until at least the 3rd week in Feb.

It's a long walk home from Cairns!

[Yellow_Festiva]

Was it $11bil they were offered several years ago when a group was looking at buying them?

[Stefan]

I'm amazed they have lasted at all.

Since day dot, or as long as I remember, they are simply the most expensive way to travel, always have been.

Again one of those times "we should support Australian" BUT you need to be able to afford to pay the 50 - 100% premium, which maybe as much as a $2K for a flight to Europe.

It's always been that so to blame a CO2 tax is just rubbish.

Maybe less people a willing to fork out the extra these days.

[Work Horse]

I posted this over twelve months ago;
"At 90, Qantas is the world's oldest continuously running airline. It is an iconic Australian company. Its story is woven into the story of Australia and Australians have long taken pride in the service and safety standards provided by our national carrier. Who didn't feel a little proud when Dustin Hoffman uttered the immortal line in Rain Man, 'Qantas never crashed'?

While it is true that Qantas never crashes, the sad reality is that Qantas is being deliberately trashed by management in the pursuit of short-term profits and at the expense of its workers and passengers. For a long time, Qantas management has been pushing the line that Qantas international is losing money and that Jetstar is profitable.The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden. When there is a cost to be paid, Qantas pays it, and when there is a profit to be made, Jetstar makes it.

But first we need to ask ourselves: why? Why would management want Qantas to look unprofitable? Why would they want to hide the cost of a competing brand within their group, namely Jetstar, in amongst the costs faced by Qantas?

To understand that, you need to go back to the days when Qantas was being privatised. When Qantas was privatised the Qantas Sale Act 1992 imposed a number of conditions, which in turn created a number of problems for any management group that wanted to flog off parts of the business. Basically, Qantas has to maintain its principal place of operations here in Australia, but that does not stop management selling any subsidiaries, which brings us to Jetstar.

Qantas has systematically built up the low-cost carrier at the expense of the parent company. These are practices that I believe Qantas and Jetstar management need to explain. For example, when Jetstar took over the Cairns-Darwin-Singapore route, replacing Qantas flights, a deal was struck that required Qantas to provide Jetstar with $6 million a year in revenue. Why? Why would one part of the business give up a profitable route like that and then be asked to pay for the privilege? Then there are other subsidies when it comes to freight. On every sector Jetstar operates an A330, Qantas pays $6,200 to $6,400 for freight space regardless of actual uplift. When you do the calculations, this turns out to be a small fortune. Based on 82 departures a week, that is nearly half-a-million dollars a week or $25 million a year.

Then there are the arrangements within the airport gates. In Melbourne, for example, Jetstar does not pay for any gates, but instead Qantas domestic is charged for the gates. My question for Qantas management is simple: are these arrangements replicated right around Australia and why is Qantas paying Jetstar's bills? Why does Qantas lease five check-in counters at Sydney Terminal 2, only to let Jetstar use one for free? It has been reported that there are other areas where Jetstar's costs magically become Qantas's costs. For example, Jetstar does not have a treasury department and has only one person in government affairs. Qantas's legal department also does free work for Jetstar.

Then there is the area of disruption handling where flights are cancelled and people need to be rebooked. Here, Qantas handles all rebookings and the traffic is all one way. It is extremely rare for a Qantas passenger to be rebooked on a Jetstar flight, but Jetstar passengers are regularly rebooked onto Qantas flights. Jetstar never pays Qantas for the cost of those rebooked passengers and yet Jetstar gets to keep the revenue from the original bookings. This is worth millions of dollars every year. So Jetstar gets the profit while Qantas bears the costs of carriage. Qantas provides an aircraft to Jetstar to cover an unserviceable plane, Jetstar does not pay for the use of this plane.

Yet another example relates to the Qantas Club. Jetstar passengers can and do use the Qantas Club but Jetstar does not pay for the cost of any of this. So is Qantas really losing money? Or is it profitable but simply losing money on paper because it is carrying so many costs incurred by Jetstar? We have been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas international is losing money but, given the information above I would argue those claims need to be reassessed.

Indeed, given these extensive allegations of hidden costs, it would be foolish to take management's word that Qantas international is losing money. So why would Qantas want to make it look like Qantas international is losing money? Remember the failed 2007 private equity bid by the Allco Finance Group. It was rejected by shareholders, and thank goodness it was, what we are seeing now is effectively a strategy of private equity sell-off by stealth.

Here is how it works. You have to keep Qantas flying to avoid breaching the Qantas Sale Act but that does not stop you from moving assets out of Qantas and putting them into an airline that you own but that is not controlled by the Qantas Sale Act. Then you work the figures to make it appear as though the international arm of Qantas is losing money. You use this to justify the slashing of jobs, maintenance standards and employment of foreign crews and, ultimately, the creation of an entirely new airlines to be based in Asia and which will not be called Qantas. The end result? Technically Qantas would still exist but it would end up a shell of its former self and the Qantas Group would end up with all these subsidiaries it can base overseas using poorly paid foreign crews with engineering and safety standards that do not match Australian standards. In time, if the Qantas Group wants to make a buck, they can flog these subsidiaries off for a tidy profit. Qantas management could pay the National Boys Choir and the Australian Girls’ Choir to run to the desert and sing about still calling Australia home, but people would not buy it. It is not just about feeling good about our national carrier—in times of trouble our national carrier plays a key strategic role. In an international emergency, in a time of war, a national carrier is required to freight resources and people around the country and around the world. Qantas also operates Qantas Defence Services, which conducts work for the RAAF. If Qantas is allowed to wither, who will meet these strategic needs?

I pay tribute to the 35,000 employees of the Qantas Group. At the forefront of the fight against the strategy of Qantas management have been the Qantas pilots, to whom millions of Australians have literally entrusted their lives. The Australian and International Pilots Association sees Qantas management strategy as a race to the bottom when it comes to service and safety. On 8 November last year, QF32 experienced a serious malfunction with the explosion of an engine on an A380 aircraft. In the wrong hands, that plane could have crashed. But it did not, in large part because the Qantas flight crew had been trained to exemplary world-class standards and knew how to cope with such a terrifying reality. I am deeply concerned that what is being pursued may well cause training levels to fall and that as a result safety standards in the Qantas Group may fall as well. AIPA pilots and the licensed aircraft engineers are not fighting for themselves; they are fighting for the Australian public. That is why I am deeply concerned about any action Qantas management may be considering taking against pilots who speak out in the public interest.

A lot of claims have been made about the financial state of Qantas international but given the information I have presented tonight, which has come from within the Qantas Group, I believe these claims by management are crying out for further serious forensic investigation. Qantas should not be allowed to face death by a thousand cuts—job cuts, route cuts, quality cuts, engineering cuts, wage cuts. None of this is acceptable and it must all be resisted for the sake of the pilots, the crews, the passengers and ultimately the future of our national carrier. "
http://www.fordforums.com.au/showthr...41#post4511341

[ryeman]

And we'll shortly be importing our refined fuel by ship when the last foreign owned refinery closes.
Another unintended(?) outcome of globalisation.
All nations want a 'flag carrier' with the important status that brings, an island of bird droppings included.
Tend to be influenced, if not run, by flying enthusiasts as opposed to hard headed financialists with experience in aviation, if there is a surviving one left.

[ford888]

Originally Posted by Work Horse

http://www.fordforums.com.au/showthr...41#post4511341

Your So called facts are very very wrong. Qantas never allows Jetstar to use their aircraft. The operate them on a code share basis, It is infact Jetstar who uses their own aircraft to operate the flights for Qantas.

There is no check in desk for Qantas at T2 in Sydney, You are confused with the Old Qantas Link operations another subsidiary of Qantas.

The fact is that They have had it too good at Qantas Engineering for too long and as the global demand for Low cost carriers rises Qantas can no long afford to be competitive. The greedy engineers have been overpaid for too too long and now they are suffering because of this. Ultimately destroying themselves also not to mention the unionism.

[Work Horse]

Originally Posted by ford888

Your So called facts are very very wrong. Qantas never allows Jetstar to use their aircraft. The operate them on a code share basis, It is infact Jetstar who uses their own aircraft to operate the flights for Qantas.

There is no check in desk for Qantas at T2 in Sydney, You are confused with the Old Qantas Link operations another subsidiary of Qantas.

The fact is that They have had it too good at Qantas Engineering for too long and as the global demand for Low cost carriers rises Qantas can no long afford to be competitive. The greedy engineers have been overpaid for too too long and now they are suffering because of this. Ultimately destroying themselves also not to mention the unionism.

I posted my information over twelve months ago before Qantas moved to T3 at Sydney.

http://www.qantas.com.au/travel/airl...ange/global/en
"The Qantas Lounge in T2 will continue to operate while QantasLink is in the terminal and close thereafter. Eligible Qantas Frequent Flyers travelling on Jetstar are welcome to visit Qantas Lounges in T3."

Wouldn't Jet Star passangers using the Qantas lounge shift the cost?

My point is it was obvious over twelve months ago Qantas management was up to shenanigans.

If you believe everything I posted is factually incorrect and blame the demise of Qantas on "greedy engineers" you are welcome to your opinion.

[GasoLane]

Originally Posted by ford888

Qantas never allows Jetstar to use their aircraft. The operate them on a code share basis, It is infact Jetstar who uses their own aircraft to operate the flights for Qantas.

I could never work out this part.

Again this year we're flying from Wagga to Cairns with Qantas.
Booking online at the Qantas site the Wagga -Syd leg is with Qantas link. Fine, they're pretty much the only carrier going from Wagga to Syd.

However the Syd/Cairns leg depends on when I want to leave Syd. It could be on a Jetstar flight...but at Qantas prices!!

If I wanted to fly and take a Thermos and sandwiches I'd book Jetstar at a Jetstar price.

[cheap]

Originally Posted by Work Horse

http://www.fordforums.com.au/showthr...41#post4511341

So it's a conspiracy. A 90+ year old company, that has survived wars, fuel crisis, financial crisis, SARS, privatisation and a host of other items. A company mostly profitable during these 90 years, it's management decides one day that it's all too hard and plans their own self destruction. Oddly this is the same mantra being preached by the unions and previous "genius" federal government.

[ryeman]

Globalisation + Privtisation = Vulnerabilty.

[mik]

2 or 3 weeks ago i saw an interesting interview by someone allegedly in the know regarding the Qantas group, sorry i'm a scatter brain i cant recall all the nitty gritty of it , but the gist of it was mostly about virgin and and Qantas, and how virgin did a deal for route x possibly with emirates i think?
Qantas decided to keep up with the Joneses and buy a some more very expensive jets when they probably really didn't need too, at the end of the segment when it was all summed up , it looked decidedly like Qantas high management had if i can use the technical American term........ "screwed the pooch".

[ryeman]

Pan Am, TWA,Continental,......so many
Left to clear thinking rational investors, a capital intensive, no holds barred industry would you throw more of your money at it?.

[MITCHAY]

Originally Posted by burnz

WOW a lot of users like your post..
ford forums really has grown. 4.3 billion

Largest value for unsigned 32bit integer. Somethings gone wrong :

But anyways it is a sad sight. If you wanted to gamble you could buy low and hold on long enough and hopefully make a gain but would seem quite a waste of money at the moment.

[nuthin' fancy]

No airline makes money, all the flag carriers are subsidised by their governments. QANTAS is not directly subsidised but is protected by the restriction on who can operate on what route.

Without direct subsidy and reabsorbtion into Government ownership, they are on a road to nowhere.

[Windsor220]

Qantas may have a reasonable safety record but they have had 3 major incidents in the last 5 years so they aren't bulletproof. Also every time I have priced them up for a flight they are way too expensive.

[monte.b]

The main problem with Qantas is that little irish git running it ,who in their right mind would ground an airline and leave people scatted all over the world with no way to get home ,the company has gone backwards ever since his moment of madness ,matter of fact its gone backwards ever since he took the top job ,i wonder sometimes who is he really working for