QANTAS - what are your thoughts & opinion on their current financial position?

berger on 26/02/2014 - 15:53
Last edited 27/02/2014 - 08:42

Hey guys,

Qantas seem to be in a bit of trouble.. Profits down, jobs going, routes cut…

It's unlikely that a large company like this could go into receivership, but never know… Look what happened to Anset Australia, which as we know was a large player in the Aussie Airspace..

What concerns me, is last month there was a "companion" sale, which I took advantage of, which cost around $6000.. I'm not sure if I wait this out until i fly in October and chance it, or refund my tickets and jump to Virgin, ANZ..

What thoughts do you have?

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Comments

  • geek001 on 26/02/2014 - 16:03

    Well, it would be a pity, I have had bad experience with customer service in the past with Qantas and swore never to fly with them again, but the expedia.com.br deal last year changed my mind and I bought tickets for a recent trip at the start of the year. I have to say the customer service has improved by leaps and bounds from the previous time.

    That being said, I don't think the OZ government will let Qantas go broke, it'll be very embarassing. I remember quite a while ago NZ had the same problem where Air NZ almost went broke, but the government stepped in at the very last minute because of national pride or could be because of some economic reason.

    More than likely, you don't have anything to worry about.

    • Miss Dior on 27/02/2014 - 12:37

      Not sure the govt will have a choice given its own financial position. More likely the govt will have to look at the restrictions it has placed on Qantas under the Qantas Sale Act and consider changing these or alteratively restricting other (international) airlines operating domestically.

  • Pumpkin_rrr on 26/02/2014 - 16:20

    Although I wasnt born in Oz, I am always sentimental about the country's icon, Qantas being one of them. I was delighted that we are flying with them to USA soon. Fingers crossed they wont disappoint.
    A friend of mine was going to Bangkok and trying to book flight yesterday. He was initially very adamant about flying Scoot or AirAsia. But luck would have it that the airline website was slow and we looked at Qantas. Woila, the fare was cheaper!
    That said, I dont know how Qantas can sustain with all the wages conditions.

  • mskeggs on 26/02/2014 - 16:38

    Did yo upay with a gold credit card or otherwise get travel insurance? If not, buy some if only for the peace of mind as this is obviously concerning you.
    FWIW, if Qantas went to the wall it is likely they would honour existing bookings, just not pay their creditors and dud their employees of their above award entitlements and frequent flyer point holders.

    • Cyphar on 26/02/2014 - 20:58

      A lot, if not all, of travel insurance companies don't cover airline collapses. If the ticket is booked by a travel agency however, their Travel Compensation Fund will give back a refund. One of the rare benefits of using a Travel Agent these days

      • mskeggs on 27/02/2014 - 08:14

        I didn't know it was a typical exclusion. Thanks for the tip!

  • cloudy on 26/02/2014 - 17:53

    Given they havent been making money in what seems like decades, it's probably best the govt just step in and take them over. The problem is that it costs more to run a airline than it takes in, so costs need to fall, which included wages and jobs should go. Including that or the CEO I might add. But it's hard, the unions play a tough game, no one wants to go backwards in their wages, but the fact is, if the plane lands in Asia, and there are engineers that are just as good (and there is no reason to assume why they are not) but strive off 1/5 the pay, than we need to take advantage of it, the same way we lost our clothes manufacturing decades ago and bought clothes from asia. It's natural progression, but someone has to be the bad person and tell thousands of current employees and the union this.

    Put it in the too hard basket, and hope things don't get worse.

  • aegcp on 26/02/2014 - 19:13

    Companies cannot expect the government to give them "a hand" all the time. Qantas is running a business which is bleeding daily. To me the biggest problem is the union, always sabotaging any radical option to keep the business afloat

    Wages are too expensive in australia and they must look for overseas options. I think this is the only way they'll survive.

    • arcticmonkey on 26/02/2014 - 20:03
      -1

      Yes, how dare the Qantas CEO get a 71% pay rise in tough times. They should look overseas and find a cheaper and better CEO.

      http://www.news.com.au/finance/qantas-boss-wins-71pc-pay-hik…

      http://www.smh.com.au/business/qantas-chiefs-pay-rise-sparks…

      • aegcp on 26/02/2014 - 20:12
        +1

        old news mate. How about this old news as well:

        http://www.theaustralian.com.au/opinion/letters/its-hard-wor…

        We need to get rid of the "entitlement" mentality. Company's main objective is to make money. simple. Stop asking the government for any help.

        Again, wages are too expensive, maintenance done here is even worse. Lots of jobs will go, perhaps even Joyce's one, which I don't care. Unless you fix this and the union behaving like kings, this will keep on sinking, faster than titanic.

        • cat06969 on 27/02/2014 - 08:24

          Absolutely true. Add to this the appalling service staff mentality that exists in Australia, which undermines the horrendous flight experience that is Qantas international, and you get the full story of Qantas' plight. Too many truly great airlines from overseas (Singapore Airlines etc - cheaper, delightful service) make Qantas look ordinary. Sat on their reputation for 30 years while others passed them. It's over for Bozo.

        • leiiv on 27/02/2014 - 18:13

          I do not think that Singapore Airlines is cheaper though.

  • [Deactivated] on 26/02/2014 - 20:57
    +3

    they should sack the board and Joyce. The fleet grounding just to say "screw you" to the union and people on strike AND customers and the two planes for every one route Virgin took on just to bully them, the fact that QANTAS is now running at a loss for the first time ever and also the fact that this little Irish twat keeps asking for tax payers money because he's screwed the entire company up.

    they've sacked thousands of Australians and tomorrow they will sack another 5-6,000 and sell their Lease for Melbourne airport and sell Brisbane airport.

    why the hell hasn't anyone removed this Irish twat ? QANTAS dont deserve government money, they deserve to die a slow death. They gouged the Australians for years until some real competion came along and now they are crying and want money to bail them out because of poor management and bullshit.

    Get rid of Joyce first of all, he's the biggest problem.

    • Mikeologos on 01/03/2014 - 02:18
      +3

      Ok, I hate Joyce as much as the next guy, but your facts are tad off. Qantas in fact did have problems before Joyce, the first being bad fleet planning (done under the previous CEO). The 5 year 787 delay meant that Qantas had to struggle through without a profit. While it is easy to blame Joyce, Qantas has been doomed to fail for a long time.

      Take Ansett and Virgin blue for example, in 2003, Virgin had the same number of passengers as Ansett had before they collapsed. How much staff did they have? 33%, one third of what Ansett had at the time were transporting the same amount of passengers. Why is this? Unions. They're great for the worker, but a struggling company like Qantas cannot take the heat of one right now. Air NZ collapsed and was rebuilt, only to post a record profit this quarter, the reason being wages, or lack of, Air NZ staff salaries pale in comparison to Qantas staff.

      Alan Joyce is a twat, i'll give you that, but consider the facts before you make a common circle-jerk comment with little understanding as to what goes on behind the scenes. Do you have a better plan? Because the streamlined fleet that Joyce is aiming to have by 2015 seems to be the only way Qantas will survive until the 787s save the day.

      Gah, one final thing, Virgin may look as if it's doing great now, but they are sadly not (I prefer them to Qantas, just hate mindless comments). They just posted a loss just under 90 million dollars, while less than Qantas, remember that they have Etihad, Air NZ and Singapore Air backing them, feeding them money to mitigate that loss. What do those companies want to do? Bankrupt Qantas, a primary competitor.

      • Speckled Jim on 01/03/2014 - 14:47
        +2

        To put it into perspective over the past three years Qantas has added 7.1 million seats to capacity, versus 2.1 million from Virgin

        The ACCC is reportedly investigating Qantas for potential ­misuse of market power. In September ACCC chairman Rod Sims said he was "concerned" by comments made by Qantas. Last year Qantas' domestic business head, Lyell Strambi warned he would add two planes for each one added by Virgin. ''We've made it very clear we'll be sensible in terms of capacity. But if a competitor puts one [plane] in, we'll put two in as a group. We're very clear, we're not making any apologies for it. That's the game and people need to understand the game.
        Source

        Qantas is over-servicing the market. How can an oversupply be profitable? How is this not mismanagement?

        • [Deactivated] on 02/03/2014 - 20:25

          Qantas is also paying Jetstars bills and giving them free access to stuff QANTAS pays for (ticket gates, etc)

  • RockyRaccoon on 26/02/2014 - 22:31

    Ah ha

    Boycott qantas so Joyce will lose his job….

    The competitors you support while boycotting, have their planes maintained with which country's engineers and which flight crews.

    If they are Aussies they they are paid less than Qantas staff, hmmm that is really supporting Qantas staff.

    The problem is that even if Joyce was got rid of the jobs will go, because those who thought bringing Joyce to his demise, forgot to realise that 5000-6000 Qantas employees would be collateral damage.

    The unions were fighting on principle, problem being they keep their principal jobs, whereas 5000-6000 now soon to be non union members lose theirs, with the sad irony that Joyce keeps his anyway.

    Hey maybe keep the boycotts going, after another 10000 lose their jobs, the board might sack Joyce.

    So far this war has 5000 casualties for no gain.

    I know it hurts but fighting wars that you cant win doesnt make any sense

  • altomic on 27/02/2014 - 01:03
    +1

    cough -fix title spelling "their"- cough

    • berger on 27/02/2014 - 08:42

      ;)

  • zultan on 27/02/2014 - 08:07
    +7

    Joyce has been angling for overseas ownership for years. This latest financial crisis and supportive government is all part of the plan. For those who haven't seen it, Senator Xenophon's speech of 23rd Aug 11 is reproduced below:

    Senator XENOPHON (South Australia) (19:37): I rise to speak tonight on an issue that is close to the hearts of many Australians, and that is the future of our national carrier, Qantas. 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. Tonight, it is imperative to expose those claims for the misinformation they are. 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. In a moment, I will provide detailed allegations of cost-shifting that I have sourced from within the Qantas Group, and when you know the facts you quickly see a pattern. 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. I have been provided with a significant number of examples where costs which should have been billed back to Jetstar have in fact been paid for by Qantas. 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 $25½ million a year.

    Then there are the arrangements within the airport gates. In Melbourne, for example, my information from inside the Qantas group is that 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 to me 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. I am told 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, insiders tell me, 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. I am informed that Jetstar never pays Qantas for the cost of those rebooked passengers and yet Jetstar gets to keep the revenue from the original bookings. This, I am told, is worth millions of dollars every year. So Jetstar gets the profit while Qantas bears the costs of carriage. It has also been reported to me that when 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 inside information I have just detailed, 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, for I am told that 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.

    • leiiv on 27/02/2014 - 18:46

      It is not surprising at all that private businesses will find and make use of the loopholes in Qantas Sale Act to the fullest. The right thing to do is for government/public to take over the management by buying its shares, and making it a co-op company like Mondragon (or even a non-profit one). It can still be a public company, but introduce a two tier share class like Google's and keep voting power internally to the employee and government.

    • arcticmonkey on 15/03/2014 - 13:28

      Nick XENOPHON is the only political leader we have with vision and long term thinking to better the quality of life for all and not just the rich and powerful.

      Abbott and co are only interested in giving the rich more at the expense of everyday Australians.

      I would like to see Joyce provide a rebuttal to the cost shifting highlighted above.

  • boccos on 27/02/2014 - 08:52
    -1

    The boss of Qantas is between a rock and a hard place. How does he manage his core airline in a radically changed marketplace whilst being limited in what he can do due to government (interference) legislation. First he created Jetstar and moved focus to that budget carrier, then he tries to get the Government to change their limiting stand. If all fails he may have to allow Qantas to fail, then refocus on building up Jetstar.

    He has my support. The totally illogical Government interference in a private business is astounding. What a misuse of power.

  • zultan on 27/02/2014 - 09:17
    +1

    Personally, I wish Joyce would change the record. I'm fed up with his threats of the sky falling in. The Qantas Sale Act was made law with the intent of preventing management from selling the company to a venture capital asset stripper. These days, I think they'll take the company private leaving employee carnage along the way and suddenly they'll find the airline was been profitable after all.

  • whodidthat on 27/02/2014 - 09:25

    Might as well sell it off to China, it's customer service and operations have dropped to such a bad level since moving a lot of their operations overseas anyway.

  • [Deactivated] on 27/02/2014 - 09:48

    they just flogged off brisbane airport and sacked 5000 staff (including pilots)

    weeeeeeee

    • berger on 27/02/2014 - 10:05

      A few routes being wiped out too. as long as the A380 heads to LA in October I should not have to worry too much.

  • Cluster on 27/02/2014 - 11:18
    +3

    To see the source of Qantas's problems we should look in the mirror. How many of us are happy to pay a few hundred extra to fly this full service airline overseas and employ Australians at the same time? Last statistics I saw was only 16% of us fly with Qantas to an international destination. When the topic of Qantas comes up inevitably there are many comments about poor customer service and surly staff, but it's difficult to imagine Qantas has jaded this many people.

    I know this is OzBargain, and I'm just as guilty of it as anyone else, but we're quite willing to do almost anything to buy the cheapest possible airfare.

    Quite why Qantas is so deserving of being saved while Holden wasn't is a bit of a mystery to me. Sure, Qantas was once the national carrier and the symbol of Australia, but 84% of us are happier to fly with anyone but Qantas.

    • arcticmonkey on 15/03/2014 - 13:32

      I no longer request Qantas flights at work due to Alan Joyce's stance and this can potentially cost the airline over $10,000.

      Why are they giving Joyce 71% pay rises when there are wage disputes? It is astounding.

  • [Deactivated] on 27/02/2014 - 11:53
    -1

    Just watched the speech by Alan Joyce. Genuinely impressive.
    Speech does clearly spell out the truly invidious position Qantas is in.
    Even allowing for some foolish paths Qantas has undoubtedly ventured down, any firm general overview that you may have developed will be tempered by the detail he presents.
    Worth watching. Everybody in this thread should seek it out.

  • whodidthat on 27/02/2014 - 12:00

    If they can't run a business competitively and profitable then either sell to someone who can, or fold.

    Isn't that what businesses do?

  • Pumpkin_rrr on 27/02/2014 - 12:04
    -2

    One thing they did in the past which baffled me is teaming up with Ethihad. Why didn't they team with someone closer like china southern?

    • zelda707 on 27/02/2014 - 20:55

      Ethihad has an alliance with Virgin…

    • Mikeologos on 01/03/2014 - 02:24

      I'll assume you mean Emirates, as Etihad is partnered with Virgin. The reason for teaming up with them is simple, connections. You fly from Sydney to Dubai, then from Dubai you have access to almost every single European city within a 6 hour flight, much better than a 12 hour one from singapore, seriously, Emirates network is massive. If basically mean that rather than going SYD-SIN-LHR-VCE, you could not just go SYD-DXB-VCE, it cuts out a stop and prevents backtracking. It's a win-win.

  • altomic on 27/02/2014 - 13:06
    +1

    cool. just picked up return air fares from GC to Kansai (Osaka) for 5 people with airasia for $2453.

    sorry, QANTAS posted a loss?! how did that happen?

  • Speckled Jim on 28/02/2014 - 11:02

    I'm no fan of Qantas, but I'm reasonable enough to acknowledge their importance to Australia. Some people fly Qantas exclusively, such as my mum and one of my uncles.

    They're not seeking a handout, but a debt guarantee (credit) that will be repaid with interest. What's most amusing was the pre-election pork barrelling to assist Cadbury's. Abbott maintains it was for tourism.
    Doesn't our national airline warrant assistance for that reason alone?

    With strict terms and conditions, of course. Key to these must be regime change. Show Alan Joyce the emergency exit but no golden parachute.

  • rock2014 on 09/03/2014 - 13:23

    Is John Travolta still Ambassador for Qantas???

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