Qantas Grounded

[HeadInTheClouds]

A bit of an overreaction?

 

In an astonishing dummy spit, Qantas Group CEO Alan Joyce has grounded the Qantas domestic and international fleet until such time as the pilots, the licensed engineers and the ground handlers withdraw their lawful industrial claims and campaigns.

http://blogs.crikey.com.au/planetalking/2011/10/29/joyce-stamps-foot-shut-down-qantas/

 

 

[HeadInTheClouds]

Cya Qantas...

It's looking that way, Virgin must be laughing all the way to the bank right about now... And if it continues so will charter operators all over the place.

 

 

[Yenn]

Why should the CEO worry, he has just had a 71% payrise. Shut down the company and ride off into the sunset with a golden handshake. There is a terible malaise in the Australian businesses on the stock exchange, no matter what profits they make, the shareholder gets very little and the directors get obscene payments.

 

 

[HeadInTheClouds]

If I was a charter operator right now I'd be out waving signs at crowds of people offering flights with the guarantee of no grounding

 

 

[fly_tornado]

A Sol Trijillo rerun? the last Telstra CEO who ran Telstra share price from $5 to $3?

 

 

[fly_tornado]

I also suspect that there is a hedge fund that wants to buy Qantas and needs the share price suppressed...

 

 

[winsor68]

Don't worry... when the dust settles upon the making of Junior Qantas it will all make sense...

 

 

[Guest Andys@coffs]

Once Qantas is gone, Jetstar, Qlink and what ever other airlines Qantas runs will follow suit pretty quick, so Id say you're right, Virgin, Rex and the Charter Guys...

Why do you think that Iggy? As I understand it the HR/ workers interaction in those other airlines is vastly different to Qantas mainstream. If he's grounded the fleet sackings will follow shortly and after the 3 union areas that will likely extend into other work areas which will likely see workers at odds with other workers. Im guessing that will lead to a "whose got the biggest balls" showdown. If I had to pick a side Im guessing (rightly or wrongly with no real analysis done) that the unions will loose as they did last time it got to a big showdown, this time its only 1 airline grounded and that alone puts power on the qantas management side I would have thought.

 

Over the last month Ive travelled coffs to ADL return 3 times. Qantas is the usual carrier but of the 3 returns they have carried me only 1 direction once, and I have the next 2 more return trips with VB booked. I guess thats at least $4 to $5k that they havent got from me that under more usual circumstrances they would.

 

When as a nation we remove trade protections and strive for competative efficiencies we then have to accept that if our industries have to compete on their own 2 feet in an international market that they cant be made to have a whole lot of costs that other airlines in the world dont have. Unfortunately that can lead in a race to the bottom, which we as consumers can shape if we choose to look for more than just a $ cost on tickets when travelling. Unfortunately believing that will happen at present is the same as believing in a pot of gold at the bottom of the garden....until something happens that is unbelievably bad and can be proven to be a function of cost cutting and consumers retaliate. I just hope when that inevitably happens Im not on board.....

 

Andy

 

 

[Gnarly Gnu]

Sad for the many folk who have severely and abruptly interrupted travel plans now. But awesome to read on proon the combination of xenophobia, outrage, racism, class envy and stunned shock - often in one sentence. Some even longing for physical violence, must be wonderful to employ people like some of these.

 

 

[facthunter]

Those of you who can read the signs will have done so. This whole thing is orchestrated, and has been coming for some time. How can you negotiate in good faith and seek assurances of job continuity, reasonable outcomes, etc. when nothing is fair dinkum. Most Airline Management these days are not interested in what goes on at the sharp end or in the maintenance section . Accountants never go there..Nev

 

 

[HeadInTheClouds]

I wonder if Qantas does fall apart will Eastern Australia aka QantasLink (In NSW anyway) start running things by themselves? Or would they not have the facility to?

 

 

[fly_tornado]

If Qantas falls over AirNZ will fill the vacuum asap.

 

 

[Tomo]

Talking to a Qantas worker today, he said it's pretty top heavy at the moment, but I doubt it will go redundant.

 

Have you looked at how many staff they have, mind blowing! Something like 32,000 - that's a rather large number...

 

 

[Litespeed]

And the winner of the 2011 "Greedy Gecko" goes to..........................

 

Alan Joyce

 

Incredible that the shareholders allowed this guy in, he has stacked it with the same guys he worked with at Ansett . Killed that airline stone dead and made sure the workers were screwed for years, with lots of help from Little Johnny and friends. To actually allow him to gain a massive pay rise and most likely lots of hidden surprises, is astounding.

 

Joyce is making a massive mistake, he is shown to be the modern Gordon Gecko of aviation. The fundamentals of the Airline are actually very good but have suffered from many years of very poor boards and executives who have had no greater interest than self enrichment. Remember the previous Ceo Geoff Dixon engineered Qantas to be off the exchange and to make himself a squillion. It was all on smoke and mirror debt with huge increases in valuation and dodgy financial engineering to create big profits for the private equity guys and smoking ruin of a airline.

 

The financial rumblings at the time stopped the plan but philosophy is still the same.

 

It should be remembered that they have $3 billion in cash reserves and are one of the few profitably airlines in the world. No matter the GFC or Asian crisis or whatever- they have made a profit. This is the only airline that has made a profit every year for almost a century. The fundamentals are excellent and are a far from the claims of Joyce. He seems to make the facts fit his world view and plans. Having worked with twisted minds for way too many years he certainly displays many symptoms that are very concerning. A diagnosis of functional psychopath is often given to similar personalty types- they tend to be very big in the business world.

 

By Grounding the Airline he has severely damaged the airlines reputation around the world and nationally. A minimum of 80,000 people disrupted today alone, how many will ever trust Qantas ever again? Given a large amount of their money comes from frequent business flyers who pay top price for their travel, I doubt many will risk it.

 

A vast amount of the value of the company has been lost under this CEO and now he is happy to squander its cash reserves, its is estimated to cost $30million a day in fixed costs. But the goodwill he is destroying is far greater at at least $100 million just in one day. He is gambling that he can force his way and to hell with the costs in money, social and economic.

 

Alan Joyce has said he is forced to do it as it costs the company $15million a week in reduced bookings. So he spends a minimum of $210million a week and untold damage to solve it. Then you add the huge cost of putting up all the passengers in accommodation, claims for missed paid holidays and heaps of other things. This guy has a warped sense of reality. The smartest decision the shareholders could do is immediately sack him.

 

He is literally destroying Qantas and actually acting illegally on many levels not just industrial laws but aviation, trades practices and most definitely Corporations law. He and the board new full well of plans to do this, had planned it and failed to mention it at the annual board meeting the day before. Then comes the Qantas sale act which has been breached.

 

Will he and his buddies be prosecuted? Not very bloody likely.

 

Absolutely disgusted

 

Phil

 

Viva Revolution

 

 

[frank marriott]

I have an opinion [very strong] but in complying wih Ian's wishes about this site not being non political I will rerain from commenting

 

Frank M

 

 

[Litespeed]

I guess that extraordinary times can call for comments that reflect the situation.

 

 

[winsor68]

This is bigger than just Qantas. Judging by baggage tags I reckon a LOT of passengers jumped ship in the last month leading up to it... I pity those who were unable to get off.

 

Alas Australian RPT... I knew it well...

 

 

[dazza 38]

This whole QANTAS saga is realy turning into a Circus.Headed by a clown .The quickest way to kill a business, any business, is to upset customers.Leaving sixty eight thousand customers stranded at various airports around the world, is upsetting alot of customers.Is not doing the business any favours. I will be very surprised to see QANTAS recover by this stunt.

 

 

[Guest Andys@coffs]

if its true that industrial action was costing $16m per day then qantas can hardly be blammed for bringing it to a head. To do nothing ensures its demise. this morning an interesting stat was published (which im sure is complex in detail) Q pilots fly 500hrs per year, its international competitors fly 900hrs per year. that stat, if true would have to contribute to Q's inability to compete in the international market. Another was that min wage paid by American airlines for unqualified workers is $8USD per hour, In Australia its $16. Personally I hope that no one has to work for either of those rates but again another reason why it cant compete. I acknowledge that these stats are headline quality and as always the devil is in the detail

 

Andy

 

 

[turboplanner]

Then again Dazza, it's interesting that most of the comments are supporting Qantas, cameras are having a lot of difficulty finding grabs of hostile customers, where when severe weather delayed flights a couple of months ago there was an endless queue lining up to have a spit at the airlines rather than the weather.

 

Take note also of what happened at the AGM. The shareholders went the opposite way to predictions and supported Qantas.

 

A big union tactical blunder was to put a timeline of 12 to 18 months of disruption at a Qantas loss of $15 million per week. From that point there was logical support to take more immediate action, and an excuse for the Board to support it.

 

Airline profitability has always been tenuous, requiring a sixth sense from management to keep it alive, and it's very sad when employee numbers have to be cut back to allow fares to be cut back, or investment to be made to ensure airline survival, but commercial flying is no different to what the rest of us do, it's all about finding a product which will sell at a price where we can make a margin, then selling it in sufficient volume to make a return.

 

 

[dazza 38]

True Andy and Turbo.While I relize that QANTAS cannot compete, as it stands.Along as foreign airlines fly into and out of this country and being based overseas, with their lower bottom line operating costs (especially Asian).QANTAS will never be able to compete, with them.Something has to be done.What i am getting at is that using customers a pawn, is not going to help QANTAS, all it is going to do is eventually alienate them from there customers.QANTAS made a net profit last year of $249 million Ending june 30.

 

The year before was 116 Million.

 

QANTAS Groups biggest profit comes from The Qantas Frequent Flyer progamme. Last year it was 342 Million. EBIT. Qantas $228 Million, Jetstar $169 Million Qantas freight $62 Million.

 

They make more money from their Frequent Flyer Scheme- than they do flying jets.Without it they will be runing at a loss.Leaving customers stranded, will eventualy lead to frequent flyers, flying with other airlines.

 

The biggest Problem ATM is that Qantas international are loosing big dollars. Last year QANTAS lost $216 Million on its international routes.

 

When you add it all together, Qantas International reported a loss of $200 Million FY11 on invested capital of $5 Billion, that is a unacceptable return on investment.

 

Its is the rest of the Qantas group which is propping up QI.

 

I agree that something has to be done, otherwise they will eventualy have to get rid of Qantas International.

 

 

[dazza 38]

In Australia since we have had the open skies policy, Qantas.And any other Aussie based International Airline (V Australia).It is always going to find it difficult to compete on the world stage. We have some Asian and Middle Eastern Airlines which are partly owned or subsidised by their governments, flying in and out of Australia on a daily basis.There operating costs will always be lower than the operating costs here.Unfortunatly unless our Airlines receive some sort of subsidy.

 

 

[fly_tornado]

Does Qantas loosing money on overseas routes have anything to do with tourism industry being in the dumps, in part because we are an expensive destination? Asian and middle east airlines will always have an advantage because they generally fly much smaller flights?

 

 

[dazza 38]

I think that as well FT. Along as the Aussie dollar is as high as it is.Also not receiving the 787 on time has realy hurt Qantas from what i have read.There some estimates of around 300 million dollars would have been saved on fuel alone, if the 787 turned up on time.They should have had 34 on line by june 30 just gone.Other airlines are in the same boat though, with not receiving theirs.

 

Fuel is one of three of airlines biggest cost.(Others are Labour and Procurement of aircraft)They had a 12 % blowout in the price of fuel .There fuel cost where last year $3.73 Billion Dollars.

 

Full Year revenue was $14.9 Billion. Operating costs where $12.43 Billion(including fuel). Its big dollars.

 

I did have there market share as a percentage of PAX carried on international flights in and out of australia somewhere, but i cant find it.It is getting smaller and smaller every year. 16 % rings a bell, but I cannot confirm that.

 

 

[fly_tornado]

Shutting the airline down without notice really lets Qantas customers know how much the management really values them.