Qantas Grounded

[Litespeed]

The market thinks in broad detail: as the cost of sunday's fiasco unfoldsthe glow from union busting is wearing off.http://au.finance.yahoo.com/q?s=QAN.AX&ql=0

Yep, that little inner warmth the hardliners felt has vanished. But the cold reality of the damage will chill for long to come.

 

Astounding arrogance and egomania.

 

 

[Guest Andys@coffs]

I will start with a reply to Andy,As you stated some airlines are uncompetitve- but to think Qantas group is in that bag is just bullshit from the Joyce crew and fairy land stuff.

 

Qantas made a profit of $558 million before tax and offsets last financial year. All in a year full of disasters natural and self inflicted which cost approx $300 million in profits.

 

So yes Qantas has a pretty nice Profit and Loss statement, I have read it , have you?

 

At no stage did I say Jetstar was not going to compete on price, it is Qantas that is less price sensitive.

 

Qantas International does need to lift its game, and also has the most potential for getting back market share.

 

CEO

 

Litespeed

hmm i never actually said i was talking about the international arm, other than by inference that global copetition isnt the same as national competition (in the aviation market in Australia). I agree that overall the group is making money (I still dont know and havent looked to see what $558m is as a percentage of total share value, im not a holder of qantas stock, so dont know if its a reasonable ROI or not but suspect it isnt one of the long term leaders. Anyone??)

I would still like some proof if it is publically available, that these 2 statements are true:-

 

1) Qantas is less price sensitive (I suspect their strong entrenched FF program may well make that statement true) but in saying that it infers that the competition that FT claims is true doesnt really exist, or more accurately if it does exist is a lost opportunity... If we could discount FF impact I wonder if the statement would still hold true?

 

2) QI has the most potential for getting back market share.... How? I dont see it myself. less price sensitive (elasticity) isnt price insensitive (not that you claimed it was) so price is still a determinant of demand and as such they have to compete by reducing costs in a global context unless there is something else that offsets a price dissadvantage. Death of similar "premium" senior airlines suggests that might be hard to achieve

 

LS, Im not having a go at you personally, Im am interested in exchange of ideas and thoughts. Iam blunt, perhaps too much so, so apologise if I offended in any previous post

 

Andy

 

 

[Litespeed]

Andy

 

at close of business today market capitalisation was $3.53 billion.

 

So looking at headline figures $558million is a nice return- but the devil is in dodgy figures.

 

 

[Litespeed]

Here is a link to the shareholders assoc. from the AGM.

 

Not happy campers

 

http://australianshareholders.com.au/asa_site/images/pdf_archive/presentations/qan%20vi%20agm%202011.pdf

 

Good read, provides a nice insight.

 

Phil

 

 

[dazza 38]

Come on commentators what do you think?Do the shareholders appoint the CEO? Does the Board appoint the CEO? Are you happy with broad brush strokes? Do you want detail?

I dunno Turbo.But this has been great reading. Im waiting for the next installment.

 

 

[Litespeed]

I like the popcorn.

 

currently in meetings with brains trust.

 

Beer is cold.

 

 

[kaz3g]

Unfortunately, there is no justice in Australia for ordinary people.I read this week that a guy spent $60,000 to contest a speeding ticket. What kind of country have we become where it costs a years wages to seek justice on something so trivial as a speeding ticket?

There is no justice in a speeding ticket... Trust me, I'm a lawyer!

 

kaz

 

 

[facthunter]

The second bit is a hard ask, Kaz, Generally. Nev

 

 

[winsor68]

[bushpilot]

I think the issue for Australia runs much deeper than just this QANTAS issue.. Our unemployment rate it relatively low at present and 'we' are a bit 'fat and lazy'..

 

Lots of examples, but one of our students owns some retail tyre outlets. He has 125 full time tyre fitters. The most that have ever turned up on a given day is 123 (when all were rostered on). The least (cold Winter Monday) was 10.. Yes 10. He offered them a $200 bonus (on top of normal hourly weekend rate) to work after lunch on some Saturdays - and got not one taker..

 

Hmmm, I think the reaction by workers in say Thailand or Taiwan or Korea would be a little different..

 

 

[fly_tornado]

Most of the foreign students I met at uni where useless as. Lazy, cheating, plagarising kids from rich families killing a few years in Australia before starting work.

 

This maylasian guy I got on with always laughed "I can't speak english but a I get a degree in business marketing".

 

 

[turboplanner]

http://www.theage.com.au/national/holden-wont-commit-on-jobs-20111103-1mxyw.html

 

This puts the Qantas actions in perspective.

 

The architect of open trade was Senator John Button who believed that protectionism led to inefficiency, and Australians should have access to cheaper products and services.

 

What he overlooked was that Australia didn't have the same critical mass as the overseas companies. In the automotive world Australia's annual production equated to about a morning's work for the overseas companies.

 

The Senator also did not take into account, or ignored, the living standards necessary for competitive pricing, whether of manufactured products or services.

 

A television expose this week showed that Australians can competitively supply our chain stores if they employ piece workers at $3.00 to $4.00 per hour working in their own bedrooms and enclosed carports.

 

The Qantas and Holden stories are the closing stages of the Button plan.

 

I've always sympathised with the car guys because they have to make decisions so far ahead of the market releases, and what is an excellent concept today may be unsaleable tomorrow. When you add fiddling by a bunch of incompetents in Canberra who have no concept of this and will usually be out of office before any design cycle completes, it can be disastrous. Same goes for Qantas where they have to order new aircraft on long lead times.

 

Reacting to the 1979 fuel crisis, GMH fast tracked a smaller platform car, lighter with better aerodynamics, and even a four cylinder option. Ford believed it was all over for them because they hadn't been able to downsize the Falcon.

 

But the fuel crisis was a beat up in which the Government was complicit, albeit probably incompetently so, and the people wanted space in their cars for their families, and walked away from the Commodore.

 

Within ten years GMH went belly up, and that was the end of the Australian car. General Motors on the sole basis that they would not allow Ford to have an uncontested position anywhere in the world started up Holdens Motor Co, came up with a bigger floor pan, gave it the Commodore name, released it as the VN, and had a massive success which in recent years has been steadily eaten away by the cheaper overseas cars of the Button Plan.

 

The Company saw this coming and about ten years ago Managing Director Kevin Wale was sent to China to set up a carline. Last time I checked there were three General Motors carlines in China. The Chinese are brilliant with mathematics, so I would assume GM has been steadily collecting engineers over there and they are now ready to design fully the cars they build. You can bet they work for a lot less than Australian Engineers.

 

It is true that the next Commodore will be Australian, but from the press reports that will only run until about 2018, not very far away - six years back is 2005, so a very short era.

 

Then we will be committed to the "competitive" overseas product whatever it might be.

 

The irony of all this is that Australia has returned to the 1930's where we imported cars and trucks. When WW2 broke out the overseas suppliers wiped the tiny Australian market and we had to patch up whatever old clunkers were still running in Australia, which is what led the Australian Government to subsidize the establishment of Australian cars and trucks.

 

We've gone the full circle.

 

 

[Wayne T Mathews]

That was a damn good read, Turbo... Thank you...

 

Keep the sunny side up,

 

Wayne.

 

 

[fly_tornado]

TAXPAYERS contributed at least $100 million in pre-tax revenue towards Holden's $112 million net profit for 2010, its first profit in six years, according to the accounts the car maker declined to show the Herald.

 

The accounts show a less rosy picture than first thought a fortnight ago. They show the car maker is in dispute with the Tax Office over $176 million in disallowed deductions and revised assessments.

 

GM Holden's 2010 accounts, obtained through the Australian Securities and Investments Commission, shows taxpayers funded the car maker to the tune of $99.6 million via the industry's main subsidy program, the Automotive Competitive and Investment Scheme.

 

Advertisement: Story continues below

 

That is in addition to the 2010 tranche of the Green Car Innovation Fund grant that Holden received ($149 million, in all, over three years), which is spread through various capital and engineering cost ledgers over the years and is unable to be readily identified from the 2010 accounts.

 

And South Australian taxpayers lent the company $3 million.

 

Yesterday Holden defended its previous pitch on its results.

 

''We've been pretty circumspect in the way we've been speaking about our results. We've said there are still a lot of challenges for us and our industry,'' Holden's director of external communications, Emily Perry, said. ''We were assisted with government funding and last financial year by foreign exchange gain, so I think we've been quite clear about that.''

 

The taxpayer subsidies helped bolster its pre-tax profit to $136.8 million ($112.4 million after tax).

 

Had the company not received the ACIS grants and made foreign exchange gains, it would have finished in the red. Subtracting out the grants, foreign exchange gains and sundry revenue ($158.7 million combined) flips its $136.8 million pre-tax profit into a $21.9 million pre-tax loss. Taking out the federal grant alone shrinks its pre-tax profit to just $37.2 million.

 

''There isn't a car industry anywhere in the world that doesn't rely on some degree of private-public partnership,'' Ms Perry said.

 

''The funding we receive as part of the green car innovation fund was critically important to justify the investment we had to make to bring the Cruze to Australia.

 

''If you took that money out … (we would) not have been making the large investments we made over the last couple of years,'' she said.

 

But what one arm of government gives, another is trying to claw back. The Tax Office has disallowed $176 million in deductions over 2005 to 2008 for royalties GM Holden paid to GM Global Technologies Operations Corporation.

 

The Tax Office has issued amended assessments for these years, which GM Holden disputes and has lodged formal objections on the basis that the Tax Office's treatment amounts to double taxation, here and in the US.

 

 

 

 

 

 

 



Read more: http://www.smh.com.au/business/subsidy-props-up-gmh-profit-20110427-1dwsz.html#ixzz1cgYE66Tn

 

 

 

 

 

 

[David Isaac]

Hmmm ... if that is Holden ... what is Ford doing? Ford don't enjoy the same sales volume as GMH or do they?

 

 

[turboplanner]

Aw, I thought you were the author of that for a minute F_T, then I realised you'd just cut and pasted a newspaper story, which wasn't really related.

 

TLDR strikes again.

 

 

[Guest davidh10]

My understanding is that Ford has been losing money on every car it sells for quite a few years, like GM.

 

 

[turboplanner]

Hmmm ... if that is Holden ... what is Ford doing? Ford don't enjoy the same sales volume as GMH or do they?

Ford and GM still fight each other to the death, but don't spend a cent more, so if one stops manufacture in Australia the other will wind down as fast as his little legs will carry him.

 

At that point we will have Australian size families trying to squeeze into Asian size cars........and (I can't find a gentle way to say this) Bathust will be like it was with the Ford Sierras, but with the whole field smaller and sounding like singer sewing machines!

 

 

[David Isaac]

Tubz,I remember the Sierra days, same result every year Sierra 1,2,3,4,5,6,7,8. I still don't understand how those front wheel drive screaming Banshees, survived.

 

I like your post, I just don't like the outcome.

 

 

[Guest davidh10]

People who copy / paste should realise that if they copy more than is allowed under copyright law, they are in breach unless they have obtained the copyright holders permission. It is usually better (safer) to just post a link and write your own commentary, although there has been legal precedent where linking to a news site was judged to be "publishing" and in breach of copyright (in the USA). In this latter case, the linking site was bypassing advertising on the news site, even though the reader was obtaining the story download from the news site via a link.

 

 

[Guest davidh10]

Maybe we should change to left hand drive!

 

 

[fly_tornado]

"Australia's" car industry has been nobbled from the start by GM and Ford, who setup enough manufacturing to stop anyone else. Why are we subsidising them?

 

 

[Bandit12]

Most of the foreign students I met at uni where useless as. Lazy, cheating, plagarising kids from rich families killing a few years in Australia before starting work.This maylasian guy I got on with always laughed "I can't speak english but a I get a degree in business marketing".

A little off topic...but most of the foreign students that I know/knew in university had phenomenal work ethics, and it was rare to see the top academic awards being presented to white Australians. Just look at the lists of graduates with Masters degrees or higher, and try to pronounce those names. You don't get there with laziness and cheating alone.

 

I remember reading a book once where the author debated why westerners were determined to beg/barter/demand for an increase in pay regularly for doing the same job. At some point the money grabbing has to stop, both for staff, management and shareholders alike.

 

 

[turboplanner]

Er, Toyota was the number one for a number of years F_T

 

 

[fly_tornado]

I used to dread having to do group projects and getting stuck with them. There was this one Indian guy who acted like a prince, his way or the highway. You only have to look @ the rubbish cars that China and India put out to see that they have trouble sourcing good engineers and managers.