Bonus for Qantas staff?
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QFInsider,
I agree with your insightful views, yes Jetstar made a very minimal profit in the overall scheme of things, but there are others saying "Well it will take time to build the product". That may or may not be true but my feeling is that the "Qantas" brand in the meantime is taking a hammering. The staff (particularly Cabin Crew) dis-engagement and cost cutting in products does and is affecting the publics perception of the brand. In the meantime Emirates and the like are doing particularly well in chewing away the market share of Qantas. Yes Jetstar maybe a tool to lower the cost base then dissolve back into the Qantas brand in the future, but it wont help if there is no brand to fall back on. And as a side note my mate is going to Japan later in the year and his priority was cost, he booked Sing-air, yes it was cheaper than Jetstar-International. lol what a joke. Yes there was a 3 hour transit SIN but hey if cost is your only priority people dont care about transits... He could have got even cheaper with Air-Nuigini but decided hed spend a couple of extra bucks with Singair. It was still $200 cheaper than jetstar though.
I agree with your insightful views, yes Jetstar made a very minimal profit in the overall scheme of things, but there are others saying "Well it will take time to build the product". That may or may not be true but my feeling is that the "Qantas" brand in the meantime is taking a hammering. The staff (particularly Cabin Crew) dis-engagement and cost cutting in products does and is affecting the publics perception of the brand. In the meantime Emirates and the like are doing particularly well in chewing away the market share of Qantas. Yes Jetstar maybe a tool to lower the cost base then dissolve back into the Qantas brand in the future, but it wont help if there is no brand to fall back on. And as a side note my mate is going to Japan later in the year and his priority was cost, he booked Sing-air, yes it was cheaper than Jetstar-International. lol what a joke. Yes there was a 3 hour transit SIN but hey if cost is your only priority people dont care about transits... He could have got even cheaper with Air-Nuigini but decided hed spend a couple of extra bucks with Singair. It was still $200 cheaper than jetstar though.
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There's a large element of the spurious in the ceaseless "doesn't meet the cost of capital" mantra.
Go to any stockbroker worth their salt with a small hoard of cash asking for advice as to which companies to invest one's hard earned in. Not one will recommend QF, not now, nor would they have when the share price was at historic highs, at any time in between, and without doubt they won't in 12 to 24 months time.
As has been stated ad nauseum, QF management could better nurture and grow the investment funds of their shareholders by ceasing all operations tomorrow, selling all assets, and then placing the resultant funds in banking shares.
A significant proportion of QF's, and indeed any publicly listed airline's shares, are held by companies, the investment arms of certain foreign governments, as well as individuals, for purely strategic reasons, not necessarily for short or long term capital growth, nor dividend return.
Go to any stockbroker worth their salt with a small hoard of cash asking for advice as to which companies to invest one's hard earned in. Not one will recommend QF, not now, nor would they have when the share price was at historic highs, at any time in between, and without doubt they won't in 12 to 24 months time.
As has been stated ad nauseum, QF management could better nurture and grow the investment funds of their shareholders by ceasing all operations tomorrow, selling all assets, and then placing the resultant funds in banking shares.
A significant proportion of QF's, and indeed any publicly listed airline's shares, are held by companies, the investment arms of certain foreign governments, as well as individuals, for purely strategic reasons, not necessarily for short or long term capital growth, nor dividend return.
Last edited by jaded boiler; 17th Aug 2006 at 16:28.
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Bonus for Qantas Staff?
Unless you're on a redundancy list, you all get to keep your jobs at current pay for at least another three months.
Congratulations! We wish to express our sincere thanks for all your efforts and sacrifices.
Congratulations! We wish to express our sincere thanks for all your efforts and sacrifices.
I'm amazed that QF wasn't reorganised into cost centres thirty years ago!
I still recall the faces of certain senior Ansett engineering managers when they were told by Abeles that from now on they didn't "own" the cargo space on the aircraft anymore and that shifting spares from base to base would attract full commercial airfreight charges to the appropriate account.
Reading between the lines, you are all going to be reoganised into "Business Units". Some of these are going to be "let go" and the employees will no longer be QF employees.
The usual next step after the "business Unit" reorganisation is about making "contestable" contracts with QF for the provision of services. In other words, your business unit gets told that in five years time, your "contract" expires and you will have to bid for it with anyone else.
Needless to say, the business unit creation requires hordes of managers to replicate a management structure in miniature in each business unit.
We then have open warfare between the business units about the prices they are charging each other, presided over by a horde of management accountants who will argue about fixed and variable, direct and indirect costs and cost allocation methodolgies for years. One such argument at AN very nearly terminated my career when I got caught in the crossfire between two warring managers.
The technical term for this is "sub optimisation", which basically means each unit tries to maximise its own "profit" by screwing the rest of the business units.
Eventually after about five years of all this, some bright spark discovers something called "economies of scale" and the entire process is reversed, again with surplus managers, and consultants, walking away with huge settlements.
On a really cynical note, the "business unit" strategy increases the power of the Board because it allows them to play one business unit off against another business unit. It also ensures that there is no "group learning" effect because business units dont know what the others are doing.
To put it another way, the cost centre approach is essential, but the "profit centre" approach stinks because profits can be manipulated any way you like and they are largely illusory unless you really are an "independent" business unit... but then you wouldn't be part of QF would you?
I still recall the faces of certain senior Ansett engineering managers when they were told by Abeles that from now on they didn't "own" the cargo space on the aircraft anymore and that shifting spares from base to base would attract full commercial airfreight charges to the appropriate account.
Reading between the lines, you are all going to be reoganised into "Business Units". Some of these are going to be "let go" and the employees will no longer be QF employees.
The usual next step after the "business Unit" reorganisation is about making "contestable" contracts with QF for the provision of services. In other words, your business unit gets told that in five years time, your "contract" expires and you will have to bid for it with anyone else.
Needless to say, the business unit creation requires hordes of managers to replicate a management structure in miniature in each business unit.
We then have open warfare between the business units about the prices they are charging each other, presided over by a horde of management accountants who will argue about fixed and variable, direct and indirect costs and cost allocation methodolgies for years. One such argument at AN very nearly terminated my career when I got caught in the crossfire between two warring managers.
The technical term for this is "sub optimisation", which basically means each unit tries to maximise its own "profit" by screwing the rest of the business units.
Eventually after about five years of all this, some bright spark discovers something called "economies of scale" and the entire process is reversed, again with surplus managers, and consultants, walking away with huge settlements.
On a really cynical note, the "business unit" strategy increases the power of the Board because it allows them to play one business unit off against another business unit. It also ensures that there is no "group learning" effect because business units dont know what the others are doing.
To put it another way, the cost centre approach is essential, but the "profit centre" approach stinks because profits can be manipulated any way you like and they are largely illusory unless you really are an "independent" business unit... but then you wouldn't be part of QF would you?
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slide show
have a look at that. went to the asx announcements and read QF presentation. in one of the slides it states:
" QF and J* will compete for destinations"
so much for a preminum product
" QF and J* will compete for destinations"
so much for a preminum product
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Originally Posted by Angle of Attack
QFInsider,
I agree with your insightful views, yes Jetstar made a very minimal profit in the overall scheme of things, but there are others saying "Well it will take time to build the product".
I agree with your insightful views, yes Jetstar made a very minimal profit in the overall scheme of things, but there are others saying "Well it will take time to build the product".
I forgot to mention the reason why Coles is the subject of takeover specualtion at the moment.
Their "Brands" include Coles supermarkets, Bi Lo, K mart and a stack of others. The CEO just realised that this was fragmenting his market and was planning to restructure all the stores under one brand - Coles, when the takeover merchants pounced yesterday. In other words, they have fragmented and devalued the Coles "brand". To his credit, the CEO had already sold the Myer business.
Now lets make the obvious comparison with Jetstar, Jetstar Asia, Jetstar International, Australian, Qantas jet connect, Qantas domestic and Qantas International, Oh.... and Qantas airfreight.
Silly me for thinking that this is exactly the same strategy that has led Coles to the chopping block.
As a McKinsey bloke drummed into my head years ago, you can only be good at one thing. Companies that fragment themselves into too many business units eventually make poor investment decisons at Board level because they can't keep track of the competing priorities of the business units. This destroys shareholder value bigtime. However since Qantas has a foriegn ownership cap on it, the management cannot be made to pay the ultimate penalty for their follies - takeover followed by house cleaning.
A classic example would appear to be all the speculation and rumour about who gets which of the new jets. While it may appear to be a Machiavellain masterstroke, you can bet that the jets will be in exactly the wrong markets, in the wrong configurations, at the wrong time.
You need one brand - Qantas. All the rest is folly.
Their "Brands" include Coles supermarkets, Bi Lo, K mart and a stack of others. The CEO just realised that this was fragmenting his market and was planning to restructure all the stores under one brand - Coles, when the takeover merchants pounced yesterday. In other words, they have fragmented and devalued the Coles "brand". To his credit, the CEO had already sold the Myer business.
Now lets make the obvious comparison with Jetstar, Jetstar Asia, Jetstar International, Australian, Qantas jet connect, Qantas domestic and Qantas International, Oh.... and Qantas airfreight.
Silly me for thinking that this is exactly the same strategy that has led Coles to the chopping block.
As a McKinsey bloke drummed into my head years ago, you can only be good at one thing. Companies that fragment themselves into too many business units eventually make poor investment decisons at Board level because they can't keep track of the competing priorities of the business units. This destroys shareholder value bigtime. However since Qantas has a foriegn ownership cap on it, the management cannot be made to pay the ultimate penalty for their follies - takeover followed by house cleaning.
A classic example would appear to be all the speculation and rumour about who gets which of the new jets. While it may appear to be a Machiavellain masterstroke, you can bet that the jets will be in exactly the wrong markets, in the wrong configurations, at the wrong time.
You need one brand - Qantas. All the rest is folly.
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There was something my dear Dad mentioned about ineffective management..Was a few years ago however it is very apparent that Qantas is full of inept management.
"When you don't know what to do, do something"
The market segmentation is effectively throwing high yield business at a so called lower cost model and hoping it sticks. As Michael Pascoe lamented, why are Qantas management so intent on replacing high yield business with lower cost(allegedly) low yield business? Which at the same time undermines the profit of the brand.
Just look at their numbers, 23 aircraft and that little gnome Joyce makes $21million gross profit...Hardly returning it's cost of capital is it?
A 47% decrease in gross profit.
Bet you his bonus is huge as he is now a CEO of an international airline!
As for Dixon, he hasn't hit a home run in years, he is yesterday's man, undoing his shirt, losing the tie doesnt hide his vintage haggard look. His last chance, use workchoices redeem his severely tarnished litany of management mistakes. Sorry geoff we control the revenue for a few more years...
I have more years flying than he has left in the company, maybe even on earth......
(using an average healthy lifespan). I just hope his ineptitude and ego don't kill our market share entirely...How many AO, J* Asia's, A330 "refurbs", classic upgrades, lack of investment in new capital etc. can we survive??
"When you don't know what to do, do something"
The market segmentation is effectively throwing high yield business at a so called lower cost model and hoping it sticks. As Michael Pascoe lamented, why are Qantas management so intent on replacing high yield business with lower cost(allegedly) low yield business? Which at the same time undermines the profit of the brand.
Just look at their numbers, 23 aircraft and that little gnome Joyce makes $21million gross profit...Hardly returning it's cost of capital is it?
A 47% decrease in gross profit.
Bet you his bonus is huge as he is now a CEO of an international airline!
As for Dixon, he hasn't hit a home run in years, he is yesterday's man, undoing his shirt, losing the tie doesnt hide his vintage haggard look. His last chance, use workchoices redeem his severely tarnished litany of management mistakes. Sorry geoff we control the revenue for a few more years...
I have more years flying than he has left in the company, maybe even on earth......
(using an average healthy lifespan). I just hope his ineptitude and ego don't kill our market share entirely...How many AO, J* Asia's, A330 "refurbs", classic upgrades, lack of investment in new capital etc. can we survive??
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hotnhigh mentioned something that might have been overlooked. For all those who hate QF pilots and AIPA because they have excluded other pilot groups, read this from Dixons own pen (my bolding and italics):
The AIPA Pres who knocked Impulse pilots back a few years ago is now the CP who was hand picked by the guy who wrote the above. What he did horrified most thinking AIPA members when they eventually found out.
It was not, and is not the QF pilots who have kept the groups separate - read Dixons words again!
QF Insider, Jetstar only made $10 Mil, so compared to last years 40 Mil isn't that a 75% reduction in profit?
For some Qantas Group employees these changes will be subtle and, in others, have already occurred. In some areas it will mean a more fundamental change of mindset. For example, the current claim by the Australian International Pilots Association (AIPA) for a common Group seniority list that includes Jetstar, and to roll short haul, long haul and Australian Airlines pilots all into one Qantas agreement, is running totally against the tide and will never happen. Jetstar and Qantas will continue to develop as quite different and separate businesses.
It was not, and is not the QF pilots who have kept the groups separate - read Dixons words again!
QF Insider, Jetstar only made $10 Mil, so compared to last years 40 Mil isn't that a 75% reduction in profit?
