Qantas Group Strategy Update and Financial Result

[Stuart Trevena]

Hi All,

I had to bring up this thread again, as I think is worth it.

This Article appeared in the Melbourne Heald Sun Recently.

Titled "Qantas needs to cut 2000 more jobs to turn its fortunes around, analyst claims"

Here is the link

http://www.heraldsun.com.au/travel/t...-1227037649654

What are peoples thoughts? Is the reporter Right??

No doubt my comments will be shouted down or tagged silly, but he is my 2 cents worth.

One big mistake that the Board of Qantas made years ago, was to not order the B777-300ER or -200LR series aircraft, as a replcement for the ageing B747-400 Fleet. While I do like the Queen of th Skies, she has 4 Engines, which guzzle fuel and the extra Maint. cost or 4 engines is expensive.

Instead they placed all eggs in one basket, and waitied for the B787 Dreamliner, which they have now put on hold for the QF Fleet. The B777 was a proven aircraft with many airlines, including Emirates, British Airways, Singapore Airlines and Air New Zealand, just to name a few.

By going to the B777, which has only 2 engines, this would cut down Maint. costs and the fuel burn is much more economical on the new generation engines. This aircraft could go anywhere do anything from Cross Country East-West Coast flights to Lax or even Dallas / Fort Worth.

The shorter-200 series would be ideal for routes that don't need high capacity but maby more frequent services, say Perth - Auckland, Perth - Hong Kong or even Perth to Honolulu, or again East-West Coast Flights.

Not too many airlines still use the B747-400, as they have switched to the B777 for their Medium / Longhaul services and are doing well them.

Given that Qantas didn't have the the Right aircraft to operate to the various routes, they were force to cut these routes as they were becoming unprofitable, as they were using B747-400's.

New Routes QF should look at with the Right Aircraft include:

Perth - Honolulu

East Coast - to Florida via Honolulu or San Francisco to link up with the Cruises.(Australian Passengers are spending big money on the cruise Industry, and they need to get there)

Return to the Kanagroo Route via Singapore (Link via Capital Cities)

Take over Emirates Flight EK404/405 Melbourne to Dubai via Singapore

Return of Rome Services via Singapore.(Link via Capital Cities)

Return of Perth to Singapore and Extend to Hong Kong or Japan

Operate QF63/64 Sydney to Johannesburg via Melbourne

Move more International flights out of Sydney, to Brisbane or Melbourne. (De-Centralize. Sydney Is not the Centre of the Universe, and Passengers Don't wish to fly to Sydney to then connect to International Service)

By pushing the Travelling public onto Foreign Carriers, you, Qantas are losing money hand of Fist.

Finally, I must agree with some other comments about the board and inparticular Alan Joyce.

Under him, the Qantas Product, Services and Share Price have all nosed dived. If this was any other business, he would have been sacked years ago, for gross incompentance. Under Joyce, QF has bleed money Left, Right and down the Middle.

The only way forward is too sack the Board and Elect a New Board that will review the routes, and Aircraft type required, and deal with the Various Unions and EBA's once and for all.

Only then will Qantas return to Profit, which into will increase the share price for shareholders and gain back the travelling Australians Trust.


Stuart

[Ash W]

With hindsight you're right. But go back to when fleet decisions were made and I think Qantas management at the time were right (and no Joyce to blame either).

At the time the 777 didn't have the legs for the pacific and didn't have the capacity for Europe and was too big for domestic and Asia.

Now of course the traffic to Europe had been decimated by the Middle East carriers, they have the right aircraft in the A330 for domestic and Asia, they also have the right a/c in the A380 for some US flights leaving just a small number of a/c requiring a 777-300er.

One interesting thing can you explain why BA has so many 777's AND still has many 747's.

Oh BTW the 787 was never intended as a 747 replacement the 787 were always intended as a 767 replacement. The 747 replacement was the A380 though that decision was made when Qantas traffic levels to Europe were still decent and not declared by the ME carriers.

[Daniel M]

Originally Posted by Stuart Trevena

Hi All,

I had to bring up this thread again, as I think is worth it......

Oh lord, I think I've seen it all now.

Can I ask with what research and references you base all those (mostly ridiculous) claims on ?

[Stuart Trevena]

Hi All,

Daniel M - I did say these were my thoughts, and as such I didn't imply or state research had been done on my suggestions. They are exactly that - Suggestions!!!

Can't someone float ideas on this forum without having to spend countless hours doing research and References just to suit a petty person like you!!!

If your soo great, Where is your Fantastic idea and Suggestions, with fully costed businiess plan???? I want to see it in a few hours!!

Stuart

[Ash W]

Originally Posted by Stuart Trevena

Move more International flights out of Sydney, to Brisbane or Melbourne. (De-Centralize. Sydney Is not the Centre of the Universe, and Passengers Don't wish to fly to Sydney to then connect to International Service)

By pushing the Travelling public onto Foreign Carriers, you, Qantas are losing money hand of Fist.

Finally, I must agree with some other comments about the board and inparticular Alan Joyce.

Under him, the Qantas Product, Services and Share Price have all nosed dived. If this was any other business, he would have been sacked years ago, for gross incompentance. Under Joyce, QF has bleed money Left, Right and down the Middle.

I've cut a lot out but left a few paragraphs that are pertinatnt to what I am about to say. Which is which came first the chicken of the egg?

What I mean is the Qantas network today a result of poor management decisions over a long period of time (before your flogging boy Joyce) or is it a result of cashed up airlines in geographically perfect locations taking advantage of a/c with perfect capability for their operations?

Clearly I am in the latter camp and I think I am right? Proof look at where Qantas dos well, which is the US. Here all traffic between the two countries is point to point or hub to hub which means Qantas is competing on a relatively equal footing.

To Asia Qantas does ok on point to point traffic but certainly doesn't have the hub pull carriers like CX, TG, MH or SQ have. That traffic is sufficent for a smaller a/c from one or two hubs within Australia not every city people wish flights could come from.

Long haul to Europe and Africa Qantas has no hope what so ever.

So simply Qantas concentrates on Sydney because it is a large city and a perfect hub location for the bulk of the Australian population. They have pulled out of other markets because the demand is not there to justify the flights.

You blame the whipping boy Joyce for Qantas' woes though maybe the issue isn't him and his decisions maybe it is simply that he has been at the helm as others factors take over.

So not all that easy in the real world.

[Michael C.]

Originally Posted by Stuart Trevena

Hi All,

Daniel M - I did say these were my thoughts, and as such I didn't imply or state research had been done on my suggestions. They are exactly that - Suggestions!!!

Can't someone float ideas on this forum without having to spend countless hours doing research and References just to suit a petty person like you!!!

If your soo great, Where is your Fantastic idea and Suggestions, with fully costed businiess plan???? I want to see it in a few hours!!

Stuart

Stuart, If the forum had a "Like" button I would use it on your post! Everyone's entitled to their opinions and in my opinion that's what forums should be about.

[Ash W]

Originally Posted by Michael C.

Stuart, If the forum had a "Like" button I would use it on your post! Everyone's entitled to their opinions and in my opinion that's what forums should be about.

And likewise Daniel expressed his opinion of Stuarts post and frankly asking someone to "justify" their comments even if they are just arbitrary thoughts or dreams is hardly a bad thing and can only encourage more healthy discussion.

[Nigel C]

Originally Posted by Ash W

And likewise Daniel expressed his opinion of Stuarts post and frankly asking someone to "justify" their comments even if they are just arbitrary thoughts or dreams is hardly a bad thing and can only encourage more healthy discussion.

Like

[Ricky T]

In hindsight, QF might not be in the current situation with respect to its fleet if the 787 program was on time.

The fuel guzzling 767s would have been long gone and the A332s would have returned to the QF fleet earlier which would have allowed to put on more Asia services.

Some routes that would have been perfect for the A332s: PER-SIN, ADL-SIN, MEL-NRT, MEL-PVG.

[James S.]

Originally Posted by Stuart Trevena

Hi All,

No doubt my comments will be shouted down or tagged silly, but he is my 2 cents worth.

One big mistake that the Board of Qantas made years ago, was to not order the B777-300ER or -200LR series aircraft, as a replcement for the ageing B747-400 Fleet. While I do like the Queen of th Skies, she has 4 Engines, which guzzle fuel and the extra Maint. cost or 4 engines is expensive.

To be honest, I don't even think that the 77W or the 77L was where the mistake in fleet planning was made. QF really should have bought the 772ER back in the late 90s instead of waiting till the mid 2000's to get the 'NG' 777 for the longer, thinner routes. In saying that, the A330 was actually a pretty decent choice on the other hand, and works really well as one of the most flexible aircraft in the fleet.

Instead they placed all eggs in one basket, and waitied for the B787 Dreamliner, which they have now put on hold for the QF Fleet. The B777 was a proven aircraft with many airlines, including Emirates, British Airways, Singapore Airlines and Air New Zealand, just to name a few.

You're forgetting the A330. Especially the newer HGW variants, they're really not that much worse than a 787. Factor in lower leasing costs (purchase?) and you've got yourself one hell of a capable aircraft.

By going to the B777, which has only 2 engines, this would cut down Maint. costs and the fuel burn is much more economical on the new generation engines. This aircraft could go anywhere do anything from Cross Country East-West Coast flights to Lax or even Dallas / Fort Worth.

As others have said above, hindsight 20/20. I think that the best aircraft for QF is the A350-1000, replacing the rest of the 747's. Don't forget the ER's are relatively new still. If we're going to talk fleet, I think that something like this would be good for a future line up;
737MAX
789
351
388

They could reduce the A320NEO order and transfer their purchase options into A350's.

The shorter-200 series would be ideal for routes that don't need high capacity but maby more frequent services, say Perth - Auckland, Perth - Hong Kong or even Perth to Honolulu, or again East-West Coast Flights.

A330.

Not too many airlines still use the B747-400, as they have switched to the B777 for their Medium / Longhaul services and are doing well them.

Given that Qantas didn't have the the Right aircraft to operate to the various routes, they were force to cut these routes as they were becoming unprofitable, as they were using B747-400's.

Tell that to BA, DL, KL, LH, etc. Seriously, the 747 is not the sole reason that QF are going bust. People almost make it out to be a Convair 880 versus a Glider in terms of fuel efficiency... ridiculous. I understand that it's not the most efficient aircraft that is around, but what are they going to do about it now? That ship has well and truly sailed, time to focus on getting the right aircraft for the future.

New Routes QF should look at with the Right Aircraft include:

Perth - Honolulu

I bet the yields would be terrible.

East Coast - to Florida via Honolulu or San Francisco to link up with the Cruises.(Australian Passengers are spending big money on the cruise Industry, and they need to get there)

Because a one stop via Dallas is a really bad idea? American have a huge amount of connecting flights to get there. SFO would be good but there's not many suitable codeshare partners to get any feed there verse LA and DFW. QF's Americas strategy is probably the soundest part of the international business.

Return to the Kanagroo Route via Singapore (Link via Capital Cities)

Which ties up an aircraft and crew for 3 entire days when they could be flying somewhere more profitable. I don't think focusing on Asia is such a bad idea really, there's a huge amount of competition at this point in time and the overcapacity is seriously destroying the market with the advent of the LCCs and making EVERY airline hurt, including historically well managed airlines like SQ.

Take over Emirates Flight EK404/405 Melbourne to Dubai via Singapore

How on earth is this helpful? QF already fly to SIN from MEL, what's the point of the tag on to DXB?

Return of Rome Services via Singapore.(Link via Capital Cities)

Yields once again are very average to the Mediterranean regions, with mostly immigrant VFR families returning to visit relatives - this is also extremely seasonal. There's a reason why all of the European airlines bar BA have stopped service to Australia. The only reason airlines like CX, EK, etc can make it work is because of the massive amount of feed that they get in their respective hub locations.

Return of Perth to Singapore and Extend to Hong Kong or Japan

I agree with this, and in fact I believe QF are returning to the route. A HKG flight wouldn't be too bad either.

Operate QF63/64 Sydney to Johannesburg via Melbourne

No offense, but that's a terrible idea. If anything, Perth would be the best destination to get a JNB flight going. You know that they used to operate QF63/64 via PER, right? Flying from Sydney direct appeals to the business passengers and the South African codeshare is satisfactory. However, I'm not sure what the status of this is, I believe they're changing to VA? This is a route that would depend on numbers really. I doubt a Melbourne flight would justify it.

Move more International flights out of Sydney, to Brisbane or Melbourne. (De-Centralize. Sydney Is not the Centre of the Universe, and Passengers Don't wish to fly to Sydney to then connect to International Service)

I agree with this to a certain extent. I think BNE-DFW would be a good start on the long haul side of things, with more expansion into Asian destinations like HKG and SIN. They're bolstering flights to LAX from MEL as well with the return of the 747's.

By pushing the Travelling public onto Foreign Carriers, you, Qantas are losing money hand of Fist.

Blame the government for one of the most liberal Open Sky policies in the world, whilst tying QF with one hand behind it's back with the Qantas Sales Act restriction. I think that removing this is the first step to recovery for the airline, allowing it to access foreign investment and capital.

Finally, I must agree with some other comments about the board and inparticular Alan Joyce.

Under him, the Qantas Product, Services and Share Price have all nosed dived. If this was any other business, he would have been sacked years ago, for gross incompentance. Under Joyce, QF has bleed money Left, Right and down the Middle.

The only way forward is too sack the Board and Elect a New Board that will review the routes, and Aircraft type required, and deal with the Various Unions and EBA's once and for all.

Alan Joyce is not the entire company, however, I think the whole focus on Jetstar and it's Asian subsidiaries really wasn't the smartest of ideas. QF mainline was clearly facing newer challenges and more of the money should have been invested there. The JQ Hong Kong debacle is ridiculously embarassing and highlights one of the poor management decisions that have been made. However, at the same time, we need to look at the previous management that have left the airline in a poor condition to begin with in terms of flexibility.

>endthread.