Melburnian1
Enthusiast
- Joined
- Jun 7, 2013
- Posts
- 24,673
QF has just announced its July 1 - September 30 trading results to the ASX - the update is also on the new QF investors' website - with domestic airline revenue declining 2.9 per cent compared to the first quarter of 2015-16 and international flights revenue down a not insignificant 6.9 per cent.
Overall, revenue per available seat kilometre was down 5.5 per cent.
This comes at a time when fuel prices in the first half of 2016-17 (that is, until 31 December 2016) are expected to be $200 million lower than they were a year ago during the same half year. History tells us this drop is unlikely to continue for ever.
QF has in part blamed 'lower fuel prices' for 'increased (international airlines) competition' and hence 'lower yields' yet QF expects in the first half to increase its international seat capacity by 3.5 per cent while decreasing domestic seat capacity by one per cent. It says that this will mean a net rise in available seats of 1.5 to 2 per cent compared with previous estimates of 2 to 3 per cent.
VA will doubtless be pleased that QF is decreasing its domestic seat capacity as VA is far more exposed domestically as a percentage of revenue than is QF.
QF has painted an optimistic tone for the second half of 2016-17 despite profits in the first half declining compared with for the comparable half year in 2015-16 and it is true that the uncertainty of the Federal election period is over, but QF may be taking a gamble in continuing to increase international seat capacity.
The elephant in the room question is that if international yields continue to decline - there seem to be heaps of cheap airfares being advertised from Oz to LHR and elsewhere in Europe, as well as southeast and north Asia for the slacker travel months in early 2017 - will QF find with its high cost base that its profits drop faster than its comments to the stockmarket today indicate?
My take is that QF has been too optimistic. While it's a different subject for discussion, I also suspect VA is struggling profits-wise.
Overall, revenue per available seat kilometre was down 5.5 per cent.
This comes at a time when fuel prices in the first half of 2016-17 (that is, until 31 December 2016) are expected to be $200 million lower than they were a year ago during the same half year. History tells us this drop is unlikely to continue for ever.
QF has in part blamed 'lower fuel prices' for 'increased (international airlines) competition' and hence 'lower yields' yet QF expects in the first half to increase its international seat capacity by 3.5 per cent while decreasing domestic seat capacity by one per cent. It says that this will mean a net rise in available seats of 1.5 to 2 per cent compared with previous estimates of 2 to 3 per cent.
VA will doubtless be pleased that QF is decreasing its domestic seat capacity as VA is far more exposed domestically as a percentage of revenue than is QF.
QF has painted an optimistic tone for the second half of 2016-17 despite profits in the first half declining compared with for the comparable half year in 2015-16 and it is true that the uncertainty of the Federal election period is over, but QF may be taking a gamble in continuing to increase international seat capacity.
The elephant in the room question is that if international yields continue to decline - there seem to be heaps of cheap airfares being advertised from Oz to LHR and elsewhere in Europe, as well as southeast and north Asia for the slacker travel months in early 2017 - will QF find with its high cost base that its profits drop faster than its comments to the stockmarket today indicate?
My take is that QF has been too optimistic. While it's a different subject for discussion, I also suspect VA is struggling profits-wise.
