Qantas 2016 Half Year results

[RooFlyer]

High fuel surcharges and the lowest fuel prices in recent memory. If you can't make a profit there then something seriously wrong.

Also Joyce and the directors must be due a bonus. Is that what the share buyback is all about?

So your company has much more cash than it needs for operations, debt servicing and the like. You can give it to the long suffering shareholders as a dividend, or you can spend it on something like a share but back .

Golly, what to do?

The shareholders are basically ungrateful sods who will continue complaining even if they are paid a dividend.

With a share buy-back, the same money is spent to reduce the number of shares on offer. All the metrics change to make the company's performance look better - CFPS, EPS, PE and so on. And, well, of course it's pure coincidence, they are commonly factors in the assessment of Executive bonuses.

Rather a no brainer, really.

 

[moa999]

Interesting comment in Australian aviation

The two 747-400s previously earmarked for retirement will instead continue to take to the skies in Qantas colours and also receive a cabin update and heavy maintenance check.

Qantas expects first A320neo delivery end of calendar 2017 | Australian Aviation

So with VH-OEB and VH-OJM getting a heavy maintenance check, which is costly and takes considerable time, I wonder if these two aircraft won't actually be the first to depart when the 787s arrive, and it will instead be one of OJS/OJT/OJU subject to when they next need checks.

 

[JohnK]

So your company has much more cash than it needs for operations, debt servicing and the like. You can give it to the long suffering shareholders as a dividend, or you can spend it on something like a share but back .

Or you can reduce ridiculous fuel surcharges on awards so people can book more awards to reduce points liability? No?

 

[trippin_the_rift]

Or you can reduce ridiculous fuel surcharges on awards so people can book more awards to reduce points liability? No?

Re: fuel there are two factors in play

First is hedging above the current fuel price which means the cost benefits don't fully materialise to the bottom line.

Second is oil is purchased in USD, which has seen a 20% appreciation over the last year that wipes off a chunk of the gains that otherwise would reflect in direct savings.

Then there is uncertainty, fickle pricing and the business case that's says - well, pax continue to pay the fee and we're enjoying high old factors so what's the problem?

 

[trippin_the_rift]

Re: fuel there are two factors in play

First is hedging above the current fuel price which means the cost benefits don't fully materialise to the bottom line.

Second is oil is purchased in USD, which has seen a 20% appreciation over the last year that wipes off a chunk of the gains that otherwise would reflect in direct savings.

Then there is uncertainty, fickle pricing and the business case that's says - well, pax continue to pay the fee and we're enjoying high old factors so what's the problem?

Or you can reduce ridiculous fuel surcharges on awards so people can book more awards to reduce points liability? No?

However reducing points liability is interesting with the new loyalty accounting standards being introduced which basically means airlines can't book the revenue until the points have been burned.

 

[waynemerry]

So your company has much more cash than it needs for operations, debt servicing and the like. You can give it to the long suffering shareholders as a dividend, or you can spend it on something like a share but back .

Golly, what to do?

The shareholders are basically ungrateful sods who will continue complaining even if they are paid a dividend.

With a share buy-back, the same money is spent to reduce the number of shares on offer. All the metrics change to make the company's performance look better - CFPS, EPS, PE and so on. And, well, of course it's pure coincidence, they are commonly factors in the assessment of Executive bonuses.

Rather a no brainer, really.

Another reason could be the franking credit balance. If they need to chew through a few tax losses before they have to actually start paying tax again, then it makes sense to do buybacks until they can frank the dividend.

 

[moa999]

High fuel surcharges and the lowest fuel prices in recent memory. If you can't make a profit there then something seriously wrong.
Also Joyce and the directors must be due a bonus. Is that what the share buyback is all about?

Share buyback is to placate shareholders in lieu of dividends.

Joyce is comfortably rewarded under the LTIP plan...
I think under last count, subject to performance, he will end up with about 8million QF shares (worth a cool $30m)

 

[michaele]

And considering the profitability of this route, I'd say 2 full A380s daily would more than cover the need for their own lounge.

While there are plenty of OW options in LHR T3 would they really make it a QF only lounge? What about reciprocal rights for EK?

If so, 230pax for 2 A380 - staggered at different times (lunch time and evening) gives 78 premium pax with access, and space for ~150 PE/Y pax who are WP/SG/QC, or assuming that almost 40% of Y pax have access. Sounds like a lot of space just for QF2/10..

 

[JohnK]

Joyce is comfortably rewarded under the LTIP plan...
I think under last count, subject to performance, he will end up with about 8million QF shares (worth a cool $30m)

Which is no indication of what he has achieved or what he is really worth. Why are executive salaries so out of touch with reality?

P.S. He is seriously not worth that much. Don't care what shareholders or institutions think. This is the main reason why we are in so much financial strife across the globe.

 

[Caversham04]

....... airline CEO's tend to blame everyone other than themselves when things go wrong and take all the credit when things go right.....

You could make that sentence one word shorter and still factually correct by removing the word "airline"

 

[Altair]

I thought a company was unable to pay a dividend if the Retained Earnings was a negative value but my accounting and Corporations Law knowledge is out of date by about 15 years.
Moodys has increased QAN credit rating today and it is clear that lots of factors showing a clear sign of improvement for QAN which the remaining staff at QAN should be proud of and the tough decisions made by AJ and the Board are helping with the turnaround that was required.
Although I will never forgive AJ for the grounding of the airline and how he treated staff and customers, also ending QF NZ domestic services:evil:, I will always give him his due that he is determined that QAN survives as an independent and strong company. It just will be an airline group that some people just do not like and I am glad the JB did not get the job as I do not think QAN would be as strong today under him as what it is today. Of course this is coming from a shareholder of Virgin Australia shares.....

 

[katiebell]

Great news on the new QF Heathrow Lounge..... Didn't see that one coming.

AUSBT always on the ball:

Qantas new London Heathrow T3 first business class lounge - Australian Business Traveller

I'm not sure the LHR QP is such good news. As a WP travelling in J I quite like access to the higher level of service and facilities in a Flounge that do not exist in a combined lounge (& from the AUSBT article will only apply to P1, F & CL). Yet another erosion of WP status benefits. If the LHR QP is that big and on 2 floors why not make one a flounge and really have a flagship QP? Yet another example of QF/AJ not understanding what high status pax value and want and not meeting the expectations created by QF in promoting WP

The other Flounges in T3 may well be more attractive than a combined QP.

 

[TomVexille]

I'm not sure the LHR QP is such good news. As a WP travelling in J I quite like access to the higher level of service and facilities in a Flounge that do not exist in a combined lounge (& from the AUSBT article will only apply to P1, F & CL). Yet another erosion of WP status benefits. If the LHR QP is that big and on 2 floors why not make one a flounge and really have a flagship QP? Yet another example of QF/AJ not understanding what high status pax value and want and not meeting the expectations created by QF in promoting WP

The other Flounges in T3 may well be more attractive than a combined QP.

Just skip it and head straight for BA or CX F

 

[medhead]

I'm not sure the LHR QP is such good news. As a WP travelling in J I quite like access to the higher level of service and facilities in a Flounge that do not exist in a combined lounge (& from the AUSBT article will only apply to P1, F & CL). Yet another erosion of WP status benefits. If the LHR QP is that big and on 2 floors why not make one a flounge and really have a flagship QP? Yet another example of QF/AJ not understanding what high status pax value and want and not meeting the expectations created by QF in promoting WP

The other Flounges in T3 may well be more attractive than a combined QP.

they understand what you want, all too well. You just need to understand that they're working hard to kill off platinum.

 

[ComeFlyWithMe]

The pessimist in me says the LHR QP is due to the falling out of love with BA more than anything. Their accountants must get upset cutting the cheque to nemesis BA for their LHR lounge customers.

 

[moa999]

Noted from theqantassource.com
that VH-OEB positioned as QF6015 SYD-HKG on 10-Mar.

Wonder whether this will include the 'refresh' that was mentioned in the results ??

 

[katiebell]

they understand what you want, all too well. You just need to understand that they're working hard to kill off platinum.

Who does a good status match???

 

[katiebell]

The pessimist in me says the LHR QP is due to the falling out of love with BA more than anything. Their accountants must get upset cutting the cheque to nemesis BA for their LHR lounge customers.

The proposed QP at T3 won't stop this as long as BA offer a better product and QF are in OW. If QF leave OW a lot of FF will leave QF as a result of the lack of reciprocity for OWE & OWS

 

[Princess Fiona]

I'm not sure the LHR QP is such good news. As a WP travelling in J I quite like access to the higher level of service and facilities in a Flounge that do not exist in a combined lounge (& from the AUSBT article will only apply to P1, F & CL). Yet another erosion of WP status benefits. If the LHR QP is that big and on 2 floors why not make one a flounge and really have a flagship QP? Yet another example of QF/AJ not understanding what high status pax value and want and not meeting the expectations created by QF in promoting WP

The other Flounges in T3 may well be more attractive than a combined QP.

I don't think that QF building a lounge in LHR is an erosion of WP status benefits in any way at all.
If you don't wish to visit the QF lounge there are ample OW alternatives.

 

[nlagalle]

I'm not sure the LHR QP is such good news. As a WP travelling in J I quite like access to the higher level of service and facilities in a Flounge that do not exist in a combined lounge (& from the AUSBT article will only apply to P1, F & CL). Yet another erosion of WP status benefits. If the LHR QP is that big and on 2 floors why not make one a flounge and really have a flagship QP? Yet another example of QF/AJ not understanding what high status pax value and want and not meeting the expectations created by QF in promoting WP

The other Flounges in T3 may well be more attractive than a combined QP.

Qantas don't have an F lounge there anyway, it's BA's. So if you don't like the new Qantas lounge just head to the BA one or CX.