Qantas CFO responds to recent criticism

[MEL_Traveller]

One example is the article from Airlineratings.com referred to on another thread (http://www.australianfrequentflyer....sale-companion-travel-57099-5.html#post975958). The article in question compares the QF staff costs and perks to its competitors, arguing "the average wage cost at Qantas is $92,000 while at Emirates it is $47,000 and for Singapore Airlines $42,000". Quite a good article IMHO and indicative of what I was referring to.

i note the difference in wages, but my last SQ flight had 6 cabin crew for 30 pax. How many does QF have for the same number?

 

[eastwest101]

Medhead - in my opinion I think that is just wishful thimking there (like people who maintain that QFF is a separate business identity somehow removed from QFi and QFd, if Qantas stopped flying tomorrow how much would you think that QFF is worth?)

And similarly if say QF removed complimentary membership of tbe Qantas Club from its Gold members would you still maintain that QC is separate from status?

 

[medhead]

Medhead - in my opinion I think that is just wishful thimking there (like people who maintain that QFF is a separate business identity somehow removed from QFi and QFd, if Qantas stopped flying tomorrow how much would you think that QFF is worth?)

And similarly if say QF removed complimentary membership of tbe Qantas Club from its Gold members would you still maintain that QC is separate from status?

They are separate entities in the accounts. As you say status gets complimentary qantas club membership. Given I've been a paid up Qantas club member since 1996, before status benefits as we currently know them, yes I will tell you they are separate. There was, in fact, a massive discussion on exactly this point a few years ago. Qantas club is separate, membership is given as a benefit.

As for your comments about the value of QFF you seem to have completely missed my point. The businesses are dealt with separately. I will also note that I am on record here a number of times outlining the synergetic relationship between the airlines and QFF. Please don't repeat my position back at me.

Removal of QC for gold status would tend prove my point that they are separate.

 

[TonyHancock]

.....if Qantas stopped flying tomorrow how much would you think that QFF is worth?

At least two toasters and a coffee maker.

 

[moa999]

It would be interesting to see the claims for gift vouchers in the worst case

 

[Happy Trails]

There's now a comprehensive riposte from Tony Webber on Plane Talking.

Former Qantas Chief Economist replies to CFO article | Plane Talking

 

[trippin_the_rift]

i note the difference in wages, but my last SQ flight had 6 cabin crew for 30 pax. How many does QF have for the same number?

Emirates a380 = 31 crew
SQ a380 = 27 crew
Qantas a380 = 21 crew

Also keep in mind that QF crew based overseas are on similar terms to other airlines - so you wipe out domestic QF crew and most of the human capital cost is not too different to overseas competitors.
The real downer is oldschool flight attendants which can be sucking upwards of 150k+ from the airline.

 

[Mwenenzi]

Emirates A380 = 31 crew
SQ A380 = 27 crew
Qantas A380 = 21 crew

How many seats / passengers ?
Miniumn cabin crew to seat ratio is by regulation & union aggreements (where they apply)

 

[markis10]

how many seats / passengers ?
Miniumn cabin crew to seat ratio is by regulation & union aggreements (where they apply)

qf 484
sq 471/409
ek 489/497

 

[MEL_Traveller]

Emirates a380 = 31 crew
SQ a380 = 27 crew
Qantas a380 = 21 crew

Also keep in mind that QF crew based overseas are on similar terms to other airlines - so you wipe out domestic QF crew and most of the human capital cost is not too different to overseas competitors.
The real downer is oldschool flight attendants which can be sucking upwards of 150k+ from the airline.

also need to include consequential costs... EK needs to buy 31 hotel rooms overnight per a380 for their crew... QF only needs 21. at $50 a night (I'm just guessing for a four/five star) that racks up a fair bit of saving to QF per year.

 

[markis10]

also need to include consequential costs... EK needs to buy 31 hotel rooms overnight per a380 for their crew... QF only needs 21. at $50 a night (I'm just guessing for a four/five star) that racks up a fair bit of saving to QF per year.

QF have far less generous slips as well, across the ditch EK do one flight then get two nights in AKL.

 

[docjames]

There's now a comprehensive riposte from Tony Webber on Plane Talking.

Former Qantas Chief Economist replies to CFO article | Plane Talking

I read this last night.

That's one serious return serve. It is somewhat surprising Fairfax didn't want it to fuel the story further........

 

[eastwest101]

I read it last night myself as well, I highly recommend it as an educational read into the background of the two gentlemen involved, some interesting background about the hedging and yield management in there too.

 

[dk4]

Eastwest, dont forget the guy is fighting for his job, due to the current finacial crisis that QAN is experiencing.

The fact he continues to champion the "profit draining" 65% strategy, shows how ignorant he is IMO. (Not only was the strategy a complete failure profitwise, the group has not held its line in the sand, and been beaten back by the competition, and the whole scenario has raised the eyebrows of the ACCC. Three strikes to the QF CFO.)

 

[eastwest101]

Yes that was an interesting point that Webber made in his latest response that the "65% Line in the Sand/2 seats for every 1 VA seat threat" essentally made Borghetti the defacto capacity/fleet and yield manager of QFd and JQd. A clearly telegraphed and spectacular "own goal" by QF management.

 

[themanfromoz]

I'm going to be a heretic here and blame not only management but the unions. Just look at Holden and Toyota.
For years (decades) we (as in Australians) have been overpaid for the work we have actually done. i.e. it cost Holden (allegedly) $3,000 more to produce a car than it was sold at wholesale/retail value. That is simply unafordable nowdays.
QF stuffed up by not going with 777s like most other airlines. Launched multiple Jetstar asias. Bled domestic profits to keep its international arm alive. That is in their own control.
Solution is simple - ditch the underperforming international arm and concentrate on domestic. Any FA who is earning $150k a year should be retired - what a joke.
/will now duck for cover

 

[Isochronous]

I'm going to be a heretic here and blame not only management but the unions. Just look at Holden and Toyota.
For years (decades) we (as in Australians) have been overpaid for the work we have actually done. i.e. it cost Holden (allegedly) $3,000 more to produce a car than it was sold at wholesale/retail value. That is simply unafordable nowdays.
QF stuffed up by not going with 777s like most other airlines. Launched multiple Jetstar asias. Bled domestic profits to keep its international arm alive. That is in their own control.
Solution is simple - ditch the underperforming international arm and concentrate on domestic. Any FA who is earning $150k a year should be retired - what a joke.
/will now duck for cover

Ditch QFi and suddenly the value of QFF collapses.

The A330 J upgrade is critical to turning QFi yield around. As are the 787s.

 

[raleyoz]

Am I understanding this correct, you are suggesting and upgrade to a series of J cabins will change QFi will have an effect that could turn their fortunes around.
Surely I'm am mistaken??

 

[medhead]

I'm going to be a heretic here and blame not only management but the unions. Just look at Holden and Toyota.
For years (decades) we (as in Australians) have been overpaid for the work we have actually done. i.e. it cost Holden (allegedly) $3,000 more to produce a car than it was sold at wholesale/retail value. That is simply unafordable nowdays.
QF stuffed up by not going with 777s like most other airlines. Launched multiple Jetstar asias. Bled domestic profits to keep its international arm alive. That is in their own control.
Solution is simple - ditch the underperforming international arm and concentrate on domestic. Any FA who is earning $150k a year should be retired - what a joke.
/will now duck for cover

So you blame the unions but then list problems that are fully owned my management. How were the unions to blame for fleet choice, setting up jetstar airlines or financial management of the company? It'd be good if you had something more that "I'm going to blame the unions".

 

[trippin_the_rift]

Its always someone elses fault.. .but at the end of the day the buck stops at the head of the biz.