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Qantas - what will Coronavirus mean in the medium term?

juddles

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Hi all,

There are quite a few threads about dear old Coronavirus/2019-nCoV/SARS-CoV-2/COVID-19 relating from everything to disrupted travel plans to panic buys of dunny paper to status freezes. What I wanted to hear from members is their opinions on what this pandemic and its effect on travel will have on Qantas? Zillions of airlines around the world have cancelled many flights and parked up aircraft and staff. And this worries me in an industry that has slim margins at the best of times. I, like many travel enthusiasts, hope that there may be windows of opportunity to get great sales fares. But this thread is not about bargain airfares - it is about the impact this whole thing will have on QF. I see the share price has dropped from over $7 to $5 since the news broke...

A few ideas:

(1) Will QF suffer a major loss this year?

(2) Maybe this is the death-knell to VA, at least internationally? So in the long term a boost for QF?

(3) "National" airlines being what they are, often supported by the nation's government, will other countries support their flag carrier more than the aussie government will the private QF? So making it an even more un-level playing field in the future in which to compete?

(4) Will Sunrise get delayed years as there are far more pressing short-term concerns, and a collapsed international market is exactly a wrong time to trial such a novel (sorry :) ) new thing?

(5) Although I feel the era of travel restrictions will vanish within months once it is a global pandemic, perhaps the severe economic effects of the whole thing will cause a massive drop in general travel that lasts for many months to years?

All in all, although I have no idea what the real effects will be, I am sure that QF, as most airlines, will emerge from this in a different state than what they were in just a few short months ago.
 

justinbrett

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Actually it’s the perfect time to launch sunrise flights. People don’t want to stop in Asia at the moment.

As long as the US stays relatively clear I think the transpacific routes will keep QF afloat. We’ve been through worse.
 

Mrmaxwell

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I think once the world goes into manage mode and away from massive uncertainty mode things will improve. Experts agree 80% of people who get the virus will only experience mild symptoms similar to the common cold. I'm afraid if we stay in uncertainty mode too long and the world economy gets worse before it gets better - many vunerable industries can only survive this much downturn for so long.
 

eastwest101

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I'm of the opinion that "never waste a good crisis" thinking will kick in - Qantas will be busy resetting its IR and wage costs and getting as many wage deals signed as possible while there is the uncertainty and excess qualified aviation workforce being laid off. They will be parking planes and threatening their workforce while all the uncertainty is around to get max efficiency and least wage rises as possible. When it comes to IR they are very predictable.
 

Pushka

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The US will not stay relatively clear, it’s far too late for that even if they shut all their borders now.
They have stated today they don't have enough test kits and they simply haven't been doing the pre emptive testing that I know has been happening in Australian hospitals. For weeks now.
 

Billtrain

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I'm of the opinion that "never waste a good crisis" thinking will kick in - Qantas will be busy resetting its IR and wage costs and getting as many wage deals signed as possible while there is the uncertainty and excess qualified aviation workforce being laid off. They will be parking planes and threatening their workforce while all the uncertainty is around to get max efficiency and least wage rises as possible. When it comes to IR they are very predictable.
I was chatting with someone recently that was of the opinion that Qantas developed the virus as they were just about to enter into a few more EBA negotiations and were in need of a timely disaster.
 

drron

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Maybe QF should release a video of their planes being cleaned like these.

Then again maybe not.
 

Lynda2475

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There was an article in SMH yesterday re inspectors questioning the quality fo Qantas' cleaning process.

If i heard correctly the radio was saying this morning that inbound international traffic into Aus is down 70% on Jan/Feb last year due to impacts of bushfores and now Covid 19. Expect more flight cuts.

Colleague flying home to Melbourne tonight was on 7pm, which has been cancelled now on 6:30pm (only other choice was 10pm).

I expect Qantas to use the lighter schedules to bring forward refurbs if possible, hopefully finish the wifi installs. But expect bargains to continue to be had.
 

ja1

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There is no single answer to this. So many factors and some are large and some small and many have dependencies on each other.

Qantas biggest expenses (ignoring capital for a minute) are its staff and its fuel.

They will always be working on how to manage staff but fuel isn't manageable in this way - hedging helps a lot if you get it right (and QAN must have some of the best hedging experts in the world?) but it's only a smoothing of a trend - you can't hedge away a long term rise but conversely you can take advantage of a drop which makes a huge difference to your operational costs.

Once you take fuel out of the equation (and you'd have to think that an economic recession actually helps in this instance as demand drops and prices fall) then you look at the other aspects..

As already noted, QAN will use this to look at its staffing. They'll also look at benefits and other costs to try to take them out.

But you can't cut your way into any long term profit if the cuts are in the wrong part of the business and you look at where your margins are being made (where F and J have much larger margins than Y and lower..) and F and J people might have many more reasons to keep flying than Y?

I don't think it's a real issue about sovereign support for most airlines - few countries or governments have the cash or are willing to burn it in airline operations (it's no coincidence that Emirates/Etihad are from monarchies and the airline business for those countries is almost a loss leader for a bunch of other things they are working to achieve).

It's more likely airlines will merge or go under rather than be supported by government. That's true in Australia especially as QAN has already had this conversation with the Commonwealth about 12 years ago.. and Holden is the most recent cautionary tale..
 

moa999

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I expect Qantas to use the lighter schedules to bring forward refurbs if possible, hopefully finish the wifi installs.
The scheduled WiFi is almost complete.
Suspect refurbs can't be done any quicker due to supply chain - lead time on custom seats etc


As for Sunrise. That's a long term decision. We will be worried about Covid-22 when those aircraft start being delivered.
 
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wannabeinvestmentbanker

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More cancellations trickling through



Qantas has canceled additional flights to Asia in response to continued weaker demand amid an escalation of the Coronavirus outbreak, the airline says in an emailed statement.

  • The changes starts next week and continue until the end of March
  • Cancellation will affect the Sydney-Hongkong routes, Sydney-Sapporo flights, and Melbourne-Auckland flights, as well as Brisbane-Tokyo, Melbourne-Tokyo and Sydney-Osaka routes
 
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Media says QFi is reducing Japan flights in coming weeks (not long before the Olympics, if they are still to be held.)

I can't see a release on the QF website, so no specifics.
 

wannabeinvestmentbanker

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I posted this in another thread - what I've seen come across my screen so far today

Qantas has canceled additional flights to Asia in response to continued weaker demand amid an escalation of the Coronavirus outbreak, the airline says in an emailed statement.

  • The changes starts next week and continue until the end of March
  • Cancellation will affect the Sydney-Hongkong routes, Sydney-Sapporo flights, and Melbourne-Auckland flights, as well as Brisbane-Tokyo, Melbourne-Tokyo and Sydney-Osaka routes
 

jb747

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Actually it’s the perfect time to launch sunrise flights. People don’t want to stop in Asia at the moment.

As long as the US stays relatively clear I think the transpacific routes will keep QF afloat. We’ve been through worse.
Yes, but they won't be launched now. At a minimum 18 months. By then Australia and the USA will have as much of the virus as everyone else.

I'm of the opinion that "never waste a good crisis" thinking will kick in - Qantas will be busy resetting its IR and wage costs and getting as many wage deals signed as possible while there is the uncertainty and excess qualified aviation workforce being laid off. They will be parking planes and threatening their workforce while all the uncertainty is around to get max efficiency and least wage rises as possible. When it comes to IR they are very predictable.
Ah, threats. You mean business as usual.
 

Max Samuels

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We’ve been through worse.
Please remind us?
Post automatically merged:

More cancellations trickling through



Qantas has canceled additional flights to Asia in response to continued weaker demand amid an escalation of the Coronavirus outbreak, the airline says in an emailed statement.

  • The changes starts next week and continue until the end of March
  • Cancellation will affect the Sydney-Hongkong routes, Sydney-Sapporo flights, and Melbourne-Auckland flights, as well as Brisbane-Tokyo, Melbourne-Tokyo and Sydney-Osaka routes
And just when the low loads meant better upgrade chances!
 

Lynda2475

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wannabeinvestmentbanker

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I don't have the exact source document, it just came across my Bloomberg. Per the story(s), it says the cancellations will run to the end of March at this stage so not through to June currently.
 

Lynda2475

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Looks liek Bloomburg are quoting old news from 20th Feb annoucnemcnet re flights in March. April, May.
 
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