Qantas - what will Coronavirus mean in the medium term?

[jakeseven7]

Do I get a prize for guessing this correctly?

Yes you and 1000 others

 

[Must...Fly!]

Both. A person at work totally freaked out when he thought I was coming straight back to work.
I rang the government hotline and they suggested 14 day quarantine, which work agreed to which was amazing considering working from home is dicouraged.

Ha. I went straight from the airport to work the other night from AUH, back from a month overseas. Rang the boss mid week and got told, you didn't go to China or transit through Asia...so go in as normal.

I think if I was coming back this week it'd be a bit different...

 

[ja1]

Not possible for all work! Mine involves the setup and configuration of specific high-end equipment for which only a few people are qualified... without us travelling to site the project doesn't go ahead.

There are always workarounds though. I mean yes in its most basic form, you can pull the plug and simply state the project stops or at least is paused. This would be the case in the event that some other event affected those few people qualified so..

Or you could use remote hands working under supervision (which may be possible for some kinds of work).

I've worked in datacenters as 'smart' remote hands where the person who needed the work done simply couldn't be in two places at once but knew I could follow instructions to a sufficient level of complexity that they could get what they needed done..

To go back on topic, Qantas must still have business meeting rooms at the airport which might have video facilities ?

 

[juddles]

..... I see the share price has dropped from over $7 to $5 since the news broke...
.....

Hmmm...... QAN now down to $4

And VAH down to 7c

Am feeling that AJ's aggressive (in a defensive manner) reaction to the Coronavirus thing may be a planned strategy to emerge in the near future very strongly against a very sick domestic opponent....

 

[ja1]

Hmmm...... QAN now down to $4

And VAH down to 7c

Am feeling that AJ's aggressive (in a defensive manner) reaction to the Coronavirus thing may be a planned strategy to emerge in the near future very strongly against a very sick domestic opponent....

To take the other side.. i don't think AJ has to put too much thought into a competitive strategy with VA as he has much bigger strategy problems to deal with. His business is much much larger, much much older and VA has yet to cause him any sort of structural threat. He also needs a 'competitor' as long as they don't out-compete with him. Look at Coles and Woolies.. if one of them weren't around there would be all sorts of conversations about more regulation but as long as they can point to 'competition' they have a lot more freedom.

On the share price side, as has been pointed out, VA only has 10% of a free float and it's share price in the last 3 months was a max of ~10c. QAN is coming from a high of $7ish down to $4..

In both cases it has zero effect on their current operations and balance sheet and everything to do with their future ability to raise money (against equity value) and returns to their shareholders.

 

[serfty]

Am feeling that AJ's aggressive (in a defensive manner) reaction to the Coronavirus thing may be a planned strategy to emerge in the near future very strongly against a very sick domestic opponent....

I saw an indication that a significant AJ's factor aggressive reductions (in relation to what is actually being reduced) is to do with A388 pilot EBAs and and continuing negotiations.

 

[Must...Fly!]

I saw an indication that a significant AJ's factor aggressive reductions (and what is actually) being reduced is to do with A388 pilot EBAs.

I'd think there is a bit of truth to this. But Qantas is horribly exposed with the expansion they've been undertaking, and the A380s burn enough fuel as it is without throwing in empty load after empty load of passengers.

Prudent action, with little response from the competition - VA continue to claim as late as yesterday that international is weak but domestic remaining very strong.

 

[moa999]

Qantas is horribly exposed with the expansion they've been undertaking,

What expansion?
QFs only international changes in recent years have been replacing 747s roughly 1:1 with smaller 787s.

I see QFs route cuts as a very sensible decision in the wake of covid-19 and massive falls in demand. Also see further deep cuts to domestic in coming weeks.

 

[Must...Fly!]

What expansion?
QFs only international changes in recent years have been replacing 747s roughly 1:1 with smaller 787s.

I see QFs route cuts as a very sensible decision in the wake of covid-19 and massive falls in demand. Also see further deep cuts to domestic in coming weeks.

Completely agree with the latter part of your statement.

Expansion I am referring to Japan, Singapore and Hong Kong which has seen steady expansion - as has USA. However I intended that to be mostly in direct comparison to Virgin Australia, not necessarily the rest of the industry.

 

[jb747]

I saw an indication that a significant AJ's factor aggressive reductions (in relation to what is actually being reduced) is to do with A388 pilot EBAs and and continuing negotiations.

There is no such thing as an A388 pilot EBA. There is an international pilot EBA, of which the 388 is part. From what I have heard, the points of contention all relate to the proposed A350.

The 380 is a difficult aircraft to fill, and it makes sense to park them, or to can multiple smaller aircraft and merge them to a 380. The 380, when full, is very cost effective...but it's terrible when lightly loaded. Which is all pretty obvious, really.

 

[AIRwin]

I notice the Qantas page (Coronavirus travel update | Qantas) now lists 8 QF flights wth known Covid-19 cases on board.

This has been moved to a separate page:

Coronavirus cases | Qantas

Find information on Coronavirus cases on Qantas flights.

www.qantas.com

 

[BAM1748]

While currently sitting in a QF Sydney T3 lounge I see the news saying flightcentre and webjet each down nearly 20% on their share price.

Not a good outlook in the short medium term for those employees I’d imagine.

 

[justinbrett]

*humble cough*

I'm usually reluctant to admit when I'm wrong. But I've been wrong.

I thought the media was over-reacting, and that the impact of the virus would not be as bad as they were making out.

This is some pretty crazy cough going on. I still think the greatest impact is going to be economic, not the virus itself - but with the US banning flights to continental Europe for a month - we have not seen that kind of thing in (most of our) lifetimes. The last time the world was so segregated was probably WWII - when Qantas Empire Airways was flying the kangaroo at night to avoid being seen by the Japanese.

I now have DSC remorse, and although my (RTW) trip is 5 months away I'm not as confident as I was just three days ago. If the DSC offer came out today I wouldn't have booked. I just hope the drastic action taken now will be enough to bring us back to normality in the near future.

 

[ja1]

*humble cough*

I'm usually reluctant to admit when I'm wrong. But I've been wrong.

I thought the media was over-reacting, and that the impact of the virus would not be as bad as they were making out.

You aren't wrong about the media over-reacting in the sense that the media nowadays know no other way to react. You're correct in calling it over-reacting but they don't really have an 'under react' stance so.. it has become what it is.

Which has resulted in a lot of people simply turning off the TV (or twitter or whatever they use for news) as there is no sense of balance - it's one crisis straight into another.


There is still a lot to play out here that's completely unknown. It's fine to think about the worst case and to try to prepare for it but in reality very rarely is this ever going to happen or even be possible. You do the best you can.

The NSW chief medical officer has suggested the first wave of infections in NSW will be about 1.5m people. Given 70 people or so are currently infected there's either a lot that has to go wrong quickly or a long way to go before that sort of ramp up happens.

If we assume a mortality rate of 50% that of China (on the basis that we have a better health system?) you'd be looking at approx 15,000 people dying in NSW. If we're 90% better than China that's about 3,000 people.

To give you scale, in Australia in 2018 a total of 15,000 people died in the whole country from the #1 disease (heart disease of some kind). About 1,000 people died from the plain flu in 2018.

3k people just in NSW is something quite different.

I work in an office surrounded by biologists and people who try to understand how this stuff works for a living. From a science POV this is all very straight forward. From a 'reality of what could happen' this is not clear at all as to what happens.

And the secondary effects (much like a hydrogen bomb) are much larger than the 'primary'.

The fall in the ASX200 by 25% in a week will take literally years to recover from (e.g. GFC v2.0)

But it will recover as we've seen this happen over and over again..

To stay on topic, QAN finished the day at $3.64 - it is down around 51% from its peak - 2 months ago!

But you probably know the next line.. that means with good management at QAN, you could be doubling your money if you had the conviction and the time..

 

[ja1]

While currently sitting in a QF Sydney T3 lounge I see the news saying flightcentre and webjet each down nearly 20% on their share price.

Not a good outlook in the short medium term for those employees I’d imagine.

In what sense ? If those employees had a chunk of their pay tied up in share options ? In which case you're right but I think for any sense of scale that's aimed at flight centre executives, not the normal staff member sitting at a sales desk in a shopping centre..

If you mean the share price has an outlook on the employees job ? Again probably not as the share price doesn't directly change anything in the same way that WOW's share price falling has no effect on their stock levels or staffing

But indirectly you are 100% right - as the market in pricing in a large loss in revenue (and therefore profit) that means FC will be looking pretty closely at its staffing like every single other business out there at the moment except for a small number of businesses that are desperately searching for qualified staff at any price as they have so much demand by the present circumstances...

 

[justinbrett]

The AUD is looking pretty sick

 

[ja1]

The AUD is looking pretty sick

It seems to be holding around $0.64ish.. which isn't too bad really.

Great if you're exporting (e.g. coal, iron ore, education, tourism) and not so great if you're buying computers or oil from overseas..

I'm pretty sure the fate of the aussie dollar depends completely on how the US handles its own upcoming infections..

 

[jakeseven7]

The AUD is looking pretty sick

It’s exactly where we need it to be for the recovery phase once the media get bored and move onto the next crisis that gets all the chickens clicking on their links.

 

[serfty]

It’s exactly where we need it to be for the recovery phase once the media get bored and move onto the next crisis that gets all the chickens clicking on their links.

Yep, better for Oz Economy, bad for those Australians who want to travel internationally. (Disclaimer: I have 7 international bookings currently.)

 

[justinbrett]

Yep, better for Oz Economy, bad for those Australians who want to travel internationally. (Disclaimer: I have 7 international bookings currently.)

Yeah, being selfish here. I'm concerned about having to book US hotels / domestic flights at that terrible exchange rate.