Should Qantas pay back Job Keeper ?

[cove]

Even though we are shareholders we think Qantas should pay back the $900 million they trousered from Job Keeper.
It would be voluntary as there was no provision for refunds in the legislation.
What do you think?

 

[Peasant]

Joyce used Covid to accelerate his transformation programme, resetting the cost base. If you recall, coming out of Covid he was out spruiking the $1b of “structural cost savings” due in large part to significant downsizing of the workforce.

They made many senior staff redundant as part of this. This was especially evident in middle management, engineering and senior Captains across the A380/B744 fleets. Let alone what they did to airport operations…

And now, surprise, surprise, the airline doesn’t have the resourcing or necessary skills to run a competent operation.

 

[Pushka]

Joyce used Covid to accelerate his transformation programme, resetting the cost base. If you recall, coming out of Covid he was out spruiking the $1b of “structural cost savings” due in large part to significant downsizing of the workforce.

They made many senior staff redundant as part of this. This was especially evident in middle management, engineering and senior Captains across the A380/B744 fleets. Let alone what they did to airport operations…

And now, surprise, surprise, the airline doesn’t have the resourcing or necessary skills to run a competent operation.

Interesting and convenient way to strip the business then.

 

[Hampton Mike]

While there is no obligation to pay back the money, there is both PR and marketing value which could likely lead to much more than the amount. Right now QF reputation is in absolute tatters and this is one thing that could help them repair that.

Paying back jobkeeper (which mainly went to the stood down employees rather than QF anyway) would not garner the airline one iota of goodwill from the types who are currently deriding it.

 

[drron]

and then there's the SHARES
3x$500 million $1.5 BILLION OF SHARE BUYBACKS and the millions of shares for free
How on earth do you afford to do this if you are "crying poor"

And there's the rub.
If QF was a whisker away from bankruptcy as AJ is saying then why do a share buy back at all?
If you knew you were going to have to find 3.2 billion for fleet replacement in the next 12 months and 15 billion over the next 10 years why would you do another share buyback.
These figures are in the AFR and supplied by Vanessa Hudson.

12ft

Another interesting thing in that article is AJ boasting that the new planes will reduce the average fleet age from 16.4 years to 9.9 years. Would sound commendable except in a release to the ASX in February 2014 they said the average age of their fleet was 7.6 years

 

[justinbrett]

It must be noted with regards to all the QF share buybacks, that even after the profit announcement a few weeks ago, the share price has still not recovered from its pre-covid peak of $7.35 in Dec 2019. They've been as close as $6.80 earlier this year but still a fair way off the pre-covid value.

 

[Peasant]

Which is probably a function of the market’s growing concern at QF’s upcoming capex bill that’s been deferred and deferred.

 

[Pushka]

Paying back jobkeeper (which mainly went to the stood down employees rather than QF anyway) would not garner the airline one iota of goodwill from the types who are currently deriding it.

All of it should have been paid to employees bank accounts by Qantas. If there's a 'mainly' then Qantas have taken money they are not entitled to, from the taxpayer.

 

[justinbrett]

All of it should have been paid to employees bank accounts by Qantas. If there's a 'mainly' then Qantas have taken money they are not entitled to, from the taxpayer.

I think he means that for many employees they were just paid the JobKeeper amount instead of being laid off, others were paid their normal pay and attended work. You didn't attend work if you only received the JK amount.

Then why were so many thousands sacked then?

"The 6,000 redundancies will include 1,450 office roles, 1,500 ground operations staff including baggage handlers, 1,050 cabin crew, 630 engineering jobs and 220 pilots."

Jobkeeper would simply be money in money out for them.

There was the expectation if a company received JobKeeper, there would be a job for that employee at the end of it.

QF had the reasonable expectation those jobs would be gone for the foreseeable future. They made the decision to retire the 747 early and expected to suspend the A380 indefinitely.

We never would have heard the end of it if QF sacked everyone the day JK ran out.

 

[justinbrett]

Which is probably a function of the market’s growing concern at QF’s upcoming capex bill that’s been deferred and deferred.

Which is in turn a function of all the debt taken on during covid.

 

[Peasant]

Which is in turn a function of all the debt taken on during covid.

The 787 orders and options were cancelled well before COVID.

The 321neos have, I believe, been deferred 7 times since the order was first placed. Blaming COVID for the fleet mess is very much one of Alan’s alternate universe excuses that is demonstrably false.

 

[justinbrett]

The 787 orders and options were cancelled well before COVID.

The 321neos have, I believe, been deferred 7 times since the order was first placed. Blaming COVID for the fleet mess is very much one of Alan’s alternate universe excuses that is demonstrably false.

I mean - the 7 billion dollar loss is not some alternate universe. That buys 30x 787s outright.

 

[Peasant]

True, but given QF’s operating margins, the positive cash flow generated to fund fleet investment would have been in the vicinity of $800m-$1.3b.

I know Joyce likes to talk up revenue lost, but he also had skeleton costs and plenty of government support which mitigated most of the cash burn.

 

[BAM1748]

True, but given QF’s operating margins, the positive cash flow generated to fund fleet investment would have been in the vicinity of $800m-$1.3b.

I know Joyce likes to talk up revenue lost, but he also had skeleton costs and plenty of government support which mitigated most of the cash burn.

But only limited freight income.

Came you point us towards where you found the numbers are for ‘skeleton costs’ and how much the govt support was in dollars.

 

[kangarooflyer88]

I don't think it is fair to Qantas to pay back any of the funding they got from the COVID pandemic. The fact of the matter is, a single decision made by the government decimated the Australian travel and tourism industry, that is shutting down the borders. It forced Virgin Australia into administration, an airline which might I add used to have an international route network on wide-body aircraft. Speaking of Qantas specifically well the proof is in the pudding there, they went from operating tons of international and domestic flights to just a couple of domestic flights once international and then domestic borders closed. It was very difficult for these airlines to operate and that money was used to keep things moving despite the challenges. That Qantas has announced record profits should not be seen as a bad thing. It should be seen as a relief from a company which for the last 2-3 years have gone through hell.

Spoiler: <redacted>

If anything I think the more pertinent question here is whether all of these measures put in place by the government at time (i.e. stay at home orders, domestic and international border closures, etc.) were necessary, especially when we had both excellent treatments and a vaccine in place. I bring that up since on June 26, 2021 I received the 2nd dose of my COVID vaccine and was considered at that point fully vaccinated. Despite this I was stuck at home for 3 months for some unknown reason. And even after those restrictions were lifted I was still trapped in the country. Again, having been fully vaccinated (well triple at that point) having all the tools I need to deal with it. I think the government needs to bear some of the costs of implementing these (questionable) policies.

-RooFlyer88

 

[cove]

I am thinking that the big super funds that effectively control Qantas may push out some of the board members as the CEO departs. Allowing the reputation of Qantas to get trashed will become a priority to fix. The pending legal claims against the company and the tired old fleet of planes must be concerning them now.

 

[Cheatah]

Which is in turn a function of all the debt taken on during covid.

If QF has taken on a large amount of debt they shouldnt have spent billions buying back shares, more so when they have a multi billion dollar fleet renewal coming up!

 

[RooFlyer]

If QF has taken on a large amount of debt they shouldnt have spent billions buying back shares, more so when they have a multi billion dollar fleet renewal coming up!

Exactly. Any argument that they are capital constrained is debunked by not one but two share buybacks to soak up excess cash.

You wait, they’ll be moaning about the Qantas Sale Act pretty soon