Qantas Grounded

[turboplanner]

The Share market, where the owners of Qantas reside gave Alan Joyce's decision a tick yesterday.

 

That's all it was, any ideas that share prices would jump to $6.00 underestimates investors knowledge that Qantas has a long hard road ahead of it.

 

They did agree though, that allowing unions to continue their strategy of bleeding $15 million losses per week out of Qantas as a softener was unacceptable.

 

The excited squealing that Alan Joyce has decided to ground Qantas days before Saturday because rooms had been booked, Couriers had been booked etc. came from people who simply didn't know logistics. Were passengers to be turfed out into the streets on a Saturday night?

 

Big Companies with big numbers of people involved and huge geographic spread need a long lead time. So does the Army.

 

That was the contingency planning.

 

The Board could have overturned that, the Shareholders could have overturned that, the Government could have overturned that - the actual decision was made after they had the reaction of the Board and the Shareholders.

 

The loud cries about Qantas losing customer support, some of it coming from people who have never flown Qantas, some of it on here, needs to be taken in context.

 

Just 4 working days worth of customers has been inconvenienced, and of those many were flown to their destinations with just a few hours delay, and many were overnighted.

 

That leaves 361 days of customers this year who weren't put out multiplied by millions of others who have flown infrequently in the past and will have long forgotten what this issue was all about by the time they fly.

 

This 4 days worth will be easily offset by the numbers who will depart Virgin and Jetstar because they were offloaded because (a) there was a thunderstorm, (b) there was fog, © maintenance for their safety was required.

 

Someone said Qantas should bring back Hudson Fysh. Well, he abandoned the town of Winton in 1921 and relocated to the more lucrative Longreach, and he abandonded support for the Country and relocated to the City, Brisbane in 1930, and he abandoned Queensland in 1938 and went to Sydney. Believe me, the unions would be having a much rougher ride today under old Hudson.

 

The rhetoric goes on.

 

 

[turboplanner]

Policy of Litespeed, new CEO of Qantas - see post 90

 

Point 1

 

You're in charge of Qantas, you'd be calling for an outside investigation into your own Company - bold move and immediate message that you will not tolerate corruption.

 

But where's solid proof of corruption and law breaking?

 

On the down side and outside investigation could get out of control - not all the people you mention have a very good record in fast results or understand the necessity for the Company to keep operating while this is going on. You yourself will have to fly to various parts of the world to attend hearings, you will have to make major decisions, you will have to come up with replacement company rules, you will have to fire people, you will have to carefully select new people, you will have to deal with phone calls from 40 year pilots.

 

Much of the first year will not be available for you to do what you are setting out to do, and the company could swing into a new crisis where you need that time.

 

What about appointing a small group headed by a retired judge to investigate, handle any misdemeanors, and refer any corrupt dealings or criminal activities to authorities?

 

Point 2

 

Critical for an understanding of the airline industry, but you're not in the airline industry, you're in the financial industry.

 

What about some people with a proven track record of successfully running large companies with small turnovers on sales?

 

Is the current management bad? Or are the current problems because the hard decisions to cope with the Open Skies haven't been addressed by previous CEO's?

 

Point 3

 

looks a good idea, but what if these two start enjoying life at the top? Do you want puppets at this level, or people with vast management experience, exceptional research capability, a contact network to die for, and a proven ability to make the correct business decision again and again?

 

What about the alternative of involving staff in tough decisions?

 

That will really get decisions based on ground floor issues and efficiencies, with expert knowledge on what is happening in cockpits, ground support and maintenance and logistics, and for that matter marketing (for those who remember Sir Peter Abeles instruction to paint all the Ansett aircraft white for no other reason than that's the way his trucks came out of the factory and it saved money on trucks.)

 

Point 4

 

Great idea. I've seen workers make tough decisions to minimise long term job losses. Needs qualification though, remeber Fletcher Jones and Staff - they all backed the wrong direction and went under.

 

Point 5.

 

As the new arrival, here is your first big brick wall.

 

New fuel efficient aircraft have already been ordered but are late and have cost you $24 million in lost fuel savings so far ? What are you going to do?

 

35 new Boening 787 Dreamliners yhave been ordered and are coming on line mid 2014.

 

Aircraft are a depreciating asset like car and truck fleets and it's financially prohibitive to change over the entire fleet in one hit, so you have to amortise the old ones first.

 

Something for you, the CEO to do some lateral thinking on.

 

Do you allocate the new aircraft to the longer runs, saving fuel but alienating customers who have to ride on the older aircraft.

 

How will you manage the fleet you have been dealt?

 

For example will you open up new markets with short legs where fuel is not so crucial, and use that market to pay for new long distance fuel efficient jets?

 

Point 6

 

If you reverse the off-shoring of maintenance, you'll be restoring part of what has been the biggest selling factor for Qantas, the perception of safety.

 

So this is a plus which will bring in extra customers.

 

But what is the cost factor? Is it significant to drive those customers, and more, away, and sink the airline?

 

Point 7

 

Qantas has several business units.

 

You are entitled to offset and subsidize costs between these entities to maximise your group market.

 

Every big company does this, and is most cases this is what gives them the critical mass of income to cover shortfalls in seasonal markets, geographical markets, business downturns etc.

 

At one stage I was involved in international marketing with the Japanese and had always wondered how they could sell new trucks in Papua New Guinea - easy, they were slugging the rich countries to subsidise the poor. Where in Australia we were paying $35,000.00 the same truck, with less trim etc was $17,000.00. Australians weren't losing though, this policy sold huge numbers which produced volume savinga allowing the Japanes to undercut the previous British and Amercan companies who weren't so smart, by about $10,000.00.

 

If doing what you want to do will sacrifice Qantas and leave you with the cheaper Jetstar division, is that what you really want to do?

 

Or will you thank the media for their thoughts and get on with it, given that you have a huge advantage over most other airlines in offering cheaper fares and still getting income through the subsidiaries?

 

An interesting omission from your very good proposal was the flight crew - the Facthunters.

 

Do you want to pay Facthunters or as he says button pushers.?

 

What are the consequences?

 

What really is the impact of the two pay scales in terms of seat price? Is it significant, or is it foolish pennypinching with huge potential market penalties.

 

Consider the A 380 engine failure and the amazingly complex saving of hundreds of lives by Richard DeCrespigny. Is he worth his money? That engine loss would have led to a crash is just an average button pusher had been in charge, and the report would have said there was virtually nothing the crew could have done.

 

But what impact would that crash have had on your market?

 

We used to be able to say that Australia had the best pilot standards in the world, and the best maintenance standards in the world. How much does that cost in terms of a typical fare.

 

Another omission was the reality check on what is causing us to have this discussion.

 

This morning I checked the cost of a return flight from Melbourne to Brisbane leaving on December 16 and returning December 20

 

Qantas: $610.00

 

Jetstar: $248.00

 

Given that Jetstar are flying with full cabins, how are you going to address this disparity in price?

 

(I know, instruct Jetstar to lift their their price, but just assume this is a typical compatitor price.)

 

Good effort just the same, what's happened to you other experts?

 

Point 6.

 

 

[Litespeed]

Will consider and get back to you.

 

Off for beer.

 

 

[Yenn]

The reason that I have travelled overseas with Qantas many times was the perception that their pilots knew how to fly and were no just button pushers. I have flown with Thai, Air India, Canadian, Canadian Pacific, British, South African, Singapore and others and none of them were as safe feeling as Qantas.

 

If Qantas starts using Asian pilots, who in my opinion don't have the same standards of training and competence, then I shall be flying with others, maybe Cathay or Emirates.

 

As it stands at the moment it seems to me that Qantas has lost credibility and their good pilots are going to suffer, because the airline is going down the gurgler.

 

 

[turboplanner]

But Cathay is Asian.

 

 

[Litespeed]

Policy of Litespeed, new CEO of Qantas - see post 90Point 1

 

You're in charge of Qantas, you'd be calling for an outside investigation into your own Company - bold move and immediate message that you will not tolerate corruption.

 

But where's solid proof of corruption and law breaking?

 

On the down side and outside investigation could get out of control - not all the people you mention have a very good record in fast results or understand the necessity for the Company to keep operating while this is going on. You yourself will have to fly to various parts of the world to attend hearings, you will have to make major decisions, you will have to come up with replacement company rules, you will have to fire people, you will have to carefully select new people, you will have to deal with phone calls from 40 year pilots.

 

Much of the first year will not be available for you to do what you are setting out to do, and the company could swing into a new crisis where you need that time.

 

What about appointing a small group headed by a retired judge to investigate, handle any misdemeanors, and refer any corrupt dealings or criminal activities to authorities?

 

That's right, no corruption, no featherbedding, no financial tricks and open management and processes. It is not really bold or brave- just the right thing to do. It would also be golden positive PR and make the workers feel you are one of them- which you are.,

 

Yes, a retired judge would be best with a forensic team, the calling in of the authority heads is to ensure it is a top priority for all concerned and to ensure the process is managed to stop disruption. No stop to operations would be required at all.

 

Is there solid proof- almost 100%, the laws and regulations are there and as with anything in the law game it only depends on will to interpret the facts and law as intended by its drafters- not by the law teams who look after their mates.

 

Changes in rules, selected sackings and a new management team are the bread and butter of real management. They would require no greater effort than the head banging version that is currently going on.

 

Point 2

 

Critical for an understanding of the airline industry, but you're not in the airline industry, you're in the financial industry.

 

What about some people with a proven track record of successfully running large companies with small turnovers on sales?

 

Totally disagree- the reason they are so much in trouble is they treat it like a financial kingdom and with serfs for employees- all of which just happen to fly planes. YES it must be well run and have sound finances- but not financial engineers running the show.

 

First and foremost Qantas is a Airline with many related entities that all revolve around travel on aircraft, even the frequent flyer program. To not have that as principle number 1 is fatal to its success.

 

Is the current management bad? Or are the current problems because the hard decisions to cope with the Open Skies haven't been addressed by previous CEO's?

 

It is both, they are very bad management that has willingly harmed the airline by horrific strategies with staff, customers and Australian public. Decisions have been poor for many years including the previous board and execs, many of which are still around.

 

The adversarial management style is the greatest problem they have, this has been created over more than a decade.

 

Point 3

 

looks a good idea, but what if these two start enjoying life at the top? Do you want puppets at this level, or people with vast management experience, exceptional research capability, a contact network to die for, and a proven ability to make the correct business decision again and again?

 

The same can be said of any board member or exec. The staff directors would be drawn from the workforce and be rotated yearly?. They would be paid and rewarded exactly the same as any other director- to do otherwise in unethical.

 

The research, management and contacts are not the needs of a director at all- most of that comes from those below. You have incredible resources at your disposal in staff. Directors are there to provide vision, develop strategies and bring the staff with them through change by leadership.

 

The proven ability on business decisions is laughable from almost all boards- how many have seen share value and maketshare drop, profits tank and still get a bonus. Almost every board in the country.

 

What about the alternative of involving staff in tough decisions?

 

That will really get decisions based on ground floor issues and efficiencies, with expert knowledge on what is happening in cockpits, ground support and maintenance and logistics, and for that matter marketing (for those who remember Sir Peter Abeles instruction to paint all the Ansett aircraft white for no other reason than that's the way his trucks came out of the factory and it saved money on trucks.)

 

The staff in a properly collaborative workplace are the greatest asset, with guidance and proper process in place- decisions are almost always better and the staff have some ownership in the whole deal.

 

Point 4

 

Great idea. I've seen workers make tough decisions to minimise long term job losses. Needs qualification though, remeber Fletcher Jones and Staff - they all backed the wrong direction and went under.

 

Well managed staff, with the right info,will make the right decisions and make the enterprise great. As workers who actually have a part of the shares and actively involved in running the show would make a huge difference.

 

Point 5.

 

As the new arrival, here is your first big brick wall.

 

New fuel efficient aircraft have already been ordered but are late and have cost you $24 million in lost fuel savings so far ? What are you going to do?

 

35 new Boening 787 Dreamliners yhave been ordered and are coming on line mid 2014.

 

Aircraft are a depreciating asset like car and truck fleets and it's financially prohibitive to change over the entire fleet in one hit, so you have to amortise the old ones first.

 

Something for you, the CEO to do some lateral thinking on.

 

Do you allocate the new aircraft to the longer runs, saving fuel but alienating customers who have to ride on the older aircraft.

 

How will you manage the fleet you have been dealt?

 

For example will you open up new markets with short legs where fuel is not so crucial, and use that market to pay for new long distance fuel efficient jets?

 

I would do what they should have and even lease where needed the right plane for correct longer routes.

 

I would get some of the new craft from Jetstar and run the older shit in the Jetstar cattle class runs, they pay a lot less and expect less.

 

The management of the 787 purchase has been a bungle from the start. Over 3 years late and no proper plans to deal with delays that blind freddy new were going to happen.

 

Yes a complete new fleet could not be done at once but large changes are possible given the fleet, many of which have been amortised long ago.

 

Point 6

 

If you reverse the off-shoring of maintenance, you'll be restoring part of what has been the biggest selling factor for Qantas, the perception of safety.

 

So this is a plus which will bring in extra customers.

 

But what is the cost factor? Is it significant to drive those customers, and more, away, and sink the airline?

 

The current safety disasters are numerous and have a far greater cost to the airline than even paying Gold plated maintenance. It is a slow poisoning of the Red Roo and a big factor in sales loss. If fact the reason I no longer fly Qantas combined with terrible service from personal experience. Every even minor incident makes world wide news- why? Cause safety is Qantas.

 

 

People have always paid a premium for Qantas Safety and been happy to. It is a fundamental part of the brand and a major asset not just a cost centre, but a significant generator of income. Just ask 'Rain Man'.

 

Point 7

 

will make another post

 

Qantas has several business units.

 

You are entitled to offset and subsidize costs between these entities to maximise your group market.

 

Every big company does this, and is most cases this is what gives them the critical mass of income to cover shortfalls in seasonal markets, geographical markets, business downturns etc.

 

At one stage I was involved in international marketing with the Japanese and had always wondered how they could sell new trucks in Papua New Guinea - easy, they were slugging the rich countries to subsidise the poor. Where in Australia we were paying $35,000.00 the same truck, with less trim etc was $17,000.00. Australians weren't losing though, this policy sold huge numbers which produced volume savinga allowing the Japanes to undercut the previous British and Amercan companies who weren't so smart, by about $10,000.00.

 

If doing what you want to do will sacrifice Qantas and leave you with the cheaper Jetstar division, is that what you really want to do?

 

Or will you thank the media for their thoughts and get on with it, given that you have a huge advantage over most other airlines in offering cheaper fares and still getting income through the subsidiaries?

 

An interesting omission from your very good proposal was the flight crew - the Facthunters.

 

Do you want to pay Facthunters or as he says button pushers.?

 

What are the consequences?

 

What really is the impact of the two pay scales in terms of seat price? Is it significant, or is it foolish pennypinching with huge potential market penalties.

 

Consider the A 380 engine failure and the amazingly complex saving of hundreds of lives by Richard DeCrespigny. Is he worth his money? That engine loss would have led to a crash is just an average button pusher had been in charge, and the report would have said there was virtually nothing the crew could have done.

 

But what impact would that crash have had on your market?

 

We used to be able to say that Australia had the best pilot standards in the world, and the best maintenance standards in the world. How much does that cost in terms of a typical fare.

 

Another omission was the reality check on what is causing us to have this discussion.

 

This morning I checked the cost of a return flight from Melbourne to Brisbane leaving on December 16 and returning December 20

 

Qantas: $610.00

 

Jetstar: $248.00

 

Given that Jetstar are flying with full cabins, how are you going to address this disparity in price?

 

(I know, instruct Jetstar to lift their their price, but just assume this is a typical compatitor price.)

 

Good effort just the same, what's happened to you other experts?

 

Point 6.

[Litespeed]

Policy of Litespeed, new CEO of Qantas - see post 90Point 7

 

Qantas has several business units.

 

You are entitled to offset and subsidize costs between these entities to maximise your group market.

 

Every big company does this, and is most cases this is what gives them the critical mass of income to cover shortfalls in seasonal markets, geographical markets, business downturns etc.

 

Yes,

 

they are a group and offsetting/subsidising are legal as long as the accounts are a true reflection of that. Hiding costs in a different group such as Jetstar getting freebies and Qantas paying for it- is not legal. The use of such methods with O/S flights also breaks the laws of the country the transaction took place. That is fraudulent accounting practices and contravenes not just international and Australian accounting standards. To feather a balance sheet and not disclose where and how the feathers got there is fraud. To make false statements and sign off accounts that are manifestly untrue is a criminal act. To make untrue statements to the stock exchange, the market and government inquiries, FWA and other courts is also a criminal act. To make statements to CASA about safe operations or a reason for grounding a fleet that are untrue or misleading is also a criminal offence and actually is a personal legal liability on the chief safety head. Even to publicly make statements about profits or losses at QI when the truth is otherwise is illegal under corporations law.

 

The mind boggles in how close attention would yeild big issues at Qantas. Remember these are the guys that entered illegal cartels to inflate freight costs.

 

The only thing that stopped jail was mega dollar lawyers and the company hiding all evidence. If the company provided all it had and treated any employee suspected of criminal activity the way they should, the result would be far different.

 

Under a new broom directors, execs and other staff would be stood down on pay and investigated. No liability or indemnity would be provided for illegal activity. Qantas should not be paying the legal bills to protect a rogue, nor should it protect them.

 

At one stage I was involved in international marketing with the Japanese and had always wondered how they could sell new trucks in Papua New Guinea - easy, they were slugging the rich countries to subsidise the poor. Where in Australia we were paying $35,000.00 the same truck, with less trim etc was $17,000.00. Australians weren't losing though, this policy sold huge numbers which produced volume savinga allowing the Japanes to undercut the previous British and Amercan companies who weren't so smart, by about $10,000.00.

 

 

Or will you thank the media for their thoughts and get on with it, given that you have a huge advantage over most other airlines in offering cheaper fares and still getting income through the subsidiaries?

 

Qantas needs to have a international arm and local arm, we expect it and the sale act demands it.

 

Any effort to circumvent the model of Qantas is a head banging exercise that sucks talent, effort, money and good will from the brand.

 

Qantas has significant natural advantages that no other airline in the world can match, but instead of using these gifts it abuses them and turns them to deficits.

 

Qantas is and always will be a premium airline, to try to be anything else is suicide. This does not mean cost does not matter but people pay a premium happily if it meets expectations.

 

All the things that are held as disadvantages for qantas are actually its best assets.

 

The most expensive maintenance.........think worlds best safety, best trained engineers all done for the Best in reliable and safe operations.

 

More engineers to inspect your aircraft and paid to be the best..........should be part of the ad campaign, not the whine campaign.

 

As far as cost ratios for staff compared to other airlines- good. You get what you pay for, I want the best staff and pay em for been the best.

 

If you fly Qantas you pay a premium so should get premium staff, premium safety, premium planes and the best service.

 

Give that to customers and they happily pay.

 

Qantas is Not a flying bus service especially for International. It is a chauffeur driven thoroughbred with wings.

 

You want a bus get a Jetstar.

 

Your right I had not yet mentioned flight crew.

 

I had not replaced them with monkeys or 5 year olds.

 

They were busy doing training with 15 year old kids in single engine planes. All part of the Qantas IQ, will detail this latter.

 

An interesting omission from your very good proposal was the flight crew - the Facthunters.

 

Do you want to pay Facthunters or as he says button pushers.?

 

What are the consequences?

 

What really is the impact of the two pay scales in terms of seat price? Is it significant, or is it foolish pennypinching with huge potential market penalties.

 

Consider the A 380 engine failure and the amazingly complex saving of hundreds of lives by Richard DeCrespigny. Is he worth his money? That engine loss would have led to a crash is just an average button pusher had been in charge, and the report would have said there was virtually nothing the crew could have done.

 

But what impact would that crash have had on your market?

 

We used to be able to say that Australia had the best pilot standards in the world, and the best maintenance standards in the world. How much does that cost in terms of a typical fare.

 

All flight crews will be expected to be the best possible and paid accordingly. No pilots no planes. Simple.

 

I would have the best paid pilots in the world, people expect that with Qantas and pay extra for it.

 

Unfortunately Richard DeCrespigny turned down my offer to be cloned and Gold Plated, but negotiations continue.

 

Button pushers will now work in call centres only- safer that way.

 

Another omission was the reality check on what is causing us to have this discussion.

 

This morning I checked the cost of a return flight from Melbourne to Brisbane leaving on December 16 and returning December 20

 

Qantas: $610.00

 

Jetstar: $248.00

 

Given that Jetstar are flying with full cabins, how are you going to address this disparity in price?

 

(I know, instruct Jetstar to lift their their price, but just assume this is a typical compatitor price.)

 

Good effort just the same, what's happened to you other experts?

 

Point 6.

Price wise?

 

Not anywhere as big a problem as people claim, yes prices could be lower and would be. But Qantas is and should be more, as that is what the customer gets with a premium airline. It is the expensive seats that makes the big bucks, be it punters, bussiness or government they pay a lot more.

 

As long as they get value and service levels they expect, they will go Qantas. By trying to race to the bottom, people want a rock bottom price.

 

Given what we know about dodgy accounts those above fares are distorted, so not relevant under the new CEO.

 

A new pay structure has been developed.

 

No one can earn more than 20 times a toilet cleaner

 

 

No management can earn more than twice a captains pay.

 

Everyone gets shares in pay structure

 

No management can get a bonus, you are paid to excel. IF not your sacked.

 

Well bugger me, The wages costs just nosedived and the staff are happy.

 

Welcome To Qantas- we actually give a damn

 

Your fellow employee

 

CEO

 

Litespeed

 

 

[Litespeed]

Following meetings with staff and approval by staff vote and board...............

 

I have rationalised the legal and HR departments.

 

All legal and HR staff who were working on screwing employees have been sacked or relocated.

 

All staff dedicated to screwing contractors have also been removed.

 

All relocated staff have now joined the cleaning crews.

 

All external consultants and lawyers have been let go.

 

I have been able to save approx $200 million over two years and more when the new cleaners voluntarily leave.

 

As such we have purchased 3 new long haul airbus aircraft and staff have voted on

 

Legal Eagle

 

HR puffinstuff

 

Clean as you go.

 

I have also rearranged the advertising department and sacked the choir.

 

90 % of staff felt PR had been a waste of space and money.

 

As such 90% reductions of PR and advertising have been made.

 

As needed staff in PR have also been allocated to cleaning crews.

 

Savings of $160 million have been made per year and will be reinvested in two new 777

 

As befitting their funding they will be called

 

Spinmaster

 

Bulls roar

 

Will be speaking with staff about accounting soon.

 

Well I will be buggered

 

Saved a heap of money, made the staff happy and bought 5 new planes with the long term savings.

 

Been a good day

 

A fund of 5% of all savings has been allocated to shares for employees- so $18million as a efficiency dividend.

 

A further 5% of savings have been allocated to Qantas IQ

 

Your fellow employee owner

 

Litespeed

 

 

[Litespeed]

Meetings with pilots and engineers have been very sucessful and plans for Qantas IQ are moving forward.

 

After speaking with the Byrd family we have finalised a name.

 

The Qantas Byrd Institute has been created and has seed funding of $30 million plus the $18million from efficiency dividends.

 

Final plans are been made and the mission statement and scope is soon to be announced.

 

So what is Qantas Byrd?

 

Thats where all elemental training takes place. Qantas will no longer outsource any pilot training.

 

Qantas Byrd will provide all training from Ab initio up. All pilots will be expected to have considerable time in single and twin engine fixed wing and must stay current.

 

Qantas Cadets are paid to train and only the best are accepted, All training will be to a standard and not a price point and befitting the best Pilots in the world.

 

All staff of Qantas will be able to use the Qantas Bryd eagle program at minimal cost. This means any staff can get a RAA or pilots licence and be trained and use the fleet Byrd's this is part of the incentive program for staff. Staff will be eligible for eagle rewards to provide free training or use.

 

Eagle Rewards are transferable to nominated family- so your son or daughter could be involved.

 

By reinstating the spirit of flying and a real opportunity to be a pilot and understand flight, big cultural change can happen. Qantas is the Flying Kangaroo- the Spirit of Australia.

 

We must have a workforce that loves aviation and been the best at it. As a company Qantas needs to be all about Aviation and excellence.

 

Qantas Byrd will also be a training organisation for advanced training of foreign pilots to Qantas standards.

 

Qantas Byrd will also have a charitable role and provide scholarships to Australian and some international aspiring pilots.

 

Qantas Bryd will also have a role in training and aviation studies in secondary and tertiary education.

 

Further plans for Qantas Byrd will be announced following discussions with Government and our Alliance partners.

 

My fellow workers are planning the Byrd nest sites now.

 

Your fellow worker

 

Litespeed.

 

 

[Litespeed]

Hmm... Arent most 777's over $200 mil, and airbus's above $50 mil when purchased new..... $160 mil + $200 mil = $360 mil.... = not enough for 2 new 777's, but probably one 777, and 2 airbus aircraft... (only 60% of the 5 aircraft you bought with long term savings?) or am I missing something....

That was $200million in two years and $160 million in one year. Long term is a great deal more, over three years around $780million. That's a lot of bucks in three years. Then add the fuel savings and better routes, fuller cabins.....................

 

Also I got a substantial deal from Boeing as they owe big time on the 787 contracts. Amazing what you can do with contracts and a smile.

 

Go to go have a airline to fly

 

 

[Litespeed]

IQ is the name of the restructure and reinvention of Qantas.

 

IQ is the process of change to a Qantas where everyone aims at one thing- been the best Airline in the World and still make money.

 

Internal Qantas, Intelligent Qantas.........

 

Bloody fun job this CEO lark.

 

 

[turboplanner]

The retired judge reported to the Board after six months that assertions by the new CEO of illegalities were unfounded.

 

“The new CEO himself has said he is not interested in finance and didn’t understand it is quite legal for a corporation to manage its subsidiaries holistically. Nothing to see here.”

 

On his appointment the CEO had announced his belief that changes in rules, selected sackings and a new management team were the bread and butter of real management.

 

The Grapevine swung into gear 30 seconds later, and everyone who’s worked in a large Company knows that the Grapevine produces the results, not the management. Email and phone traffic broke the all time record for Qantas in the next 24 hours.

 

The CEO had instantly united the staff, who were no longer interested in any suffering under Alan Joyce, there was a new and much more menacing threat now.

 

It was quickly noticed that KPI’s didn’t matter any more, the CEO was only interested in flying, and this was welcomed by many of the staff who no longer had the added stress of having to meet targets, the weekly and monthly reports, the boot in the bum if figures were down, the focus on market share and so on. So they relaxed, and so did the income.

 

The CEO had announced that four Board Members would be leaving, to be replaced by two dropkicks from baggage handling, Biggles and a Cabin Steward.

 

At the next Board Meeting the atmosphere was calm and orderly and the preliminaries conducted in a very friendly manner.

 

Then the Chairman said “Before we go on Mr Litespeed, I’d just like to clear up some procedural matters.

 

“We appear to be short four Board Members and the visitors are still in the room, so I need to advise you that you don’t have the power to replace Board Members so be a good chap and go out and ask the four Board Members to come in, and then get those KPI’s up to scratch or you’ll be looking for another job”.

 

“By the way, we provide the direction here, not you.”

 

And that was the CEO’s first lesson about the importance of politics.

 

The CEO had talked about including the staff in decisions but had only referred to “proper process”; he hadn’t enunciated a Policy – the how, when, where, why this would happen, so the staff had no idea what he was talking about and went on their normal ways.

 

The CEO hadn’t conducted any research to find out whether fuel savings were significant, so didn’t have a target, and we all know if you don’t have a target, you’re never going to hit the bullseye.

 

Instead he had decided to lease some new aircraft which suddenly affected the cash flow, compromising many different areas and requiring new borrowings which outweighed the fuel savings.

 

His other fuel saving decision to run the older aircraft on the cheaper Jetstar operations, didn’t save any fuel costs; he just wasn’t financially metric.

 

Instead it created a new crisis.

 

He’d sacked his marketing staff whose research would normally told him that people who seek out the cheapest fares are usually trying to keep up with the Joneses, and always make the highest number of complaints.

 

Oddly, if he was as interested in flying as he professed he would have watched “Airline” and found that out for himself.

 

Virgin’s marketing staff, swollen by retrenched Jetstar specialists who knew where the skeletons were buried came up with a simple television campaign showing a cattle truck and a ten dollar note, and the customers deserted Jetstar.

 

Now some REAL bleeding had started. What was he going to do?; he had no marketing team.

 

Busy with the growing disasters and an avalanche of questions from the Board, the CEO had not conducted a detailed analysis of local maintenance where he would have found there was no need to go offshore.

 

Closing down four leased premises, and building a new facility with robotics and single bay repairs, forward planning 80% of parts requirements and shipping them more slowly on old sea freighters, using the freighters as warehouses, ending over servicing and double disassembly caused by the diverse service locations, and simply not replacing people who left or retired would produce an easy transition over five years and produce lower maintenance costs with higher quality control.

 

Because he hadn’t done this, maintenance staff were leaving because of uncertainty, aircraft were grounded longer, and more bleeding occurred.

 

The Board called a special meeting.

 

“We have a problem” said the Chairman “When Alan Joyce left Qantas had 20% market share, Jetstar was offsetting this with 98% payload, and we had some longer term cost issues we needed to bring under control.”

 

“Now some of the line managers I grew up with are sending me daily reports of the latest debacles and they all correlate, so we can assume that morale is through the floor”.

 

“Jetstar passenger loading is down to 15%”.

 

“Qantas market share is down to 18%, and our unreliability due to not making the hard decisions on maintenance is ruining customer perception.

 

“We have no marketing people to counter this, or even come up with a comprehensive advertising campaign to get people back”

 

“I’m tripping over middle management misfits, promoted from ticket sellers, who are causing bottlenecks for passengers, who are calling ME!

 

“The CEO seems to think that high seat price is not as big a problem as people claim, but when I checked on Virgin’s website this morning they were charging $250.00 for a return flight Melbourne to Brisbane and we were charging $610.00.

 

“The CEO says that expensive seats make the big bucks, but when you drop loading from 60% to 45%, you have to increase fares exponentially.

 

“I spoke to my friend Turbo, who is a marketer and he said up to a 15% price premium you can usually convince customers with better service, but above that you really need to show them long term savings, or provide a unique unbeatable service which they can’t get elsewhere, such as holding a 357 magnum to their ear”

 

There was a general chuckle and then someone said:

 

“But what about the positives:

 

“He’s purchased new aircraft

 

“He’s given $18 million in shares to employees

 

“He’s set up a Training Institute

 

“He bought light aircraft for free training

 

“He’s talking about a $780 million profit over three years

 

“He got a substantial deal from Boeing on the 787 contract”

 

The Financial Director, a tall, skinny man with an angular face which always had a pained expression on it coughed. They all knew what that meant.

 

“All dreams and visions I’m afraid” he said

 

“I cancelled the aircraft order because he’d doubled up on existing forward orders

 

“We had a billion dollars in cash reserved when Alan Joyce left, but it’s all gone now, so no shares

 

“He’s talked about a Training Institute, but we haven’t seen any concept plans

 

“He wanted to buy light aircraft for free training but couldn’t explain why cleaners would need it

 

“His $780 million didn’t include taxes, write downs, provisions or the current bleeding; it’s gone

 

“I spoke to my contact at Boeing who said they’d received a call but referred him to the contract

 

“Well, we better do something fast” said the Chairman “do we fire him?”

 

 

[Guest Andys@coffs]

............The most expensive maintenance.........think worlds best safety, best trained engineers all done for the Best in reliable and safe operations.

More engineers to inspect your aircraft and paid to be the best..........should be part of the ad campaign, not the whine campaign.

 

As far as cost ratios for staff compared to other airlines- good. You get what you pay for, I want the best staff and pay em for been the best.

 

If you fly Qantas you pay a premium so should get premium staff, premium safety, premium planes and the best service.

 

 

 

Give that to customers and they happily pay.

 

 

 

Qantas is Not a flying bus service especially for International. It is a chauffeur driven thoroughbred with wings.

All good except this part "Give that to customers and they happily pay."If that were true Qantas international wouldnt be loosing hand over fist (and a lot more than some shaddy accountanting adherence to the AASB standards can be credited with......)

 

They are uncompetative in the global market and not enough LiteSpeeds are flying to allow that to be an irrelevant fact. Until they can convice us that a) there is a pot of gold at the end of the rainbow and b) when it comes to QI let emotions overrule normal personal fiscal approaches there is no way on this earth your comment will be anything other than wishful thinking.

 

Andy

 

Andy

 

 

[fly_tornado]

Andy: take 25 minutes on http://flightcentre.com.au and see how many airlines undercut Qantas. I'll give you a tip and tell you its not many and on only a few routes.

 

 

[Guest Andys@coffs]

Andy: take 25 minutes on http://flightcentre.com.au and see how many airlines undercut Qantas. I'll give you a tip and tell you its not many and on only a few routes.

If airline 1 charges $1000 for a flight and at the end of the year makes a profit or breaks even and arline Q charges $1000 for the sme flight but at the end of the year has lost heaps then my contention that Airline Q is uncompetative in the global market place still stands.

Also, its my contention that a price on a wesite doesnt a ticket make. Using Q as the example a red-E deal (or that might be a VB fare...whatever its just an illustration) from Coffs to Syd might be $88...shame I cant find one for that price when I need to fly when it actually comes time to flash the plastic.....

 

At the end of the day, ignore the ticket price, just look at the P&L. If they make a loss when others break even or make a profit they arent competative and need to focus on reducing their costbase, not allowing it to grow.

 

Anyway, thats all accounting 101, and probably bears little resemblance to the details, wherein lies the devil, that Q work with.

 

Andy

 

 

[fly_tornado]

Why are you talking about domestic fares?

 

 

[Guest Andys@coffs]

Why are you talking about domestic fares?

Yeah Ok.......add a 1-4 at the begining of the cost and a 0 at the end and change the town to somewhere overseas.......The rest is valid as written

Andy

 

 

[fly_tornado]

Go and have a look @ Flightcentre's website and see what I am talking about. Qantas are undercutting hence the low profitability on long distance. Is this due to the tourism industry decline due to strong dollar and Qantas management supplying too many seats for the routes? Most probably.

 

Qantas need to focus on providing a quality service and leave the budget stuff to countries that are at route crossroads in Asia.

 

 

[Guest davidh10]

But Cathay is Asian.

Yes, but I think the point Yenn was making was that Qantas had squandered the advantage of being perceived as a "safer airline". The perception is now that they have no safety advantage, so the price premium for perceived safety is no longer justified.

Once upon a time, Qantas just never had any publicity of incidents. Whether any occurred or not is moot. Over the time since they decided to off-shore some maintenance, they have not been able to stay out of the news. That's a powerful lot of free negative publicity.

 

There's an old saying in business.... its much cheaper to keep a customer than to win another one.

 

I don't think the negative image of this lock-out will evaporate quickly and once people have made a decision to change to another airline and it seems ok, what motivation to return. Toothpaste is very difficult to get back into the tube. Even though people may forget the incident, the perception often persists.

 

Just on the point of Joyce not making the decision alone, remember that Telstra is now less two directors who were key supporters of Trujillo due to what he did to the company with board supported decisions.

 

I used to be a Qantas Club member but don't fly Qantas anymore, due to product decisions that Qantas took. I am however quite happy flying Jetstar.

 

Maybe they are deliberately trying to kill Qantas and beef up Jetstar!

 

 

[Litespeed]

I will start with a reply to Andy,

 

As you stated some airlines are uncompetitve- but to think Qantas group is in that bag is just bullshit from the Joyce crew and fairy land stuff.

 

Qantas made a profit of $558 million before tax and offsets last financial year. All in a year full of disasters natural and self inflicted which cost approx $300 million in profits.

 

So yes Qantas has a pretty nice Profit and Loss statement, I have read it , have you?

 

At no stage did I say Jetstar was not going to compete on price, it is Qantas that is less price sensitive.

 

Qantas International does need to lift its game, and also has the most potential for getting back market share.

 

CEO

 

Litespeed

 

 

[Litespeed]

sorry repeat post- bloody puter did it

 

 

[Litespeed]

Turboplanner,

 

You have made a very long and imaginative possible future.

 

But you did ask for suggestions on the basis, I had just been appointed CEO by the shareholders. The only possible way this would have happened is if the shareholders called a extraordinary meeting. At the meeting they sack the board and CEO and appoint a new CEO- in this hypothetical, that would be me.

 

So this means as CEO, I would work with the shareholders and elect a suitably structured board.

 

On that basis, I have worked.

 

So the support of the board and shareholders were given.

 

If read carefully in my replies, you will note the workforce was integral to the whole process and helped make the decisions. I think having two board members from staff, a active and motivated workforce who even vote on change, with a share in the action would have indicated such.

 

In this hypothetical, it is absolutely assumed that any changes were the best option using the collective wisdom available.

 

To think that return on equity, P/E ratios, targets and other goals do not matter is wrong. Just because I did not mention them, does not mean they don't exist.

 

I think you have assumed a totally different scenario to what I indicated.

 

Litespeed

 

 

[turboplanner]

Come on commentators what do you think?

 

Do the shareholders appoint the CEO? Does the Board appoint the CEO? Are you happy with broad brush strokes? Do you want detail?

 

 

[fly_tornado]

The market thinks in broad detail: as the cost of sunday's fiasco unfoldsthe glow from union busting is wearing off.

 

http://au.finance.yahoo.com/q?s=QAN.AX&ql=0

 

 

[Litespeed]

Without been on the inside and all the advantages it brings broad brush strokes is probably as good as it gets.

 

If the shareholders want to and exercise the power- they can do what pleases them, within the law.

 

I assume that the shareholders have revolted completely and sought change. That includes the board for they and the CEO are considered the problem.

 

Generally shareholders appoint the board and the board appoints the CEO. The only way to force a board to get rid of a CEO is to sack the board. Bar that they can ignore your advice or protests.