At the Dubai Airshow Qantas’s major alliance partner Emirates (one of those dastardly foreign government owned airlines) placed colossal orders for 150 Boeing 777Xs and 50 Airbus A380s.
That presages yet more booming growth for Emirates.
Fast-forward barely two weeks and Qantas is forecasting massive financial losses, 1,000 job cuts and another review of its capital spending. The relative decline of Qantas is becoming in starker and starker relief.
With 1,000 further job cuts and “network optimisation and improved fleet utilisation” now planned, that relative decline – at least of the bits of the Qantas Group with a white kangaroo against a red background on its tail – is speeding up. Qantas hasn’t been specific about the route cuts and staff retrenchments, but clearly fewer staff will be needed to fly fewer aircraft to fewer destinations, a path Qantas has been travelling down for some years since the August 2011 restructure of the international operation was first announced.
The Qantas press release/stock exchange announcement about the looming losses contains an appendix titled: ‘Capital Expenditure, Costs and Transformation Milestones’. It is a laundry list of measures Qantas has taken over the past few years to cut costs, and is worth cut-and-pasting here:
Appendix 2 – Capital Expenditure, Costs and Transformation Milestones
Since announcing a wholesale review of costs, capital expenditure and a new strategic direction for Qantas International in August 2011, the Group has made significant progress towards building a strong, viable business for the future. Transformation initiatives across the group have resulted in redundancies of approximately 3,000 full-time employees.
Milestones over the past two years include:
Fleet & Capital Expenditure
Deferred delivery of six Airbus A380s to between 2018 and 2021, lining up with the retirement of the last B744ER aircraft in the fleet. Deferred capital expenditure of $US2.3 billion at list prices
Deferred delivery of two A380 aircraft to financial year 2017 at earliest
Reconfigured 12 x A380 aircraft to increase efficiency, adding 8% more seats by reducing business class and adding more economy and premium economy
Reconfigured 9 x B744 aircraft, adding 19% more seats and upgrading interiors to A380 standard
Restructured Boeing 787 order, reducing firm commitments for 35 x 787-9 aircraft. Reduction in capex commitments of $US8.5 billion at list prices
Reduced B744 fleet from 26 in August 2011 to 16 as of June 30 2013
Youngest average fleet age since privatisation, at 7.9 years as of June 30 2013
Increase in Qantas jet aircraft utilisation – FY14 forecast at ~9.9 hours per day compared to FY13 at ~9.4 hours Network
Withdrawal from unprofitable international routes including Bangkok and Hong Kong-London, Singapore-Frankfurt, Auckland-Los Angeles, Singapore-Mumbai, Perth-Hong Kong and Adelaide- Singapore
Global partnership with Emirates including hub shift for European flying to Dubai from Singapore, integration of Frequent Flyer schemes, joint sales, marketing and flight scheduling
Expanded or entered into new alliances with American Airlines, LAN Chile, China Eastern, China Southern, Malaysia Airlines
Restructure of Asia flying to focus on right timing and connections, including 40% increase in available seats to Singapore and 14% increase in available seats to Hong Kong Qantas Transformation & Asset Sales
Heavy maintenance consolidation from three facilities to one (as of early 2014)
Line Maintenance efficiencies; ‘maintenance on demand’
Catering facility consolidation
Airport ground operation efficiencies
Corporate and commercial overhead reductions
Exit from Freight joint venture with Australia Post with the sale of Star Track Express road freight, and acquisition of 100% of Australian Air Express
Sale of Qantas Defence Services
Now this listing is likely primarily aimed at the financial community to show that Qantas has been taking robust action to shore up its financial position.
And it certainly has been.
But it speaks of decline as well.
And that raises one big question. Who or what is to blame? An uneven playing field distorted by foreign government owned airlines and the majority foreign government owned Virgin? Or Qantas itself?
And then there is the language used too. The announcement talks of the measures the ‘Group’ has made. But they almost entirely apply to Qantas mainline.
That not so little low cost carrier subsidiary Jetstar seems to be doing ok for itself.