No Rest For Qantas

The HSC is done for another year and the rest of school will be winding down soon. However, there is no rest for Qantas. If anything, things are gearing up.
Qantas’ recent trading update shows some difficult domestic and international conditions. Qantas has signalled that it is currently experiencing declining revenues in the domestic market. This is consistent with the current slowdown in the Australian economy. In fact, Qantas is more vulnerable than most because air travel is often a discretionary spend.

However, despite the state of the global economy a silver lining has been the growth in international revenue as many of Qantas’ competitors have reduced flying capacity for the first time in decades. Qantas is benefiting from its competitors’ woes, many reporting significant falls in profitability. The progressive introduction of the Dreamliner’s has also helped Qantas improve its profit margins on key routes. The Hong Kong protests have hurt Qantas as few people want to fly into Hong Kong right now. Trump’s not helping either. His trade war with China has put a dent in Qantas’ freight revenue.

Given the slower revenue environment there is no doubt that Alan Joyce will continue to focus on cost reductions to bring home the bacon which may not be great news for staff. Qantas has flagged that it will soon announce staff redundancies as part of its head-office restructure. Qantas is not budging in EBA negotiations with the engineers and pilots which have dragged on for months.

Qantas is seeking backing from its pilots and regulator (CASA) to launch its non-stop flights from Sydney to London and New York (Project Sunrise). The aircraft in the running for these flights are the A350-1000ULR (Airbus) and the Boeing 777-8. This would be the world’s longest flight at almost 20 hours. It’s very attractive for Qantas because it can charge a premium price of about 20% for non-stop routes which are especially popular with corporate travellers. Qantas already flies non-stop from Perth to London which takes 17 hours. The Perth to London non-stop service has been a stunning success with a 92% load factor. Qantas is conducting 3 test flights to test crew and passenger reaction to 20-hour flights.

Qantas has announced that it intends to place an order with either Boeing or Airbus to replace its 75 Boeing 737’s (domestic fleet) over the next 10 years. At about $5 billion it’s an even bigger financial decision than the new long-haul planes Qantas is eyeing for its non-stop flights. Qantas will be short of domestic aircraft for several weeks as it waits on Boeing to repair structural cracks on 3 of its Boeing 737’s. Qantas had to do an urgent inspection check on all its 737’3 fleet.

Environmental sustainability is a key influence on Operations at Qantas. There is growing scrutiny on Qantas’ carbon footprint and pressure on travellers to opt for more friendly modes of transport. Qantas has countered by pledging to slash its net carbon emissions to zero by 20150 primarily through fuel efficiency and its carbon offset scheme. Qantas is only the second airline in the world to make such a commitment.

Source: Qantas boos and pilots in standoff on Sunrise flights deal by Robyn Ironside The Australian Oct 3rd, Fasten your seat belt Qantas is hitting some turbulence by Stephen Bartholomeusz Oct 24th, Qantas short on aircraft for weeks due to pickle fork cracks by Patrick Hatch SMH Oct 31st, Qantas pledges zero net emissions by 2050 by Patrick Hatch SMH Nov 12th.